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Last Words
SCHUMER UNVEILS FIRST COMPREHENSIVE CELL PHONE USER BILL OF RIGHTS
By Senator Schumer
25/02/2003
In wake of last week's FCC decision, Schumer bill seeks to keep cell phone users from falling victim to kinds of anti-consumer practices that plagued local phone customers and have allowed a handful of companies to dominate local service
Schumer bill would mandate number portability to make it easer to switch providers and force carriers to provide better service; require providers to clearly disclose contract and service terms on all solicitations; improve monitoring of service quality and dead zones
US Senator Charles Schumer today unveiled a cell phone user bill of rights aimed at improving wireless service and making competition an ingrained part of the wireless industry. Schumer's bill would mandate number portability between companies; create a box with contract and service information on solicitations and contracts (similar to the Schumer box on credit card solicitations); and authorize the FCC to monitor cell phone quality.
Consumer complaints on issues ranging from billing to service quality to contracts with hidden costs are skyrocketing across the country. In New York, for example, the New York State Consumer Protection Board reports that cell phone complaints increased an incredible 1400% in 2001. Many users complain of getting get virtually locked into their plans because they can't keep their numbers if they switch providers, a particularly costly proposition for small businesses who rely on cell phones to stay accessible to their customers. According to In-stat/MDR, 52% of business cell phone users would be more likely to switch carriers if they could take their numbers with them.
"One of the great things about our free market system is that if someone does a bad job, you can find a better company and take your business there. One of the exceptions to that rule however, is the cell phone industry," Schumer said. "By preventing cell users from keeping their numbers when they switch providers, wireless companies effectively lock in consumers by artificially raising the costs for switching. If you're a small business owner who relies on a cell phone to stay in touch with customers, you can't switch providers when a cheaper plan is available because you can't risk losing touch with your customers."
With last week's decision by the Federal Communications Commission (FCC) upholding the rules meant to spur local phone competition serving as a stark reminder of the difficulty of inserting competition into the telecom industry, Schumer said his legislation is needed to keep these kinds of anti-competitive behaviors from becoming further ingrained in the wireless industry.
"Experience in the land-line sector shows that if we don't do anything to improve competition now, the current malaise will only become more entrenched," Schumer said. "The lesson here is that you can't set the rules of the game in the fourth quarter: it is very difficult to create a competitive market once patterns of behavior are set, networks are built, and major players established."
In an effort to address these issues, Schumer unveiled landmark legislation to improve competition in the cell phone industry entitled the Cell Phone Users Bill of Rights. Schumer said the bill is intended to foster competition in the cell phone industry by improving disclosure and making it easier for consumers to choose plans. Schumer said he rejected a mandate-based approach out of concern that external government fiats would stifle innovation and investment in the relatively young wireless industry. The Cell Phone Users Bill of Rights accomplishes this goal through three main initiatives:
• Number portability Although the FCC originally ruled that industry wide number portability needed to be in place by December of 1998, the Commission has extended that deadline five times under pressure from the industry to this November. The November deadline only applies to those companies who filed "bona fide" portability requests with one another by yesterday. The industry association has said it would seek another extension and industry critics are concerned that few companies will file those bona fide requests. Schumer said, however, that Verizon and T-Mobile told him yesterday that they would comply with the November rule and file portability requests.
To ensure that the rest of the industry follows suit, Schumer's bill would require the entire industry to be compliant with number portability by November 2003 or within six months of his bill's passage – whichever comes earlier – in the 100 largest market areas.
• Schumer Box on Cell Phone Solicitations and Contracts The bill requires marketing materials and contracts to clearly spell out the terms and conditions of service plans. When he was in the House, Schumer wrote legislation to improve competition in the credit card industry by encouraging full disclosure of credit card terms through what has become known as "Schumer Box" on credit solicitations and contracts.
The bill requires all wireless contracts and marketing materials to place a similar box containing standardized information on numerous key issues. All plans will have to disclose rate info, including calling-from area, monthly base charge, per minute charges for minutes not included in the plan and the method for calculating minutes charged. Information on minutes in the plan, including weekday/daytime, nights/weekend, long-distance, roaming, incoming and directory assistance will also have to be displayed. Termination and start-up fees and trial periods will have to be outlined as will any taxes and surcharges.
• Improving government monitoring of cell service The bill authorizes the FCC to monitor service quality industry-wide. Data will be collected and made publicly available so consumers can compare signal strength among providers, look at dropped call counts per carrier and compare dead zones across carriers. Most importantly, consumers will have access to high resolution maps that detail variations in call quality across a provider's service area.
"Adam Smith had it right: competition is indeed a wonderful thing when it forces players to improve their performance. Sometimes, you need rules in order to set the teams in motion. This is what the Cell Phone Users Bill of Rights does," Schumer said. AARP, the Consumers Union, Consumer Federation of America, National Association of Regulatory Utility Commissioners, National Association of State Utility Consumer Advocates are endorsing Schumer's bill.
Read the full press release
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