September 7, 2007
Washington, D.C. – Senators Amy Klobuchar (D-MN) and Jay Rockefeller (D-WV) today unveiled legislation aimed at empowering the 200 million cell phone customers nationwide to make informed choices about a wireless service that best fits their needs and their budget.
The Cell Phone Consumer Empowerment Act of 2007 will require wireless service providers to share simple, clear information on their services and charges with customers before they enter into long-term contracts; a thirty-day window in which to exit a contract without early termination fees; and greater flexibility to exit contracts with services that don’t meet their needs.
“The rules governing our wireless industry are a relic of the 1980’s, when cell phones were a luxury item that fit in a briefcase instead of a pocket,” said Klobuchar. “Early termination fees are a family budget-buster; families should be able to terminate service without outrageous fees; know if their cell phone will work on their drives and in their home and office; and understand what to expect in their monthly bills once you pile on charges and fees. It’s a simple matter of fairness.”
“Anyone who’s looked at a cell phone bill knows it’s a hodge-podge of fees and surcharges that supposedly cover regulatory or administrative costs,” said Rockefeller. “The reality is, often these are nothing more than operating costs that the companies are passing on to the consumer disguised as fees and taxes. It’s high time to protect cell phone users from these deceptive billing practices.”
Among the bills provisions are: detailed data on coverage areas and dropped calls provided to consumers before committing to a long-term contract; pro-rated early termination fees for those who exit their contract after thirty days; the ability to exit a contract within thirty days without a termination fee when wireless service is found to be unsatisfactory; and transparency in contracts and billing, including explanations of taxes and fees.
The legislation also calls upon the FCC to study the practice of “locking” phones – making them exclusive to one service provider and requiring consumers to purchase a new phone when changing carriers.
The Cell Phone Consumer Empowerment Act will be introduced in the Senate on Friday. Earlier this week, Senators Klobuchar and Rockefeller sent a letter to Chairman Inouye requesting a hearing before the Commerce Committee.
THE CELL PHONE CONSUMER EMPOWERMENT ACT OF 2007
•EARLY TERMINATION FEES (ETF)
-The FCC shall set forth regulations to pro-rate ETFs. At a minimum, the ETF for a 2-year contract shall be reduced by ½ after 1 year.
•MAPPING AND SERVICE QUALITY
-Maps are to be detailed enough to identify whether or not a consumer shall be able to receive wireless service at the consumer’s home.
-Wireless providers shall provide the FCC with information on dropped calls and coverage gaps; and the FCC shall make this information publicly available.
•DISCLOSURE REQUIREMENTS FOR PLANS AND CONTRACTS
-Publication of the terms of a wireless plan shall include information on: contract terms; charges; minutes; information on taxes and surcharges; wireless E-911 service; and other information that the FCC considers appropriate.
-This information shall be given to a consumer prior to entering into any contract.
-Taxes and fees shall be set forth in a separate section of the bill; and roaming charges shall be separately itemized and sent to a subscriber not later than 60 days after such calls were placed.
-Carriers will not be able to list charges or fees other than fees for the wireless service and any charge expressly authorized by federal, state, or local regulation.
•CONTRACT EXTENSION, MODIFICATION, OR RESCISSION
-Extension: An extension of a contract shall not be valid unless the wireless provider provides point-of-sale notice of the extension to the customer and allows the customer to cancel the extension within 30 days after such notice.
-Modification: Wireless carriers must provide subscribers with written notices of changes in rates and terms at least 30 days before such changes are to take effect.
-Rescission: A contract for wireless service may be canceled upon the request of a subscriber for any reason up to 30 days after entering into the contract.
•REPORT ON HANDSET PORTABILITY AND HANDSET QUALITY
-The FCC shall submit a report to Congress that studies the practice of handset locking in the United States and the effect of handset locking on consumer behavior and competition.
•TERMINATION OF CONTRACTS FOR ARMED SERVICE PERSONNEL
-U.S. military personnel may terminate their cell phone contracts if, during the term of the contract, the member receives orders for deployment outside of the U.S. for a period of not less than 90 days.
-The FCC shall enforce the legislation’s provisions and the attorney general of a State, or the public utility commission of a State may bring a civil action in federal district court or establish or use existing administrative procedures to enforce the Act’s provisions.
-The Act preempts state law, except that the Act does not preempt state laws that provide additional protections to wireless subscribers.
Alas, this is in the U.S. and just a proposal. Meanwhile, here in New Zealand we have two mobile operators on a comfortable position with 50% of the market each, running their own set of rules, with contracts locking customers in (and out), early termination fees that are not reduced half way through contracts and billing systems so badly designed and implemented that there is no month without people complaining of wrong charges in their accounts.
Currently all Vodafone New Zealand handsets are unlocked and I can imagine in twelve months time (or less) this will change, since Telecom New Zealand has announced its plans to introduce a EDGE/UMTS/HSDPA network in the country, moving away from its current CDMA service.
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