WASHINGTON—Rep. Chip Pickering (R-Miss.), co-chairman of the Congressional Wireless Caucus, is asking lawmakers to join him in writing a letter to the Federal Communications Commission urging the FCC to declare that states have no jurisdiction over early-termination fees.
“In our view, there is no question that ETFs are part of a wireless carrier’s rates or rate structure. This is true because ETFs are part of the price customers agree to pay for wireless service and because they are part of carriers’ business plans for recovering their service costs,” reads a draft of the letter. “State legislation, litigation and regulatory efforts will spread if the FCC does not act quickly to stop these actions under its clear authority. State action to regulate this one aspect of rates charged by carriers would do more harm than good for consumers. Even one state law or court decision could jeopardize the nationwide or regional wireless calling plans that have benefited so many Americans, potentially resulting in higher costs and fewer service plans.”
Pickering’s office did not immediately respond to a request for comment, but the National Association of Regulatory Utility Commissioners said his office was circulating the letter.
The letter appears to be a consolation prize since pre-emption of wireless state regulation was left out of the telecommunications-reform bill passed by the House of Representatives. Wireless pre-emption, what the industry likes to call a nationwide framework, was included in the bill passed by the Senate Commerce Committee. The Senate bill, however, faces a significant hurdle since strong network-neutrality language was not included.
No state commissions are contemplating regulating early-termination fees today, NARUC President Diane Munns, a member of the Iowa Utilities Board, told RCR Wireless News.
Nonetheless, states should not be cut out of the process, said Munns, noting that early-termination fees are a part of the contracts that wireless consumers sign.
“State courts deal with contracts all of the time,” said Munns. “If it is a contract issue, you shouldn’t have to go to the FCC.”
Allowing state regulators to oversee early-termination fees would ensure that wireless carriers abide by the contracts signed by customers. “Cell-phone companies should keep up with their end of the bargain,” said Munns.
Wireless trade association CTIA asked the FCC more than a year ago to assert federal jurisdiction over early-termination fees.
In September 2003, following a three-year investigation, an administrative law judge for the California Public Utilities Commission proposed a $12 million fine against Cingular Wireless L.L.C. for allegedly charging early-termination fees and prohibiting refunds during a period when the mobile-phone carrier aggressively marketed its service without disclosing network problems to customers. The CPUC affirmed the fine the following year. Cingular has consistently denied any wrongdoing.
A new AARP survey found most cell-phone users support legislation giving consumers the right to terminate their cell phone service up to 20 days after receiving their first bill.Verizon Wireless announced in June that in September it plans to start pro-rating early-termination fees for customers who terminate their service contracts. The new policy, which the company has dubbed its Worry Free Guarantee, will gradually reduce the amount customers will owe for breaking their contract before it expires. The new policy will only apply to contracts signed or renewed after the policy is implemented.
