WASHINGTON-The California Public Utilities Commission last week denied industry’s request to reconsider a decision creating a bill of rights for telecom consumers, but not before the six national carriers filed lawsuits in federal court to overturn new state regulations.
The mobile-phone industry spent hundreds of thousands of dollars and lobbied California Gov. Arnold Schwarzenegger (R) in hopes of derailing a comprehensive regulatory regime that other states may decide to emulate. But its efforts fell short.
The all-Democratic, five-member CPUC, following months of negotiations with industry and consumer groups, narrowly approved the bill of rights on May 27. Commissioner Susan Kennedy unsuccessfully fought for a less-regulatory bill of rights. Likewise, Commissioner Carl Wood, original author of the bill of rights, could not muster three votes for his plan. In the end, Wood joined Commissioner Loretta Lynch in backing a third bill of rights penned by Commissioner Geoffrey Brown. Kennedy and CPUC President Michael Peevey voted against the bill of rights.
Angry wireless carriers asked the CPUC to stay the bill of rights rule, but the agency denied the request in August. Industry did not fare any better last week, as the CPUC in closed session rejected industry applications for rehearing.
The battle now shifts to the courts.
Two lawsuits have been filed in California federal court challenging the bill of rights. One was filed by Nextel Communications Inc. The other was filed jointly by Verizon Wireless, Cingular Wireless L.L.C., AT&T Wireless Services Inc., Sprint PCS and T-Mobile USA Inc.
Asked why Nextel filed solo, spokesman Timothy O’Regan stated, “Nextel filed separately because going forward we wanted the ability to manage the process independent of other wireless carriers’ legal approval.” For months, Nextel has been fighting other national wireless carriers over how best to fix interference to 800 MHz public-safety communications.
Nextel told a Los Angeles federal court the bill of rights is unconstitutional on numerous grounds and at odds with 1993 legislation banning states from regulating carrier rates and market entry. The same legislation left to states oversight of terms and conditions of commercial wireless service.
“Those overarching goals of the federal regulatory framework included enabling wireless carriers to function nationwide, free from the costly and inefficient influences of state regulation; ensuring national uniformity in the rates, terms and conditions of wireless service through the use of national operating and billing systems; and maintaining a stable regulatory environment to encourage investment in the wireless industry and in new wireless technologies,” stated Nextel.
The CPUC bill of rights, said Nextel, “obstructs and frustrates the achievement of these goals and thereby threatens the very harm to consumers and the public that Congress and the FCC sought to prevent.”
The other five national mobile-phone operators were equally critical of the bill of rights.
“The rules comprehensively micromanage essentially every aspect of the relationship between wireless carriers and their consumers, including content, format and type size of disclosure documents and contracts; the presentation of bills; levels of customer service; the resolution of billing disputes; changes to rates and other terms of service; imposition of early termination fees, late payment fees, interest on deposits and other charges; and service termination,” the carriers told the court.
The carriers also said the bill of rights “subject wireless carriers to an entirely new and highly prescriptive regulatory regime and foster the very kind of balkanized regulatory patchwork that Congress and the FCC have sought to prohibit.”
Two CPUC members who voted for the bill of rights predicted the new rule will withstand judicial scrutiny.
“The basic document and rules are sound legally and will be upheld,” said Brown.
Wood agreed. “I’m very confident we’re on very firm legal ground. Bring it on.”
Litigating the bill of rights does not free mobile-phone carriers from complying with it. Many of the rules kick in over the next six months. Nextel and Cingular Wireless have asked the CPUC for additional time to meet new requirements, specifically rules the two carriers say require changes to information technology and billing systems.
