WASHINGTON-Cingular Wireless L.L.C. said it will challenge a record $12 million fine levied by the California Public Utilities Commission for violating state telecom laws.
Cingular, jointly owned by SBC Communications Inc. and BellSouth Corp., said it was appalled and shocked by the decision.
“Even a cursory review of the decision reveals that it is fatally flawed from both a legal and factual perspective regarding Cingular’s service levels and performance throughout the state,” said Michael Bennett, executive director of external affairs for Cingular. “Cingular is deeply concerned that the decision may have been motivated by other intentions rather than to address any actual improprieties in any Cingular practices.”
Cingular has 30 days to appeal the decision to the five PUC commissioners.
The ruling was issued by a PUC Administrative Law Judge Jean Vieth in San Francisco only hours after industry officials in the nation’s capital unveiled a voluntary code of conduct that attempts to address some of the very issues cited in the state’s year-long probe of Cingular.
Though Vieth is the presiding officer of the Cingular investigation, PUC Commissioner Carl Wood has oversight of the case. Wood is the architect of a bill of rights for telecom consumers, which is up for vote at a Sept. 18 PUC open meeting. However, there are indications that heavy lobbying could cause the item to be pulled from the agenda.
Vieth came down hard on early termination fees-ranging from $150 to $500-that Cingular and its agents imposed on subscribers who wanted to cancel contracts between January 2000 and May 2002.
“Given Cingular’s own testimony to the PUC that testing wireless service by using the phone is the best way for a customer to ascertain whether the service meets his or her needs, binding that customer in advance to a one- or two-year contract constituted an unjust and unreasonable rule and resulted in inadequate, unjust and unreasonable service in violation of Public Utilities Code and a previous commission decision,” the PUC press release stated.
Vieth said Cingular’s business practices became more egregious during 2001 when its engineers struggled to accommodate a spike in subscriber growth-due to successful advertising and marketing-but “made no effort to disclose its network problems to customers by any means and, in spite of these problems, continued to prohibit returns/refunds and require early termination fees for early cancellation of wireless service contracts.”
In addition to the $12.14 million fine, Cingular is also ordered to reimburse customers who paid early termination fees during the year-and-a-half time period at issue.
“This represents the beginning of the states moving forward to protect consumers,” said Carl Hilliard, president of the Wireless Consumers Alliance.
