WASHINGTON-As industry spotlights the latest wireless data innovations this week in San Francisco, another show will unfold just blocks away, where the California Public Utilities Commission opens hearings on a telecom consumer protection plan with potentially far-reaching implications for firms at the Moscone Center and throughout the rest of the country.
Hearings on a revised bill of rights for telecom consumers-one far less regulatory than the rule adopted last year-are set for Sept. 28-30 at a reconstituted CPUC that appears on course to overhaul by year’s end many disclosure, marketing, billing and contract guidelines otherwise opposed by Gov. Arnold Schwarzenegger (R) and the mobile-phone industry. Implementation of the current bill of rights was suspended in January so state regulators could re-examine the existing rule.
Commissioner Susan Kennedy, a Democrat and one-time aide to ousted governor Gray Davis, is leading the charge to rewrite the bill of rights. Kennedy appears positioned to pick up the support of CPUC President Michael Peevey (D) and John Bohn (R) when her plan comes to a vote in mid-December.
Commissioners Geoffrey Brown (D), whose compromise bill of rights won narrow approval by the CPUC in May 2004, and Dian Grueneich (D) are apt to vote against the Kennedy bill of rights.
Bohn and Grueneich are new to the CPUC. They were appointed by Schwarzenegger to replace Carl Wood and Loretta Lynch, Democrats and staunch consumer advocates whose terms ended last year.
The bill-of-rights battle pits Schwarzenegger and industry against consumer groups, disability advocates, state California Attorney General Bill Lockyer and Democrats who control the state legislature. The California Senate in May approved a bill of rights sponsored by Sen. Martha Escutia (D) and based on CPUC consumer protections for telecom consumers that are now on hold. However, the measure fizzled in the State Assembly. Even if the bill were to come up next year and win passage by the California legislature, Schwarzenegger likely would veto the measure. Such a veto would be difficult for the state legislature to overturn.
The mobile-phone industry has invested hundreds of thousands of dollars on lawyers and lobbyists in California in hopes of derailing the bill of rights and preventing it from materializing into a national trend. Indeed, the Massachusetts Senate Committee on Telecommunications, Utilities and Energy plans to hold a hearing early next month on a bill that would establish a bill of rights specifically for cell-phone consumers. The CPUC bill of rights covers wireless and wireline telecom carriers.
While cellular carriers prefer the Kennedy plan to the existing bill of rights, they have not backed Kennedy because they do not believe any new guidelines are necessary in light of intense carrier competition, industry’s voluntary code of conduct and existing consumer protection laws.
CTIA, the national wireless carrier association, on Sept. 16 offered up written testimony from in-house and outside experts on the Kennedy bill of rights.
William Schulte and Robert Johnston, former heads of consumer divisions at the California and Kentucky state utility commissions, respectively, argued the analysis of consumer complaints by the CPUC Office of Ratepayer Advocates is flawed.
“ORA provides no evidence that the issues supposedly identified in the `complaints’ contained in the database would actually be mitigated or eliminated by the proposed new rules,” said Schulte and Johnston. “If the proponent of rules cannot establish a link between a proposed rule and the problem it will resolve, it should not be adopted.”
Michael Katz, a chief economist at the Federal Communications Commission during the Clinton administration and now a professor at the University of California at Berkeley, said a new consumer protection rule should be considered only when there is a well-documented market failure. Katz noted that any such remedy should be targeted.
But, added Katz, “Even if current laws and regulations were found to be insufficient to enforce the rights and principles listed in Part 1 of the draft General Order, it would generally be more efficient to address these concerns at the federal level because the operations and service offerings of wireless providers are predominantly multi-state in nature and the concerns are not specific to California.”
Katz’s observation succinctly captures the wireless industry’s overarching strategy to convince the FCC and Congress to further pre-empt state regulation of mobile-phone carriers so that industry will have to answer only to uniform federal laws and regulations.
