Cell Phone Protections or Shackles?

Ron Benham paid $200. Raymond Corrie paid $175. Bruce Sotto was charged $150. These consumers weren't buying anything, they were trying to get rid of something that didn't work: cell-phone service.

When a toaster or a TV doesn't do what it's supposed to do, the customer's money is refunded. In the unregulated world of cell-phone service, just the opposite happens. Consumers actually pay for the privilege of canceling service that is defective or useless.

Cell-phone companies collect millions of dollars through these unfair termination fees, and they are fighting like crazy to keep it that way. Limiting termination fees is one of the goals of the California Public Utilities Commission's Telecommunications Consumers' Bill of Rights, a set of new rules now under consideration.

The new regulations will give cell-phone customers a 30-day grace period so, if service doesn't work as promised, the customer can cancel with no penalty or early-termination fees. Today, even the most reputable carriers only give about 14 days. This bill of rights will also require sellers to disclose early-termination fees in their advertising and highlight those fees in the contract, so there are no surprises.

As the PUC moves slowly and cautiously toward passing this and other basic consumer protections, the wireless companies are reacting as Chicken Little did to the acorn — predicting a disaster of absurd proportions. They've cooked up a bogus industry study that claims that the bill of rights will cost the industry billions of dollars to implement. After funding the so- called study themselves, they are now touting its self-serving "findings" in expensive, full-page newspapers designed to retain the status quo.

Can it really be that much more expensive to play fair? Taken as true, the study raises the troubling question of how dependent wireless profits are on these inflated termination fees, unauthorized sales of consumer information and inaccurate billing. That's certainly the impression a look at the complaints pouring into the PUC might give regulators.

That the debate has dragged on for more than three years is a testament to how doggedly and vociferously the industry opposes fundamental rules that are commonplace in many other industries. During the delay, cell-phone use has grown by leaps and bounds and has become indispensable to many consumers. But free-market service has too often meant dropped calls, confusing bills and exorbitant termination fees. Luckily, California regulators are taking the national lead in trying to assure that cell-phone customers get what they pay for when they purchase service and have remedies when they don't.

Fact: Many of the rules included in this bill of rights are already legal requirements for many telecommunications companies that do business in California. To date, these requirements could only be found in obscure and inaccessible legislative codes, making it impossible for consumers to understand and exercise their rights. The bill of rights allows consumers to better understand and assert their rights.

Fact: Wireless companies' claim that the bill of rights is not necessary because in their "competitive" industry consumers can vote with their feet is disingenuous. On the one hand, they say consumers can vote with their feet by leaving, but on the other hand they charge them more than $100 if they do.

Fact: All of the companies who would comply with these rules are doing quite well financially, especially the cell-phone companies. While they claim the costs of consumer protection rules are prohibitive, they have launched an expensive disinformation campaign against them, touting the industry's "voluntary" and anemic rules. The industry's voluntary code is not a genuine response to consumer dissatisfaction, but an attempt to dress up business as usual in flashy new clothes.

The PUC's goals are modest and well within its constitutional mandate. Regulation will not only ensure consumers fair treatment, it will provide a level playing field between competitive telecommunications companies in California. That shouldn't frighten anyone.