Runaway FCC Regulations: Abating the Ban on Agents

History has countless examples of boom or bust as result of a regulatory change. It was the latter, rumbling down upon a largely unaware segment in our industry, that freight-trained many of us on July 1, 2020. On that day, multiple cable and telco providers ceased paying agents earned commissions for health care customers, and they did so to remain in compliance with new federal regulations.

Our federal government isn’t exactly known for moving like a speeding train, so how did regulatory change roll up on us so quickly? And more importantly, what’s next? Will future restrictions in some other business segments put you on the railroad tracks? If you have a pulse, work in the United States, and are involved in the agent industry, then you work under the auspices of the Federal Communications Commission (FCC). Read on.

How Regulatory Change Works

Most federal policy changes follow a process prescribed by the Administrative Procedures Act (APA), which includes requirements for federal agencies to publish draft new rules, seek public input on such rules, as well as taking such public comments into consideration before issuing an order adopting the final rules. Before the rules become effective, a federal agency has to also undertake a regulatory flexibility analysis on whether the proposed new rules would unduly burden small entities by imposing a significant economic impact. Finally, for the rules to become effective, they must be published in the Federal Register to ensure sufficient notice has been given to the public.

For the rules that led to a cessation of payment on July 1, 2020, the FCC observed all the steps required by the APA, including clear language describing the FCC’s perception that agents were harbingers of bad influence and danger to a fair and open competitive bidding process. Several telcos and their trade association filed comments requesting the language banning agents be removed. However, an unpersuaded FCC marched forward in adopting the rules, without the benefit of fully considering the significant economic impact the prohibition would have on a substantial number of small businesses that make up the community of technology channel sales professionals. These things all happened over the course of several years. But where was our voice? Where was agent nation?

The majority of us are direct sellers. Whether technical, pre-sales, post-sale, account executives, or administrators, we work directly with our customers. We are independent small businesses, and we enjoy getting out on the road to our customers. The majority of us worked in the industry for years at a cable or telco before moving into the independent agent realm. We relish an unfettered capacity to provide the best solutions, irrespective of a single brand’s product limitations. We provide best-in-class solutions and take pride in supporting our customers. Our expertise, our labor and access to multiple competitors provides a unique benefit to our customers.

Back in 2017, all of us were hard at work across the country when this story began. The FCC published a notice requesting comments on third-party consultants working with health care providers who participate in the Rural Health Care Program (“RHC Program” as overseen by the commission). The concern was based upon a single instance of a third-party consultant managing a request for proposal (RFP) for a health care customer and then taking a sales commission from the telco provider to whom it awarded the bid. If you’re shaking your head after reading this and mumbling that this kind of consulting is not what you do, you would not be alone. Unfortunately, opinions and rules were formed based on an overly broad definition of consultant and an uninformed sense of what our agent industry does. The consequence was sweeping.

What came next didn’t consider the …