WASHINGTON-California state Sen. Martha Escutia (D) last Friday vowed to pursue a law creating a bill of rights for telecom consumers similar to the one utility regulators approved in 2004, but that was overhauled last week.
“Six years of effort and this was the best they could do,” said Escutia, noting the California Public Utility Commission began the proceeding in 2000. “The commission totally ignored the evidence provided by consumers, but it is another example of how this commission ignores the needs of the average citizen.”
State regulators and mobile-phone carriers argued the market has changed drastically since 2000, making out of date and unnecessary the bill of rights approved by the CPUC in May 2004. Instead of a litany of rules in a competitive wireless marketplace, the CPUC decided to beef up enforcement and its complaint resolution process, specifically creating a telecom consumer fraud unit intended to act as a watchdog.
Escutia said that while increased enforcement and consumer-education efforts are important and needed, they are not a substitute for strong consumer-protection rules such as requiring clear disclosure of rates, terms and conditions of service and requiring companies that market in a language other than English to provide contracts and disclosures in that same language.
The CPUC, voicing concern about the language-barrier challenge and minorities possibly being targeted for fraudulent practices, said it would study the issue and publish a report. The five-member agency also adopted a rule banning cramming, the placement of unauthorized charges on consumers’ phone bills.
But Escutia only had scorn for the new bill of rights.
“The commission could have prevented problems before they occur had they approved the [Dian] Grueneich proposal,” said Escutia, reacting to the new bill of rights. “Instead, the commission will step in only after a customer gets ripped off, and even then the customer might not get any help because the commission has failed to adopt any clear rules to enforce. Given the failure of the CPUC to protect consumers against the worst of the abuses, it is now time for the legislature to act. I’ll pursue my [bill] to create some common-sense rules for the cellular telephone companies and see if we can right the CPUC’s wrong.”
The California Senate approved Escutia’s bill last year, but it died in the Assembly. Even had Escutia’s bill of rights cleared both chambers in the state legislature last year, GOP Gov. Arnold Schwarzenegger likely would have vetoed it and it is doubtful the legislature could have overridden such a veto.
But Schwarzenegger is not the popular celebrity governor he once was, facing a touch re-election. As such, a change in leadership in Sacramento could change the political calculus for Escutia’s bill should it win passage by the full legislature in the future.
The catalyst for Democratic legislative rumblings in California was the divided CPUC’s vote last Thursday to replace the existing consumer telecom bill of rights with one far less regulatory and highly dependent on state enforcement.
“This decision is a prime example of the commission’s desire to use the power of market forces whenever possible in lieu of commission edict,” said CPUC President Michael R. Peevey. “Static rules in a dynamic, competitive environment are not the best use of this commission’s resources. Instead, we should be providing timely information to educate consumers and promptly enforce our rules. These basic principles will stand the test of time even as the telecommunications market continues to evolve.”
The Peevey plan was largely crafted by former commissioner Susan Kennedy, a pro-business Democrat who left the agency to become chief of staff to Schwarzenegger in January.
Peevey, also a pro-business Democrat, was joined in today’s vote by Schwarzenegger-appointed GOP Commissioners John Bohn and Rachelle Chong.
Grueneich, a Democratic put on the CPUC by Schwarzenegger, picked up qualified support from Commissioner Geoffrey Brown for an alternate plan with fewer wireless guidelines than the existing bill of rights but more regulatory than the Kennedy-Peevey proposal.
“While I will work with my fellow commissioners and our staff on developing an enhanced education and enforcement program, I am skeptical of the efficacy of the program given that there are no underlying rules to enforce that apply to all carriers,” said Grueneich. “I am concerned that starting a new multimillion-dollar statewide education campaign is not the best use of ratepayer dollars, given the lack of enforceable rules on which to educate customers.”
Brown called the new Kennedy-Peevey bill of rights “an inducement to massive, pervasive and unaccountable fraud” and a “deception designed to hoodwink the public into thinking the PUC is actually protecting them.”
By the same 3-to-2 margin as last week’s vote, the CPUC in 2004 approved a Brown-authored bill of rights containing new guidelines governing disclosure, billing, marketing and other business practices of wireless carriers and other telecom operators. The mobile-phone industry and Schwarzenegger were highly critical of the 2004 ruling. The wireless industry preferred the Kennedy-Peevey bill of rights over the Grueneich plan, but argued no new state wireless regulations were necessary.
Still, the CPUC decision is a major victory for industry.
“Today’s decision will keep the California wireless consumer in the driver’s seat. Consumers are best served when given the power to make product and service decisions that fit their individual needs. Today’s decision will allow this important wireless consumer right to continue,” said Joe Farren, a spokesman for wireless industry trade association CTIA.
CTIA spent hundreds of thousands of dollars in lobbying against the bygone bill of rights crafted by Brown and former commissioner Carl Wood.
