WASHINGTON-Nearly a week after the Federal Communications Commission ruled that wireless carriers can be subject to damages awarded in civil lawsuits, consumers and the industry are reading the ruling differently. Meanwhile, interest in wireless consumer issues on Capitol Hill is picking up momentum.
To the Wireless Consumers Alliance the FCC ruling is a “smashing victory.” To the industry it changes nothing.
“The [FCC’s] decision is a smashing victory for consumers. … In living up to its promise to advance consumer rights, the [FCC] has made it easier to put a stop to unfair business practices that have given rise to an explosion of consumer complaints. … The message is the [commercial mobile radio services] industry is just like everyone else in the marketplace where full and fair disclosure is the rule-not the exception,” said WCA President Carl Hilliard.
“I don’t think this will make any difference because the FCC has continued to make it clear that the courts must review it on a case-by-case basis, said Michael F. Altschul, vice president and general counsel for the Cellular Telecommunications Industry Association.
Altschul pointed to language in the FCC decision stating “that whether a specific damage [award] is prohibited will depend on the specific details of the award and the facts and circumstances of a particular case.”
Meanwhile, on Capitol Hill and in courts and states around the country, consumer disenchantment with the mobile-phone industry is growing louder.
Rep. Anthony Weiner (D-N.Y.), dissatisfied with mobile-phone service he and his constituents receive from AT&T Wireless Services Inc. and other carriers, is pushing a bill that would require the FCC to set minimum standards for service quality and direct the agency to compile-as well as monitor-complaints that consumers could refer to when shopping for phones.
Weiner says mobile-phone operators should be accountable for dropped calls, busy signals, dead spots and improper billing.
The FCC, according to Weiner, received 3,386 complaints about wireless service and billing in 1997 and nearly 8,000 inquiries in 1999. Federal regulators told Weiner they believe the number of complaints will double to 16,000 by the end of 2000.
FCC Commissioner Gloria Tristani has said as users cut the wireline cord and use only wireless that someone might need to monitor service quality.
The scope of the problem is difficult to assess, since there is no official tally of wireless-service complaints from each of the 50 states. Indeed, the number of complaints registered with the FCC and states may well understate the level of consumer discontent with wireless service because a certain percentage of subscribers likely do not bother to air their grievances.
The declaratory order by the FCC, released on Aug. 14, said the Communications Act “does not generally pre-empt the award of monetary damages by state courts based on state consumer protection, tort, or contract claims.”
The order followed a similar ruling last November where the FCC said that “although states may not prescribe how much is charged for CMRS services or rate structures for CMRS, the CMRS industry is not exempt from the neutral application of state contractual or consumer fraud laws.”
The industry and WCA have been in a lobbying dog fight over the request, filed in July of last year. According to WCA, there were 71 documents in the record. Since the first of the year the two sides have visited the FCC staff 15 times.
WCA asked for the ruling after a judge in California agreed with AT&T Wireless (formerly L.A. Cellular) and said that monetary damages could not be awarded to Marcia Spielholtz in her lawsuit because to do so would involve rate making. The appeal in the case was put on hold pending the FCC’s decision.
“A state court, by awarding damages to customers damaged by a CMRS provider’s breach of contract or fraud violation, would not per se be engaged in ratemaking prohibited by the [Communications Act]. If liability is established, an award of monetary relief would not normally require a court to prescribe, set or fix wireless rates,” said the FCC.
CTIA was disappointed with this part of the ruling.
“I was disappointed in the aspect of the ruling that rejected the argument we had been making that if the court is really engaged in what the rates are then that is ratemaking,” said Altschul.
Wireless-service complaints have been lodged with various states, and attorneys general are beginning to take note. Attorneys general from Connecticut, California and Wisconsin took aggressive pro-consumer positions in supporting WCA in the FCC proceeding. Texas state regulators also backed WCA.
Iowa’s attorney general and U.S. Cellular Corp. are knotted up in litigation over consumer complaints of alleged overcharging and misleading advertisements about mobile-phone coverage areas.
Elsewhere, Rep. Rush Holt (D-N.J.) is crafting legislation to ban mobile-phone spam-a somewhat new wireless consumer problem. Some of Holt’s constituents, AT&T Wireless subscribers, complained to the congressman’s office after receiving unsolicited advertisements from Plugout.com.
AT&T Wireless said it has installed filters to prevent the problem from reoccurring.
Even so, advertising on Internet mobile phones is expected to be more commonplace in coming years as wireless firms turn to data applications for additional revenue.
How mobile-phone consumers will react to location-based wireless marketing is a big question, too.
The law forbids wireless location tracking by carriers except in 911 situations. A lot depends on how up front carriers are in seeking subscriber approval. Recent history suggests anything less than an explicit opt-in approach could run into the same kind of Internet privacy problems recently flagged by the Federal Trade Commission.
That service quality, customer service and billing problems are growing as the industry adds thousands of new subscribers daily is not necessarily surprising.
Mobile-phone carriers, facing fierce competition and watched closely by financial markets, place heavy emphasis on adding subscribers. Those are the numbers wireless carriers like to highlight in quarterly earnings reports.
In many cases, the ability of consumers to take legal action against mobile-phone carriers will remain limited due to contracts that force consumers with complaints into arbitration while precluding them from taking legal action.
