Business Practices & Corporate Accountability News

BOSTON—Consumers and lawmakers are urging members of the Joint Committee on Telecommunications, Utilities and Energy to support consumer protections for cell phone customers as a key bill receives its hearing this week. The bill—The Cell Phone Users’ Bill of Rights (SB 1790, HB 3331)—was filed jointly by Representative Steve Walsh (Lynn) and Senator Jarrett T. Barrios (Cambridge).

Consumer complaints about cell phone companies’ unfair billing practices are skyrocketing, leading to calls for change from frustrated customers. Complaints to the Federal Communications Commission (FCC), which oversees the wireless industry, increased 92 percent –over the last two years. Earlier this month, J.D.Power and Associates, a business consulting firm, reported a 10% decline in overall consumer satisfaction with wireless service providers, the biggest year to year change since 1995.

“They [cell companies] act like they can charge customers whatever they want, whenever they want, even improperly, and not be held accountable,” complained Shari Goscinak, a former Verizon customer who complained about her service to MASSPIRG, FCC, and the Better Business Bureau.

“I was shocked at how the advertised come - on of $59.99 a month plus $9.99 a line can turn into $300 so quickly,” complained Jan Walker, a Cingular customer.

The dissatisfaction is confirmed in MASSPIRG’s March 2005 report: “Can You Hear Us Now.” That survey of 874 Massachusetts cell phone customers found that 42% of consumers reported having a billing problem with their provider and 68% reported dropped calls and other quality problems.

"The number of consumers that are unhappy with their cell phone providers, highlighted by the "Can You Hear Us Now" report, is eye-opening,” said Representative Steven Walsh. “I have been very pleased with the amount of support this piece of legislation has received and I am very optimistic that we as a Legislature will be able to make significant changes in the way Cell Phone Companies operate in the Massachusetts."

Among the industry shortcomings which outrage consumers are the widespread use of vague and misleading marketing, poor billing practices, a lack of customer service and the aggressive use of extended contract periods and high termination fees designed to tie consumers down and make it difficult to drop or change providers.

“It’s time for an end to unfair billing practices, outrageous early termination fees, and misleading marketing,” said Senator Barrios. “Consumers have had enough. It’s time we give consumers the power to protect themselves in a fair and competitive marketplace.”

Adding fuel to the consumer dissatisfaction fire said Deirdre Cummings, MASSPIRG’s Consumer Program Director, “is the massive consolidation in the wireless industry.” In the beginning of 2004, the industry giants included AT&T, Nextel, Sprint, Cingular, Verizon and T-Mobile. In October 2004, Cingular acquired AT&T, leaving five companies controlling roughly 80% of U.S. cell phone industry revenues. The most recent merger between Nextel and Sprint, approved in August, 2005 leaves only four companies controlling more than four-fifths of the market for cell phones in this country.

“History teaches us that such a high level of concentration in a major industry can be accompanied by excessive market power, which in turn can reduce competition resulting in poor service and quality and high prices. The cell phone industry is no exception,” said Deirdre Cummings, Consumer Program Director for MASSPIRG.

The Act to Establish a Cell Phone Users’ Bill Of Rights will receive a hearing on Tuesday October 4th. The bill includes the following consumer protections:

Better disclosure:
• All wireless contracts and marketing materials must clearly spell out the terms of the contract in an easy-to-read, standardized format so consumers can compare costs. The disclosures must be made available and accessible to consumers comparing prices and services.
• All providers must provide consumers with coverage maps that are as accurate as current technology would allow. These maps must be available on the provider's Internet site as well.

Billing:
• Cell phone bills must be clearly organized. All mandated government taxes, surcharges and fees required to be collected from consumers and to be remitted to federal, state, or local governments would be listed in a separate section of the bill and clearly itemized. This section of the bill may not include any charges for which the carrier is not required to remit to the government.
• Roaming calls must be itemized on the bill within 60 days of the call, and identify the date and location of the call.
• Charges from theft that arise after reported to the carrier may not be charged to the consumer as long as the consumer promptly reported the theft to the service provider.
• Consumers will be able to file billing disputes with the state utility commission and providers should not treat the disputed portion of the bill as late or terminate the contract or service for non-payment if the billing dispute complaint is pending with the state.

Service Quality:
• The DTE (Department of Telecommunications and Energy) would monitor service quality. Data should be collected and made publicly available so consumers can compare signal strength, dropped call counts and dead zones across carriers.

Service Contracts:
• Consumers would have a trial period during which a customer can cancel any new service contract without having to pay the hefty contract termination fee ($175-300). This gives consumer time to see whether the phone works where and how it was promised. Consumers would have 30 days to cancel after having received their first bill.
• Carriers can not extend a customer's contract without obtaining a customer's written permission. Currently, many consumers do not realize that they are extending their contracts by upgrading their phones or by increasing or decreasing the minutes in their plans.
• No contract for wireless telephone service can be longer than twelve months.
• Any material changes that the carrier makes to the contract must be provided to customers in advance, and customers would have a 30 day opportunity to terminate the contract without penalty and to receive a pro-rated refund of the charges they paid for purchasing a phone for the carrier's network.

Consumer Privacy:
• Carriers must obtain customers express permission prior to making cell phone numbers public. They may not charge a fee for keeping the number private.