California on Thursday became the first state in the nation to adopt consumer protections for cell phone customers, after a four-year tussle with the industry.
The state Public Utilities Commission adopted the so-called Telecommunications Consumer Bill of Rights on a 3-2 vote.
The commission said it received more than 5,000 complaints from consumers last year about wireless companies; nationally, the Council of Better Business Bureaus said wireless carriers are the No. 2 topic of complaints filed with its bureaus, second only to auto dealers.
The regulation passed after an acrimonious debate about whether the reforms represented enlightened regulation or ham-handed meddling into the free market.
“These are ’Thou Shalt Not Deceive The Customer’ rules,” said PUC board member Geoffrey Brown, who wrote the proposal passed Thursday.
PUC board member Susan Kennedy, who wrote a proposal seeking to give carriers an escape hatch from the reforms, predicted the changes will fuel perceptions that California is unfriendly to business and ultimately drive more wireless carriers from the state.
“There is a high probability that this agency will screw up the competition that gives consumers all the choices that they have today,” Kennedy warned before the vote.
The reforms adopted Thursday dropped some of the provisions included under a tougher proposal drafted by PUC board member Carl Wood, who began exploring the bill of rights concept in 1999. Brown’s proposal excluded regulations involving the industry’s marketing practices and customers’ privacy rights.
Nevertheless, consumer activists hailed the new rules as a long-overdue breakthrough that could provide the regulatory framework for similar reforms in other states.
“This is the first state to take a look and make their telecom regulations appropriate for wireless,” said Tim Morstad, a policy analyst in the Austin, Texas office of Consumers Union.
The new rules are “a tremendous step forward for consumers in California and the rest of the United States,” Wood said.
Court challenge anticipated
Wireless industry leaders vehemently disagreed and promised to explore all options to overturn Thursday’s decision. “These rules simply represent a leap to judgment that is fundamentally inconsistent with a vigorous and competitive marketplace,” said Steve Largent, president of the Cellular Telecommunications & Internet Association, an industry trade group.
The industry doesn’t have to adopt many of the California reforms until late November. Other changes aren’t scheduled to take effect for another year.
Wireless carriers still hope to derail the reforms, possibly in court. The Cellular Telecommunications & Internet Association, an industry trade group, said it “will consider all possible options to challenge the unnecessary and sweeping rules.”
Supporters say the reforms will make wireless carriers more accountable by forcing them to do a better job explaining rates to customers and to provide better service. In one of the biggest changes, dissatisfied consumers will have the right to cancel their wireless service within 30 days of signing a contract.
Other key reforms include: Requiring all rates, taxes and other services terms to be clearly posted on the Internet; requiring all key contract terms to be listed in 10-point type so vital information isn’t written in fine print; requiring carriers to list the address and toll-free number of regulators to make it easier for customers to file complaints.
The reforms’ opponents, led by wireless carriers, contend the rules will create new layers of bureaucracy and impose new costs that will be passed on to consumers. The industry has estimated the price increases triggered by the rules could range from $4 to $17 per month.
Consumer groups are confident the reforms will benefit California’s 19 million wireless phone users.
“The wireless industry has made it clear that they’d rather spend millions on lobbyists and public relation campaigns than on implementing a few common sense rights that would ultimately keep their customers happy,” said Janee Briesemeister of Consumers Union.