WASHINGTON-As the California Public Utilities Commission heads toward a vote next week on three bills of rights for telecom consumers, a contentious four-year proceeding pitting consumer advocates against the mobile-phone industry has turned into a high-stakes, political chess game whose outcome ultimately could be decided by GOP Gov. Arnold Schwarzenegger.
The bill of rights issue is now in the political arena, where anything is possible.
The outcome is critical for the mobile-phone industry, which could see a new regulatory regime-which would change the way carriers do business and by extension throw a wrench in the cost structure of service providers-migrate from California to other states.
Scott Ford, chief executive officer of Alltel Corp. and chairman of the Cellular Telecommunications & Internet Association, told the Senate Commerce Committee last week that state efforts to regulate wireless carriers represent a huge emerging problem for industry.
The bill-of-rights brawl got even more complicated last week with the release of two new proposals by Democratic commissioners Susan Kennedy and Geoffrey Brown.
The new plans, which would govern certain carrier activities and give consumers avenues to seek redress for grievances, come in response to the original bill of rights authored by Commissioner Carl Wood (D).
Wireless carriers and consumer advocates will have only this week to reply to the Kennedy and Brown plans, with a May 27 vote in serious play.
Of the three initiatives, Wood’s is the most regulatory and consumer friendly. Kennedy’s alternative is the most deregulatory, while Brown’s approach represents a compromise of sorts between the two that the former San Francisco public defender says can withstand legal challenge.
The political component remains key. Any bill of rights approved this year likely would have to survive the scrutiny of two new commissioners Schwarzenegger will appoint to the PUC next year.
Until recently, Brown, the PUC’s swing vote, was working with Wood, who also had the backing of Commissioner Loretta Lynch. That gave Wood enough votes to win approval of his measure by the five-member PUC.
But it all fell apart two weeks ago when Brown decided to go his own way, stripping out advertising regulation, controversial privacy provisions and other rules. “I think I have made the kind of changes that industry can live with … I think this is a soft landing for industry,” said Brown. Brown said his plan gives consumers and wireless carriers a roadmap for the future.
While a newly revamped PUC next year likely would be tempted to disassemble the Wood bill of rights, Brown said the commission would have to think twice about trying to gut his plan.
“I think the heart of this thing is transparency and fair dealing, and I think this is preserved,” said Brown.
Kennedy’s plan covers wireline and wireless carriers, a change from her previous intention to exempt mobile operators from any new rules. Kennedy, who like Brown has been lobbied by Schwarzenegger and his staff, has been persuaded by wireless industry arguments that overly burdensome rules would hurt the sputtering California economy and are largely unnecessary in light of declining complaints by wireless consumers.
“The wireless telecommunications industry is the most intensely competitive industry in the world right now. Customers are being offered new products and services every day. Consumer complaints are dropping. Regulators have a responsibility to tread carefully and focus only on real problems, and that’s what my plan does,” said Kennedy.
But the wireless industry, which has spent nearly $600,000 to lobby against the bill of rights, declined to embrace any bill-of-rights plan late last week.
“Although we have not had time to digest these new proposals, we question the need for any rules to be imposed on the hyper-competitive wireless industry,” said CTIA President Steve Largent. “With subscribership on the rise, complaints declining below 0.03 percent, and a multiplicity of carriers and options for wireless consumers, these proposed rules are a solution looking for a problem. They are a clearly unwarranted government intrusion in a marketplace that is functioning well.”
PUC President Michael Peevey (D), a former energy industry executive, has not been active on the bill-of-rights proceeding. Peevey’s inclination, however, is to favor less regulation.
PUC commissioners can seek to reconsider votes, while industry has the option of appealing PUC rulings in court.
Consumer activists have watched their favored Wood plan marginalized in recent months. “The CPUC is a balance wheel that protects wireless consumers from the excesses of the marketplace. The bill of rights does not provide any remedies that are not now available under state consumer protection laws,” said Carl Hilliard, president of the Wireless Consumers Alliance.
