When the government talks about truth, watch out. This Thursday, the Federal Communications Commission will consider a petition to revise its “truth-in-billing” rules that govern the information that telecommunications carriers may – and may not – place on their bills.

On the surface, truth-in-billing is an innocent issue. The National Association of State Utility Consumer Advocates [Nasuca] petitioned the FCC to expand truth-in-billing rules to declare that telecommunications firms cannot put charges on consumer bills unless the item has been authorized by a government agency.

Problematically, of the many regulatory fees and costs imposed on telecommunications carriers, few are specifically authorized for direct recovery from consumers. More often, regulations are silent about how telecommunications companies are to collect fees or cover costs for such programs as federal universal service or local number portability.

One result of the Nasuca petition would be to limit the itemization of regulatory costs, forcing companies either to raise basic charges or to remain uncompensated for many costs. Fairness and efficiency require consumers to pay for the costs they incur. The Nasuca petition ironically would discourage consumers from learning about these costs or, worse, have someone else unwittingly pay for them.

The Nasuca petition also exposes a sensitive jurisdictional turf battle about whether federal or state regulators have primary jurisdiction to limit truthful commercial speech between a business and its customers. The right answer is such information should not be limited as a matter of constitutional law, good economics, and simple conscience.

The dissemination of information from a telecommunications carrier to its customer is already discouraged by existing FCC “truth-in-billing” rules. For example, a telecommunications carrier is permitted to have a line item for a “federal universal service fee,” but the carrier is not permitted to use the word “mandated” or any description suggesting that the carrier must collect the fee from consumers.

Of course, the universal service fee is a formula tied by regulation directly to a consumer’s bill. The payment of a universal service fee by those who incur it is self-evidently “mandated.” It is lawful for anyone except a telephone company to say so.

The FCC began regulating “truth-in-billing” in 1999 partly because it did not want telecommunications companies to reveal to their consumers the full extent of the costs of FCC regulations, particularly universal service. Permitting a business to reveal only part of the truth to a consumer is the regulation of half-truths. An agency that today prides itself on “deregulation” has not seen fit to abandon the invisible cloak of regulation known as “truth-in-billing.”

It would be perilous for a telecommunications company to place information on a bill inconsistent with the FCC world view. Not coincidentally, the contribution factor for interstate telecommunications services collected by the FCC for the federal universal service fund has increased to 10.7% today from 3.18% in the first quarter of 1999. During this period when FCC “truth-in-billing” rules have been in place, few other fees or taxes at either the federal or state level have increased as dramatically.

The federal universal service fund’s size (approximately $6.5 billion annually) and the specific fee structure are determined by the FCC, not Congress. A federal universal service fund is required by federal statute, but the language of that law barely resembles the current fund. Perhaps for all of these reasons, it is not surprising that the FCC goes to some lengths to apply “truth-in-billing” concepts to the collection of universal service fees.

Now Nasuca seeks to have the FCC limit further what telecommunications companies may tell their consumers. That would be a step in the wrong direction. Discouraging commercial speech has harmed, not helped, the American consumer.

A better approach for the FCC would be to abandon its rhetoric of the truth. It may regulate reasonable billing practices, but such regulation should not rest on hiding taxes and costs imposed by the FCC itself.

Clearly fraudulent billing practices will be weeded out, with or without the FCC, through many layers of potent federal and state law.

The FCC’s “truth-in-billing” rules go far beyond fraud. They discourage businesses from revealing the full costs of regulation and taxation or from expressing points of view different from the FCC’s. The American public has been ill-served.

A former FCC commissioner,Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.