The FCC's Issuing More Fines Than Ever, But Taking Heat For Not Collecting Them

While nobody expected much of former cable and wireless industry lobbyist turned FCC boss Tom Wheeler, he's actually been doing a relatively good job when it comes to standing up to entrenched broadband duopolists. From passing tougher net neutrality rules to taking aim at state level protectionist broadband law, he's often been on the side of the end user and actual competition. That has included an ocean of fines for fraud that, while wrist slaps for the bigger companies involved, have spearheaded a crack down on the kinds of behavior the FCC spent fifteen years pretending didn't exist.

AT&T has born the brunt of the FCC's fiery new disposition, be it a $100 million fine for lying about throttling, a $100 million fine for milking a subsidy fund reserved for the poor, a $105 million fine for allowing and aiding SMS cramming, or a $18 million settlement for defrauding the IP Relay program for the hearing impaired (noticing a trend at AT&T yet?).

But while the agency has been making a lot of media waves with some major fines over the last few years, it has also been taking criticism for not doing a particularly good job collecting the money owed. The collection process is notoriously slow, thanks in large part to expected company challenges (which have to occur 30 days after the fine is announced). But in some cases, companies that were found to be ripping off the government years ago not only haven't paid a dime, but are still eligible to collect subsidies:

"In announcing some of the proposed Lifeline fines in 2013, the agency trumpeted, “Today's actions constitute the most recent step in the Commission's significant efforts to root out waste, fraud, and abuse in the Lifeline program and preserve the overall integrity of the Universal Service Fund (USF).” But the FCC has yet to officially impose the penalty on those companies -- and several are still deemed eligible to receive FCC reimbursements for phone subsidies, according to data from the Universal Service Administrative Company, which runs Lifeline.

In other words, historically-flimsy wrist slaps are notably more flimsy when there's no actual slap involved. That said, the FCC has responded with a blog post in which it argues it collected 88.6% of the fines levied in 2015, up notably from the 55% collected in 2011, and the 39.2% collected in 2012. So not only are the number of fines being issued up, so is the rate of collection under Wheeler. The FCC also tries to argue that the bad press can sometimes be enough to get companies to change their behavior:

"...a spokesperson said the practice of issuing proposed fines -- technically called notices of apparent liability (NALs) -- is a major tool to protect consumers, even if companies don’t ultimately pay a full penalty. The FCC, which says it normally conducts extensive inquiries before proposing a fine, has seen instances of companies adjusting practices to comply with agency rules after an NAL is filed, said the spokesperson, who declined to be identified, saying the FCC has a policy about not speaking on the record about its enforcement bureau."

Note too that some of the Congressional criticism on this front is ironic posturing. Many of the complaints emerged at a recent series of House hearings designed to publicly scold the FCC for standing up to broadband ISPs on net neutrality, with the end goal of stripping the agency of both funding and authority. Odd, then, that these same folks are concerned the FCC somehow isn't being aggressive enough despite actually in some ways being more aggressive than ever. Still, critics are right to note that while the number of fines the FCC is issuing is higher than ever, the roar of a lion eventually becomes somewhat less imposing when followed by a toothless smile.

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