Consumer Federation of California

SB
831 (Lowenthal) would establish a minimum standard of consumer
protections for cell phone subscribers ‘ including allowing 10 days
after receiving the first bill to cancel contracts without exorbitant
penalties

On April 24th, cell phone users came one step closer to winning
critical consumer protections after the Senate Energy, Utilities and
Communications Committee approved Senate Bill 831 (D- Lowenthal). The
bill would establish a minimum standard of consumer protections for
cell phone subscribers that has been sorely lacking since the repeal of
the ‘Telecommunications Consumer Bill of Rights’ by the California
Public Utilities Commission (PUC) in 2005. The vote in the Committee
was 5 Aye and 3 Nay.

The vote split along partisan lines, with the ‘Aye’s’ including
Democratic Senators Alex Padilla, Joe Simitian, Mark Ridley-Thomas,
Patricia Wiggins, and Christine Kehoe. Those voting ‘Nay’ on the
Committee were Republican Senators Robert Dutton, Dave Cox, and Jim
Battin. Democratic Senator Ron Calderon was not present for the vote.

"The cell phone industry ranks number one among all industries in consumer complaints filed with the Better Business Bureau,’ said Richard Holober, Executive Director of the Consumer Federation of California, which
is the sponsor of SB 831. ‘Consumers have put up with deceptive
contract terms, poor phone reception, excessive early termination fees
and inadequate customer service for long enough.’

UPDATE: On June 7th, Senate Bill 831 (Lowenthal), our
legislation to establish a sorely needed minimum standard of cell phone
consumer protections – including cancellation rights and pro-rated
early termination fees – was defeated in a close Senate floor vote. The
final tally read 17 Ayes, 21 No’s, and 3 Abstentions (which is the same
as a No vote).

SB 831 provisions include:

‘ Gives consumers either 30 days – or 10 days after receiving their
first bill (whichever is later) ‘ to evaluate their phone service
before being locked into a one or two year service contract subject to
steep early termination fees;

‘ Phases out early termination fees, which can reach $200 or more, so a
cell phone subscriber canceling after 23 months is subject to a lower
penalty than someone canceling after only 2 months;

‘ Requires that each bill statement includes information allowing
subscribers to more effectively dispute unauthorized calls made on a
lost or stolen cell phone;

‘ Prohibits a third party retailer from charging additional early
termination fees on top of the termination fee charged by the phone
carrier;

‘ Allows subscribers to cancel contracts without paying early
termination fees when a phone company unilaterally raises rates during
the life of a contract;

‘ Limits the terms of a mobile telephone contract to no more than two years.

Supporters of the legislation cited the fact that cellular phone
industry competition is decreasing. Just three years ago, consumers
could choose among six major cell phone companies. Today, four cell
companies control 80% of the US market. Industry consolidation is
directly tied to increasing complaints, according to Consumers Reports
magazine.

Click here to read our SB 831 fact sheet.

Testimony
in support of the bill was provided by numerous consumer rights,
senior, and labor organizations, including Richard Holober of the
Consumer Federation of California, Lenny Goldberg of TURN, Bill Julian
of AARP, and Hellan Roth Dowden of the California Community Technology
Policy Group. Opposition testimony was provided by cell phone industry
lobbyists and other business trade groups, including the Cellular
Telecommunications & Internet Association.

The PUC, responsible for protecting cell phone consumers,
recently revoked the ‘Telecommunications Consumers Bill of Rights’ ‘
regulations it had adopted in 2004 to restrain some of the industry’s
worst practices. Despite consistently high levels of consumer
complaints, the current PUC has clearly stated that it opposes
regulation of the cell phone industry. Thus, the only venue available
for phone users to address these problems is the California
legislature.

‘Cell phone companies are merging, competition is decreasing, customer
service is deteriorating, and yet California cell phone subscribers
have little or no protection against industry abuses,’ said State
Senator Alan Lowenthal (D- Long Beach). "SB 831 would establish a
minimum standard of protections that every cell phone subscriber needs
and deserves.’

The next stop for SB 831 is the Senate Appropriations Committee on May
14th. Additional bill supporters include: California Labor Federation,
AFL-CIO, Communications Workers of America District 9, Latino Issues
Forum, CALPIRG, and the California Alliance for Retired Americans.
(Partial list)