Calif. suspends wireless protections

[WirelessBeachBum]

By MICHAEL LIEDTKE, AP Business Writer
Published Thursday, January 27th, 2005


SAN FRANCISCO (AP) - California utility regulators on Thursday suspended an 8-month-old crackdown on abusive practices in the wireless telephone industry, rebuffing the protests of consumer activists and the state's top law enforcement officials.
The California Public Utilities Commission's 3-1 decision represented a dramatic about-face from last May, when the same agency passed the nation's toughest wireless phone regulations.

The sweeping overhaul was known as the Telecommunications Consumer Bill of Rights.
Since then, the PUC's makeup has changed with the terms of two commissioners expiring. Both of those departed commissioners, Loretta Lynch and Carl Wood, played pivotal roles in getting the consumer rights bill approved after four years of wrangling.

Rampant consumer complaints alleging false advertising and confusing billing practices prompted the PUC's push to hold the wireless phone industry more accountable for its conduct.

PUC board member Susan Kennedy vehemently disagreed with the crackdown. She spearheaded the drive to suspend the rules, saying it had become evident that the regulations imposed too many unreasonable burdens on an industry that has become vital to the California economy.

PUC President Michael Peevey, who also voted against the rules last May, sided with Kennedy, as did Dian Grueneich, who is completing her first week on the job after being appointed by Gov. Arnold Schwarzenegger last month. Schwarzenegger has appointed high-tech entrepreneur Steve Poizner to fill the PUC's remaining board seat.

Consumer activists are worried that Thursday's vote signals a shift in PUC sentiment.

"I fear what we are going to start to hear is that what's good for business is necessarily good for consumers, and we know that's just not so," said Robert Finkelstein, executive director for The Utility Reform Network.

Kennedy described Thursday's action as a constructive move to clean up the flaws in the original reforms.

Without a regulatory time-out, Kennedy said California's 19 million wireless phone users ultimately would be hurt because some carriers would raise their rates while others would abandon the state entirely. She pledged revisions and to revive the consumer bill of rights by the end of this year.

She said existing laws will enable regulators to rein in wireless carriers if there is evidence of customer abuse before another consumer bill of rights is drawn up.

PUC member Geoffrey Brown, who drew up the rules approved last May, strongly opposed the suspension.

The decision also provoked objections from consumer groups, state Attorney General Bill Lockyer and all 58 district attorneys in California.

The district attorneys say widespread consumer complaints about the wireless phone industry are diverting their attention from other law enforcement issues.

The safeguards were supposed to make wireless carriers do a better job explaining their rates and other features of their service. The reforms are highlighted by a provision giving dissatisfied customers the right to cancel their wireless contracts without penalty within the first 30 days of signing up for a service.

Other significant changes include: a mandate for clearer explanations of all rates, taxes and fees; a requirement that all contract terms be listed in 10-point type so vital information isn't listed in fine print; and more assistance for non-English speaking customers.

The wireless phone industry, which had railed against the rules as regulatory overkill, welcomed the relief provided by Thursday's decision.

"The rules would have set California on a path toward higher prices, fewer choices and less information for consumers," said Steve Largent, president of Cellular Telecommunications & Internet Association.

Consumer critics believe wireless carriers exaggerated the impact of the consumer rights bill to coerce regulators into backing off.

"If wireless companies dedicated as much energy and resources toward providing their customers with fair and honest service as they have toward fighting against this (bill of rights), they would have little reason to fear cancellations and lost customers," said Joseph Ridout, consumer services manager for Consumer Action.