Democrats take aim at un-'friendly' wireless carriers

WASHINGTON--Disgruntled Democratic senators on Wednesday renewed threats to impose new regulations designed to force more "consumer-friendly" policies on wireless carriers.

Curbing early termination fees, prohibiting companies from passing "deceptive" fees onto customers, reporting the number of dropped calls to government regulators and providing more accurate service coverage maps are among the requirements being considered in a bill touted at a morning hearing here convened by the Senate Commerce Committee.

If such a law were enacted, it would be a significant departure from today's relatively limited federal regulations in the wireless industry, which date back to the early years of the Clinton administration.

"I do not believe that this limited regulatory scheme is now working given the industry size and its domination by four major carriers," said Sen. John Rockefeller (D-W.V.), one of the bill's chief sponsors. "I believe it's time to revisit the entire regulatory framework that governs wireless service."

Unlike at a similar House of Representatives hearing during the summer, however, politicians didn't pay as much attention to the issue of device "locking" and also refrained from specifically criticizing Apple's iPhone being tethered to the AT&T network.

Sen. Byron Dorgan (D-N.D.), one of the chief sponsors of Net neutrality legislation in the Senate, said that the practice of "locking in phones, making them exclusive to one provider, and requiring consumers to purchase a new phone when changing carriers" is also a phenomenon that members of Congress need to examine. (The proposed bill largely punts on that issue, requiring a report to Congress on "handset locking and portability.")

Naturally, wireless companies aren't happy about the specter of increased government control. Verizon Wireless CEO Lowell McAdam told the committee such legislation was not only unnecessary but could be "harmful to the consumer." For instance, the bill's decision to allow not only federal regulators but also individual state authorities to enforce its many requirements will make it more complicated to do business.

"A set of regulations will establish a minimum requirement that when a carrier diverts from that minimum requirement, they will be questioned by regulators across the country," McAdam said. "All that will do is slow down a very innovative and dynamic industry."

Some wireless carriers have already begun addressing some of the complaints the Senate bill seeks to address, arguably in hopes of averting new regulations. For instance, on Tuesday, AT&T announced that next year it plans to begin prorating its existing flat rate, $175 early termination fee--a move widely believed to be timed to Wednesday's hearing. Verizon Wireless already initiated such a practice last year.

But other carriers need to be coerced by law into doing the same, supporters of the wireless bill said.

For smaller carriers with fewer customers over whom to spread their costs, it'll also be prohibitively expensive if the Senate goes ahead with a number of the bill's proposed mandates, including requiring carriers to provide customers with specially itemized invoices, to update maps quarterly to show coverage areas and to file semiannual reports with the Federal Communications Commission on number of dropped calls, said Mike Higgins, CEO of the Central Texas Telephone Cooperative.

"While the mandates are well-intentioned," the rural wireless carrier executive told the politicians, "the actual benefit to the public is significantly less than the substantial cost of compliance."

Consumer advocates at Wednesday's hearing sided with the need for new regulations. Patrick Pearlman, a consumer advocate with the West Virginia Public Service Commission, said neither the market, nor existing federal rules, have been adequate constraints on unreasonable or abusive wireless carrier practices.

"Consumers just aren't as happy as they ought to be," said Chris Murray, senior counsel for Consumers Union.

Senators themselves were among the complaining consumers. Sens. Amy Klobucher (D-Minn.), another chief sponsor of the wireless bill, and Rockefeller griped about lagging coverage areas in rural zones in their states. Sen. Claire McCaskill (D-Mo.) complained that even though she hadn't signed up for text messaging for her three teenage children, they managed to receive incoming messages on their phones, resulting in what she called "a horrendous situation."

A number of the Democrats also said they were troubled by the variety of fees, labeled "administrative" or "regulatory," tacked onto consumers' bills. In Rockefeller's eyes, wireless companies are "literally passing the buck for ordinary operating costs and tax liabilities" to their customers, and "that's not right," he said. Those complaints, however, were arguably a little ironic, since Congress is responsible for passing many of the laws that spawn regulatory fees--for instance, payments into a fund that subsidizes rural telephone service--in the first place.

Verizon Wireless' McAdam said his company has spent a lot of time making sure its bills are clear to customers, revamping the bill's design five times in its eight-year history based on customer feedback. He denied that the wireless firm was passing on operational costs to customers under the guise of government mandates, arguing that many municipalities layer on additional fees and taxes.

"We don't make a penny on any of it," he said. "There's no advantage to us to put these fees on the bill."

Republicans present suggested that if such problems exist, government regulation isn't the way to go about resolving them. They pointed to the fact that, with some of the most limited government regulation of any U.S. industry, wireless services have flourished, racking up some 230 million customers today, compared with only 9 million in its infancy in the early 1990s.

"Our government has consistently shown that it cannot effectively manage complex functions," said Sen. Jim DeMint (R-S.C.), citing complaints his offices receive daily from constituents about processing of food stamps and other government services. "To suggest we are going to design a system that more effectively protects consumers than a competitive market is well intended but naive."

If there are aspects of wireless service that are "performing significantly below other products or other services that are important to consumers," added Sen. John Sununu (R-N.H.). "I think that's where we need to look and take measured action."

