WASHINGTON-California Public Utilities Commissioner Susan Kennedy does not appear to have the votes for an alternative bill of rights for telecom consumers that would exempt mobile-phone carriers, but the rewrite is bound to score points with the new, pro-business Schwarzenegger administration in a way that could increase her political clout on other tech matters in the trend-setting state.
For mobile-phone operators in California and elsewhere, the future is now. While Kennedy likely will come out a winner regardless of the outcome of the proceeding, the wireless industry cannot afford to lose this one. A bill of rights that imposes a comprehensive set of consumer protection rules-covering everything from billing to privacy to advertising practices by California wireless carriers-could easily catch on with other state regulatory bodies across the country.
Indeed, it is the mobile-phone industry’s worst fear, the reason carriers have spent hundreds of thousands of dollars to snuff out the current plan. Industry’s adoption of a voluntary code of conduct has failed to persuade California regulators to hold their fire, though some PUCs have expressed support for it. On the legal front, the code of conduct has not dissuaded angry consumers and their lawyers from filing lawsuits against wireless carriers. At last count, the mobile-phone industry faced at least two dozen lawsuits, most taking issue with carrier billing.
Wireless carriers, whose objections to the bill-of-rights proposal have forced the California PUC to twice postpone votes on the plan, received good news last week when Kennedy signaled she would offer a new bill of rights applicable only to wireline telecom carriers.
Ross LaJeunesse, a Kennedy adviser, said the decision was made to take a different approach to telecom consumer protection after Kennedy decided Commissioner Carl Wood-author of the bill of rights-was not going to make changes to satisfy her concerns.
“This plan represents recognition by the more thoughtful members of the commission that one-size-fits-all regulation doesn’t work. The wireless and wireline industries are completely different animals and should be treated as such,” said Travis Larson, a spokesman for the Cellular Telecommunications & Internet Association.
LaJeunesse volunteered that while Kennedy was appointed by ousted Gov. Gray Davis-and before that was a deputy chief of staff to the Democratic governor-her position on the bill of rights is philosophically in sync with GOP Governor-elect Arnold Schwarzenegger. Kennedy also wants to put the brakes on a PUC effort to treat firms that offer voice over Internet the same as telecom carriers.
During the past two months, Kennedy and Commissioner Geoffrey Brown have met several times with industry representatives and consumer advocates on contentious issues in the bill of rights.
LaJeunesse said consumer requirements for mobile-phone carriers make little sense in view of the Nov. 24 implementation of a federal mandate enabling subscribers to move from one carrier to another without surrendering their phone numbers. In addition, LaJeunesse said there is compelling evidence wireless complaints actually have declined in relation to increased minutes of use in the mobile-phone industry.
LaJeunesse said Kennedy has met with many wireless chief executives on the bill of rights and was impressed with their presentations.
The Kennedy alternative is expected to be put out for public comment next month. LaJeunesse said Kennedy wants a vote on her measure before year’s end. But given the high stakes and controversy, that is unlikely to occur. Under commission protocol, both Wood’s bill of rights and the Kennedy plan would be on the same meeting agenda.
Reaction to Kennedy’s action was swift and direct.
Contacted last Thursday, Wood said he was not aware of Kennedy’s decision to offer an alternate bill of rights. But he said he was not surprised.
Wood, calling her the most conservative commissioner on the five-member PUC, said Kennedy has “shown a willingness to accommodate the demands of business rather than consumers.”
Wood expressed confidence that he and Brown-the apparent swing vote in the bill-of-rights battle-can work out differences and arrive at a compromise. Brown could not be reached for comment, but in the past voiced support for giving wireless subscribers greater protections that would stand up in court.
LaJeunesse said it is his understanding Brown wants the bill of rights to apply to wireless carriers.
Commissioner Loretta Lynch is seen as being in Wood’s corner, while Commissioner Michael Peevey-president of the California PUC-is likely to get behind the Kennedy plan. Peevey’s and Lynch’s offices did not return calls for comment.
Michael Day, a lobbyist for the Cellular Carriers Association of California, did not return a call for comment.
A top consumer group in California downplayed Kennedy’s move.
“I think this will have little impact on the outcome. Commissioner Kennedy has not placed consumer protection as a high priority so we didn’t expect her to support the bill of rights,” said Michael Shames, executive director of San Diego-based Utility Consumers’ Action Network. “We are confident that the majority of the commissioners will reject the notion that wireless carriers be exempted from the consumer protection rules that will be imposed upon all other telephone companies. So this report is more of a curiosity than a threat to the adoption of the rules.”
