WASHINGTON-The nation’s top mobile-phone carriers asked a Minnesota federal court to stay a judge’s decision last Friday upholding a new state law going into effect next week that bans mobile-phone carriers from making significant changes to service contracts without obtaining written or verbal permission from subscribers.
The wireless carriers are expected to appeal the ruling shortly.
“We think it [Minnesota’s Article 5 ] is contrary to federal law prohibiting wireless rate regulation by the states,” said Travis Sowders, a spokesman for Sprint PCS.
Sowders said the timing of the appeal filing depends on how and when the Minnesota federal court rules on the carrier’s motion yesterday to stay U.S. District Court Judge John R. Tunheim’s decision.
The Minnesota wireless consumer protection law, whose July 1 start date was put on hold after a group of mobile carriers sued Attorney General Mike Hatch to prevent its enforcement, is scheduled to kick in next Wednesday.
Verizon Wireless, Sprint PCS, AT&T Wireless Services Inc., T-Mobile USA, American Cellular Corp. and others argued the state law at issue illegally regulates wireless carriers’ rates.
U.S. District Court Judge John R. Tunheim disagreed.
“Although Article 5 is directed at wireless providers, the court is no longer convinced that the law represents impermissible rate regulation,” stated Tunheim in his 16-page decision. “Article 5 manifests basic principles of contract law. Nothing in the law prevents wireless providers from charging any rate the market will bear. Nothing in the law caps wireless rates. Similarly, the law does not dictate whether a particular billing method is unreasonable . Instead, the law requires notice and informed consent to contract changes.”
The state law was prompted partly by consumer complaints about automatic renewal of their mobile-phone contracts. Once the contract was renewed, a consumer was forced either to remain with his/her service provider or pay an early termination fee to break the contract.
Sowder said Sprint PCS does not automatically renew subscribers’ long-term contracts.