[shanewalker]

What we NEED is mandatory phone unlocking!

The Europeans, once again, are waaaay ahead of us on this.

Pay of fee to unlock w/in a certain period, and take the phone
wherever you wish. Pop in the new carriers card and go.

It's how it should be. With wireless we've regressed back to the
1970s when you had to buy your phone from the phone
company...it made sense when the technology was new but now its
absolutely ridiculous.

[Renegade Knight]

Agreed.

Telephones are infrastructure. Any phone should work on Any carrier. The Feds screwed up when they didn't mandate that. Now I have crappy choices with my own carrier. I can't even find a good phone because most of them are 'pre locked' and the few that don't seem to be are sold with a contract that normally means a new line of service when all I need is a phone.

The Feds should right this ship ASAP.

[grossph]

Yup way ahead...not

So you think they are ahead of us...you do know that you pay for local calls in europe....next you will want us to do the same in the states...I think not...

I am not a big fan of locking a phone, but for the most part all phones are available from all carries (yes there are some and of course the iPhone is one of them)

[chris_d]

Verizon's and industry "innovation"

Verizon and innovation are two words that certainly don't go well together. About the only way Verizon is innovating is in finding new ways to nickel and dime customers. The locked phones are just great. Pay VZW every time you want to put something on or take something off the phone. Sure, you bought the phone, but Verizon still owns it.

Of course Congress, as usual, is clueless. The biggest issue I see is this locked-down phone issue. If carriers subsidize phones, I don't particularly see anything wrong with wanting an early termination fee to recover that. But I don't like the fact that if you bring your own phone, you still have to sign a contract to start service. I also hate it that all customers have to foot the bill for these phone subsidies. I don't get a new phone every year or two as a fashion statement, but I'm footing the bill for the people who do in higher subscription fees. I think the carriers should offer a credit to people who don't get new phones all the time but are loyal customers.

[Renegade Knight]

Plan B.

With a land line you can rent a phone, or buy your own and just plug it in and it will work. Cell companies should be the same. Bring your own phone, or rent one for 5 bucks a month(or whatever the rent would need to be to cover the phone).

No need to subsidize anyone.

[Pete Bardo]

Tough choice to make!

Cell phone charges and restrictions are crazy. It's all designed to force the consumer to stay with their current provider. Branded phones, early termination fees, confusing billing practices, misleading marketing--can you say free market?

Some phone companies even restrict what the phones can do. I've been struggling with data transfers from phones to a computer for backup. It's amazing what I have found. Many phones have complete data transfer available, but providers like Verizon restrict what can be transferred.

I have a camera phone and wanted to print the photos. I asked the Alltel agent, who told me the only was was to send them in a multi media message to myself--at a cost of $.25 each! What a scam.

Turns out she was wrong. I was able to find a cable ($10) and software (free download) to get the job done.

But there was no way to get my contact list off my Kyocera, so I ended up putting all those numbers in by hand.

You would think providers would figure out a way to make the switch easier, but I guess if it's easy to switch it could go either way for the provider.

Anyway you look at it, the cell phone service providers are in collusion with the manufacturers.

[waller]

let my cell phone go!!

I have to agree on both unlocking and the carrier still owning the phone. It is said to the consumer we need you to sign a contract in order to recoup the costs of the phone. But at the end of said contract they still are the only one you can use the phone with. When are we even (assuming you received a discount)? I paid full price for my treo (yes I know you can buy it direct and unlocked but I needed a new phone immediately) to avoid lengthy contracts and possible penalties for moving on to a more dependable carrier. Should I not be able to use the phone with another carrier if I so chose? This is only a way to keep the consumer from moving on to what they hope is greener pastures. The feds should come in and clean up there act. It is just like pro sports. It wasn?t until the threat of regulation was upon them (see MLB) that they bothered to clean things up.

[mpitogo]

Free my phone from tyrany

Yes, please! An open and free wireless market is what would spur
innovation. To compete for our dollars wireless companies have to
do more and if the consumer is not happy take their hardware to a
competitor. The other provider would be more than happy to
service a new customer and make them happy. Why is 3G for GSM
providers slow to market when Japan is already on 4G?

[fasteddiedyer]

Keep the government out

Stop early termination fee and then have to pay full retail for phone no discount. Look at your bill and see all the taxes and fees. Big Brother was able to charge all these because at the start mobile phones were car phones, as the phones became hand held the service was so expensive only businesses could afford them. So one screamed as the government added this fee and that fee. The cell service was only for business and rich people. Just a few years ago we stop paying a federal excise tax on telephone phones that was adopted to pay for the Spanish-American war. Government will just gum up the works, and if you don't think so look at the US Post Office.

[Mystigo]

Completely off subject

This is way off topic. Don't read this if that upsets you.

But why do people use the US Postal Service as an example of
incompetent government? For one thing, it's my understanding
that they are fairly autonomous, other then their rate structures
and international treaty obligations. But more importantly, thye
appear to do a phenominal job. They handle staggering
quantities of mail with amazing accuracy and speed. The cost to
mail a first class envelope in the United States is an absolute
pittance compared to any other delivery service. There are lots
of government services I wish could be even half as effective as
the USPS.

What am I missing?