WASHINGTON-The high-flying mobile-phone industry-poised to pick up its 100 millionth subscriber this week-could soon find itself in the throes of a major consumer backlash.
Complaints about mobile-phone service-including dropped calls, busy signals, dead spots, improper billing, false advertising and poor customer service-have begun to resonate with lawmakers, state attorneys general, policy makers and consumer advocates. Wireless consumerism is gaining momentum like no time in the past.
In Congress, Rep. Anthony Weiner (D-N.Y.) is rounding up cosponsors for a bill to require the Federal Communications Commission to set minimum standards for service quality and require the agency to compile as well as monitor complaints in a manner readily accessible by consumers.
Serena Torrey, a spokeswoman for Weiner, said a flood of complaints from mobile-phone customers in the Brooklyn-Queens district as well as the congressman’s own frustration with wireless service prompted the legislation.
“Our experience with AT&T Wireless Services has been enormously problematic for us,”said Torrey.
Statistics compiled by Weiner’s office revealed the FCC received 3,386 telephone inquires about wireless service and billing in 1997 and nearly 8,000 inquiries in 1999. FCC officials indicate that figure likely will double this year.
“We realize we had some problems over a year ago in New York because of the success of our AT&T Digital One Rate Plan,” said Ritch Blasi, an AT&T Wireless spokesman. “Since then, we’ve invested billions of dollars in the New York market to upgrade the capacity of network to handle all the added traffic. We want to provide the best service that we can, and realize New York is one of the most important markets in the world.”
Another congressman, Rep. Rush Holt (D-N.J.), has a bill that would ban mobile-phone spam. That legislation was prompted by complaints about wireless junk mail from AT&T subscribers in Holt’s district. AT&T said a third party-Plugout.com-spammed about 5,000 of its mobile-phone customers without its knowledge or consent. AT&T said it has installed filters to prevent unwanted wireless junk mail in the future.
A related measure sponsored by Rep. Heather Wilson (R-N.M.), designed to curb junk e-mail generally, was passed by the House last Tuesday.
In addition, Congress is considering a number of electronic privacy initiatives.
While those issues play out on Capitol Hill, all eyes are on the FCC as it nears a decision on a consumer group’s request for the agency to determine whether the telecommunications act pre-empts state courts from awarding monetary relief to remedy fraud and false advertising claims.
The petition, filed last July by the Wireless Consumers Alliance, stems from a consumer lawsuit against Los Angeles Cellular Telephone Co. The litigation is on hold pending the outcome of FCC matter.
Recent weeks have seen a whirlwind of lobbying by consumer advocates and wireless carriers, with each side arguing and rebutting the other side’s interpretation of federal law and recent state court rulings.
WCA claims the telecom law does not pre-empt states from making monetary awards in wireless consumer fraud lawsuits.
Mobile-phone carriers disagree, insisting that because monetary damages can impact rates, state courts cannot impose such penalties. Carriers base their argument in part on 1993 legislation that prohibits states from regulating entry and rates of commercial wireless carriers, leaving to states oversight of other terms and conditions of service.
“Numerous federal and state courts have rejected state court claims for damages against carriers where the award of damages would effectively constitute impermissible state rate regulation,” stated the Cellular Telecommunications Industry Association in a recent FCC filing.
The wireless industry is giving the matter high priority, fearing a negative ruling from the FCC could open the floodgates to a barrage of consumer lawsuits.
A decision is expected in the next two weeks. At least two FCC commissioners have voted, though there are no clear indications which way the agency is leaning. Last fall, the FCC ruled the telecom act does not shield wireless operators from state contract and consumer fraud laws. However, the agency was silent on the issue of monetary damages.
“In today’s competitive marketplace, wireless providers need to offer not only attractive service plans, but also high quality service,” said FCC Commissioner Gloria Tristani. “Carriers should be responding, but if they aren’t, consumers have recourse.
Some states are weighing in loudly in support of consumers.
“Wireless carriers must be subject to generally applicable consumer protection rules to ensure adequate protection of consumers’ rights in the telecommunications marketplace,” California’s attorney general told the FCC in a recent filing.
California’s attorney general, who last week sued long-distance giant WorldCom Inc. for false advertising, said during the past five years, it has “noted widespread unlawful and deceptive practices in the cellular industry.”
Among those backing WCA at the FCC are the Connecticut and Wisconsin attorneys general, Texas state regulators and Public Citizen, the consumer group founded by presidential longshot Ralph Nader.
