WASHINGTON-The controversial California bill of rights for telecom consumers is about to go nuclear.
This week, only months after narrowly approving a rule creating scores of new regulations governing wireless carrier disclosure, marketing, billing and service, a newly configured California Public Utilities Commission is set to vote on a motion to stay last May’s bill-of-rights decision as a possible prelude to gutting the rule this year.
Commissioner Susan Kennedy, a pro-business Democrat who unsuccessfully fought to win passage of a watered-down bill of rights last year, is championing the effort to put the bill of rights on hold.
“These rules were rushed into place with the full knowledge that delays in implementation were inevitable. Hopefully the commission will take the time to fix what was obviously a flawed process that led to equally flawed rules,” said Kennedy in a statement last Friday.
In practical terms, the telecom bill of rights-which was to have gone mostly into effect last December-has never really gotten off the ground. There have been lawsuits, motions for more time to comply with it and a petition for rehearing. And there has been a lot of intense, high-level lobbying.
On Jan. 3, the CPUC granted mobile-phone operators a 90-day extension to meet most new guidelines in the bill of rights.
Meantime, Cingular Wireless L.L.C., Verizon Wireless, Sprint PCS, Nextel Communications Inc. and T-Mobile USA Inc. are challenging the bill of rights in federal court and in state appeals court. A federal court in Orange County is set to hear oral argument Jan. 31 on the CPUC’s motion to dismiss two lawsuits. Nextel filed separately from the other major carriers.
“It is clear from the volume and nature of the extension requests that compliance with key provisions of [the bill of rights] related to billing and computer systems will be greatly uneven among carriers, and there is significant risk of consumer harm if major changes are made to billing systems without adequate time for testing,” said Kennedy in her proposed ruling last week.
Kennedy said numerous requests from telecom carriers that need additional time to comply with the new rules as well as recent legal and regulatory developments justify a suspension of the bill of rights.
Kennedy and wireless carriers are anxious to move swiftly on the matter.
“It is our hope that consumers will soon be freed from these costly, confusing and arbitrary rules,” said Joe Farren, a spokesman for CTIA, the U.S. trade association of cellular operators.
Last May 27, the CPUC approved the bill of rights by a 3-2 vote. The independent state agency’s ruling angered Calif. GOP Gov. Arnold Schwarzenegger and the wireless industry. Wireless carriers spent hundreds of thousands of dollars on California lobbyists in hopes of derailing a measure they claimed would hurt the state’s economy and wireless subscribers.
The wireless industry reiterated those concerns in CPUC filings last week, which included supporting documents from Michael Katz, a Federal Communications Commission economist during the Clinton administration, and consultant Mark Lowenstein, managing director of Mobile Ecosystem. CTIA paid for both reports.
With California moving aggressively on the consumer front, there is fear other states may try to enact their own wireless regulations based on the California model.
In December, Schwarzenegger replaced outgoing Democratic commissioners Carl Wood and Loretta Lynch. Wood, original author of the bill of rights, joined Lynch and Commissioner Geoffrey Brown in winning passage of the bill of rights last year.
Wood and Lynch are being replaced by Republican Steve Poizner and Democrat Dian Grueneich. Poizner is the former chief executive officer of Snap Track Inc., which was sold to Qualcomm Inc. in 2000. Grueneich’s background is in energy and environmental law.
The two Schwarzenegger appointees will be sworn in Tuesday and can vote on CPUC matters for a year as they await Senate confirmation.
The CPUC vote on the Kennedy motion to suspend the bill of rights is scheduled for Thursday. If Kennedy wins backing from one of the two new commissioners, the next step could be to dilute, if not repeal, the bill of rights.
“I think it [Kennedy’s move] is out of order, irregular and illegitimate,” said Brown, whose compromise bill of rights ultimately was approved by the CPUC. Last year, Brown and Wood secured backing from top California newspapers for the bills of rights. Brown is expected again to enlist the support of newspaper editorial boards in the state.
Consumer advocates are outraged, with one predicting intervention by the state legislature.
“The shameless attack by the wireless industry on the CPUC rules is designed to prevent effective relief for consumers against well-documented marketplace abuse by the industry. A decision suspending these rules will be based on political muscle-not on the interests of consumers,” said Carl Hilliard, president of Wireless Consumers Alliance.
Michael Shames, executive director of San Diego-based Utility Consumers’ Action Network, called Kennedy’s “broadside against California consumers” a distressing-yet expected-development.
“If Kennedy succeeds, then the California legislature is poised to raise the stakes for Gov. Schwarzenegger. The Democrat-controlled legislature is prepared to respond to a CPUC reversal by codifying the existing rules and sending it to the governor’s desk,” said Shames. “At that point, Schwarzenegger will have to explain to voters in 2006 why he felt he had to take away consumer rights that were in effect prior to his CPUC appointments and then veto the consumer rights adopted by the Democrats in 2005.”
Christine Mailloux, a telecom attorney for the San Francisco-based Utility Reform Network, argued a stay of the bill of rights is not warranted.
“Carriers have been attempting to implement these rules since May. A quick review of the pending motions does not reveal any recent major developments or changes in circumstances as to why everyone must rush to have a stay at this point,” Mailloux told the CPUC.
