WASHINGTON-Gov. Arnold Schwarzenegger-despite lacking jurisdiction over the California Public Utilities Commission-is quietly pressing regulators to follow an executive order freezing pending regulations until their economic impact can be assessed, setting up a political showdown at the agency over an upcoming vote on a proposed bill of rights for telecom consumers.
“I know I do not have the authority to direct an independent constitutional agency like the Board of Equalization or the Public Utilities Commission to voluntarily comply with my executive order, but I do believe it will benefit all of California if you abide by the letter and honor the spirit of my executive order on a voluntary basis, and I encourage you to do so,” said Schwarzenegger in a Dec. 22 letter to PUC members obtained by RCR Wireless News last week.
Already the battle lines are being drawn over a request that would further delay PUC action on the controversial bill of rights. The proposal is popular with consumer advocates and influential media outlets around the state, but vehemently opposed by the state’s cellular carriers.
“We very much embrace the spirit of the letter from Governor Schwarzenegger and will certainly be looking to several areas of pending regulatory rules, including the bill of rights for telecommunications consumers, to assess in fact what the impact of those regulations would be on California’s economy,” said Pete Arth, chief of staff to PUC President Michael Peevey.
The $80 billion mobile-phone industry fears other states will follow California’s lead.
The Cellular Telecommunications & Internet Association cites an industry-funded study claiming the bill of rights would add nearly $6 to subscribers’ monthly bills, could lead to a loss of 12,000 jobs in the state and cost the California economy $6.9 billion in lost revenue. CTIA, breaking with its past practice of not interfering in state matters, has spent more than $200,000 on high-power industry lobbyists in California in hopes of derailing the bill of rights.
Peevey and Commissioner Susan Kennedy are seen as against the bill of rights, which was crafted by Commissioner Carl Wood. Indeed, Kennedy plans to offer an alternate plan exempting mobile-phone operators from any new rules. But it appears she lacks the votes to get it passed by the five-member commission.
Wood, on the other hand, appears to have backing from Commissioners Loretta Lynch and Geoffrey Brown, the latter being the key swing vote.
Ross Lajeunesse, chief of staff to Kennedy, said the commission supports Schwarzenneger’s request to abide by the 180-day regulatory moratorium. The directive was issued the same day-Nov. 17-that the GOP governor was sworn into office, following a raucous campaign to recall former Gov. Gray Davis (D).
Why Schwarzenegger decided to weigh in at the California PUC a month later-so close to when a vote on the bill of rights was to take place-is unclear.
Peter Siggins, Schwarzenneger’s legal adviser and the contact person in the PUC letter, did not return calls for comment.
Last Wednesday, a Schwarzenegger spokesman said it was doubtful he could get a comment on the governor’s position on the bill of rights and related questions.
Meantime, the California PUC is at war with itself over the bill of rights and, now, the Schwarzenegger letter.
“We really feel the commission has a history of acting with regard for the economic impact of its actions,” said Lajeunesse.
Kennedy, opposed to a state plan to regulate voice over the Internet and named last week by the Federal Communications Commission to a national commission on advanced telecom services, has become as much a beacon of hope for industry as Wood is a champion of consumers.
“It would be very unfortunate if the governor intervened against a consumer protection plan supported by every major paper in California and the state legislature,” said Wood. Wood, also overseeing an investigation of Cingular Wireless L.L.C.’s business practices that led to a proposed fine of $12 million, said he would like the PUC to vote on the bill of rights at its Jan. 22 meeting. That appears highly unlikely now.
Brown said he and Wood have narrowed their differences on the bill of rights, but he is realistic about the impact of Schwarzenegger’s letter. “There’s not question it will figure in the timing of this,” stated Brown.
Brown said rather than delaying a vote on the consumer bill of rights until April, the commissioners likely will work out a compromise to act by February. “I think we’re close … We’ve spent a lot time accommodating industry changes,” said Brown.
One consumer group views the regulatory freeze as a sop to California business interests.
“This is both a waste of taxpayer money and an abuse of power. The regulatory process is where a governor can slow and stop legislation that his contributors do not like. This executive order rolls back vital public protections and only serves the large industries that have fought tooth and nail to make sure they do not become law,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights.
On a related front, the Wireless Consumers Alliance last week protested a proposed nationwide settlement of a class-action billing suit against Nextel Communications Inc. WCA said the settlement-which offers consumers free minutes, is woefully inadequate.
WCA’s gambit could prove significant if the judge overseeing the case gives the consumer group standing to intervene. After WCA and other consumer groups challenged a settlement of a consumer class-action lawsuit against Verizon Wireless in San Diego Superior Court, the nation’s No. 1 mobile-phone carrier ultimately agreed to further concessions whose total dollar value could top $1 billion.
Last month, Judge Fernando Gaitan, of the Western District of Missouri, barred any further litigation against Nextel until the court rules on the pending nationwide settlement.
Meanwhile, a federal appeals court in the nation’s capital ruled Verizon Wireless and other wireless carriers can negotiate different deals with consumers. An Ohio woman first complained to the FCC and later sued, arguing she was discriminated against because other consumers got better plans than she received from Verizon Wireless.
