WASHINGTON-In a development with national implications for a wireless industry increasingly hit with complaints about service quality and billing problems, a California telecom regulator last week suggested the state Public Utilities Commission may consider approving a new policy before year’s end that would allow consumers to return mobile phones within 30 days without having to pay hefty early termination fees.
The 30-day return policy option is the brainstorm of California PUC analyst Robert Wullenjohn, who is helping draft a telecom consumer bill of rights.
“We’ve heard the complaints and are considering how to resolve the issue,” said Wullenjohn.
However, Wullenjohn cautioned that the 30-day return policy idea is only one of many options being considered.
“This is not an official position of the commission,” said Wullenjohn. He noted, for example, that because phone equipment is deregulated, the California PUC may not have the legal authority to institute a 30-day return policy. Moreover, wireless carriers could argue that such a rule represents illegal ratemaking. In 1993, Congress pre-empted state regulation of rates and market entry of commercial wireless carriers.
At the same time, Wullenjohn told another newspaper: “Companies shouldn’t be allowed to be misleading in their coverage.”
California has been at the forefront of wireless consumer protection in recent years. The California PUC said it received 2,404 complaints in 1998 and 3,356 complaints in 1999. About a quarter of the complaints dealt with early termination fees, which can cost consumers $150 or more if they break service contracts.
“We have a long-standing belief that competition should dictate this type of thing. Legislation is not the answer,” said Brenda Raney, a Verizon Wireless spokeswoman.
Susan Pedersen, executive director of the Cellular Carriers Association of California, played down Wullenjohn’s comments. “From our perspective, this is not a formal rule,” said Pedersen. Pedersen said the mobile-phone industry does not need a bunch of new regulations as it prepares to bring third-generation wireless services to the public.
“At this point, this is a state issue,” said Travis Larson, a spokesman for the Cellular Telecommunications & Internet Association.
With the meteoric growth of the wireless industry-which today boasts 112 million users-has come a flood of complaints about dropped calls, network busy signals, dead spots, billing, spamming and lackluster customer service.
The magnitude of the problem is difficult to assess because no one entity collects wireless complaints on a national scale. Complaints typically are lodged with public utility commissions, state attorneys general and cell-phone carriers themselves.
Some consumers go straight to court, as did Maryland’s Ann Bolduc recently. Bolduc alleged Cingular Wireless ran up her bill by combining calls from several months on one bill. Cingular Wireless was not immediately available for comment.
“This [California PUC] rule is needed to remedy the unfair business practice of providing false and misleading coverage information,” said Carl Hilliard, president of the Wireless Consumers Alliance. “Finally consumers will have the ability to comparison shop-which is what the marketplace is all about.”
WCA, which first proposed the 30-day return policy in comments filed with the PUC, scored a major victory over the mobile-phone industry last year when the FCC ruled that federal law does not pre-empt state courts from awarding monetary damages against wireless carriers that violate state consumer protection laws. The FCC is expected to rule shortly on the common industry billing practice of rounding up calls to the next minute.
The mobile-phone industry has been able to limit litigation by writing into contracts mandatory arbitration clauses.
Under a bill recently re-introduced by U.S. Rep. Anthony Weiner (D-N.Y.), the Federal Communications Commission would be responsible for setting minimum mobile-phone service standards and for compiling-as well as monitoring-consumer grievances. While monopoly landline telephone companies are required by the FCC to report on more than 30 categories of service quality every year, the wireless industry-represented by four or more carriers in each market-must make no such showing.
But Weiner’s bill, strongly opposed by industry and which died without a single hearing last Congress, is unlikely to fare any better this year.
“I’m not aware of any plans to move the legislation at this time but the issues certainly sound like they’d make a good hearing,” said Ken Johnson, a spokesman for House Commerce Committee Chairman Billy Tauzin (R-La.). Tauzin receives significant campaign funding from the telecom and electronics industries.
But all the complaints are not coming only from wireless consumers.
As a result of complaints from Verizon Wireless, the National Advertising Division of the Council of Better Business Bureaus-the advertising industry’s self-regulatory body-last week said it would refer the print advertising of VoiceStream Wireless Corp. to the FCC and Federal Trade Commission for review.
Verizon Wireless claimed Voice-Stream misrepresents its coverage area by not adequately disclosing holes in coverage areas.
“When any company repeatedly is found to misrepresent service it provides, governmental oversight is warranted,” said Jeffrey Nelson, a Verizon Wireless spokesman.
VoiceStream said the matter has been blown out of proportion.
“This is a dispute between two competitors. We agree to disagree with Verizon on the narrow point they raised,” said Brian O’Connorz, vice president for legislative and regulatory affairs for VoiceStream. O’Connor said Verizon raised many other points that were dismissed.
