WASHINGTON—The California Public Utilities Commission, unable to reach a settlement with the nation’s No. 2 mobile-phone carrier, today affirmed a record $12.14 million fine against Cingular Wireless L.L.C. for breaking the state’s public utilities code.
The CPUC vote was 4 to 1, with Commissioner Susan Kennedy dissenting and withdrawing at the last minute an alternate proposal that would have reduced the Cingular fine to around $1 million.
The actual cost to Cingular Wireless, according to one source, could climb to $20 million because of early termination fees Cingular must refund to consumers as a result of the CPUC ruling.
The CPUC fine comes at a time when the wireless carrier is awaiting word from the Justice Department and Federal Communications Commission on its bid to acquire AT&T Wireless Services Inc. for $41 billion.
Last year, following a three-year investigation, a CPUC administrative law judge proposed a $12.14 million fine against Cingular for charging early termination fees and prohibiting refunds during a period when the mobile-phone carrier aggressively marketed service without disclosing network problems to its customers.
Several commissioners said the fine was fair, reasonable and backed by evidence in the record. Commissioner Carl Wood, author of the California bill of rights for telecom consumers, said the fine was too light and that those consumers with service problems who remained with Cingular Wireless to avoid paying hefty early termination fees should have been compensated.
“Cingular Wireless is extremely disappointed by the commission’s decision to adopt the administrative law judge’s proposed decision in its investigation against Cingular. For the commissioners to ignore the facts in this two-year case and issue the same result is hard to comprehend,” stated the company in a statement.
Cingular added: “This type of unreasonable, out-of-touch regulation makes doing business in California and meeting the needs of our customers far more difficult than virtually any other state. Cingular will continue to ensure that there is a full and fair consideration of the facts in this case from four years ago and an appropriate, truthful application of the law. Cingular will vigorously pursue all options available, once again highlighting the legal and factual errors in the decision approved today.”
