Customers of mobile-phone carriers shouldn’t have to pay early termination fees if they’re called to overseas military service or have their contracts automatically extended every time they call customer support, critics said Wednesday.
Several lawmakers called for the U.S. Congress to pass a mobile-phone subscriber bill of rights during a hearing before the Senate Commerce, Science and Transportation Committee.
Last month, Senator Amy Klobuchar, a Minnesota Democrat, and Senator Jay Rockefeller, a West Virginia Democrat, introduced the Cell Phone Consumer Empowerment Act,, which would require mobile phone carriers to give customers more complete information on their coverage, prorate early termination fees, and prohibit carriers from misidentifying their own fees as government taxes.
More information about coverage and dropped calls is needed, Klobuchar said. Verizon Wireless Inc. currently has a billboard near Fosston, a town in northwestern Minnesota, that says, “Count on Verizon Wireless to keep you connected.”
Yet, Verizon phones don’t get a signal near the billboard, she said.
“I believe you can have a competitive industry when people have full knowledge and are able to make decisions based on price comparisons … or the service-quality comparisons,” Klobuchar said. “It’s very difficult for my middle-class people in Minnesota, who don’t have a lot of disposable income, to make their decisions if they don’t have full information.”
The Minnesota Attorney General’s Office has fielded complaints from military members headed overseas who have to pay hundreds of dollars to get out of their mobile phone contracts, said Lori Swanson, the attorney general.
In another case, customers who made small changes to their service, such as buying batteries, had their service contracts extended without their knowledge; one woman who called Sprint Nextel Corp. to complain that she had been overbilled had her contract automatically extended, Swanson said.
“The burden should not be on the consumer to figure out the rules of the cell-phone shell game,” Swanson said. “There needs to be more transparency and more fundamental fairness.”
Sprint Nextel denied that it was extending contracts without letting customers know. “We dispute every single one of her allegations,” spokesman John Taylor said of Swanson.
Klobuchar’s bill would limit customer choices, he added. Service contracts help pay the subsidies for phone handsets that would otherwise cost US$300 or more, he said.
But Lowell McAdam, CEO of Verizon Wireless, and some Republican senators questioned the need for more regulations. Verizon Wireless publishes its coverage maps, gives customers a 30-day trial for new service, and prorates early termination fees, McAdam said.
The U.S. mobile-phone industry is extremely competitive, McAdam said. The Cell Phone Consumer Empowerment Act would “slow down a very innovative and dynamic industry,” he said.
Many of the provisions in the bill are already being adopted by mobile-phone carriers, added Senator Jim DeMint, a South Carolina Republican. “For us to suggest that somehow we are going to be able to design a system that more effectively protects than a competitive market is well-intended but very naive,” he said.
“Once we create a format here that everyone has to follow, that’s the end of competition and best practices.”
But some senators complained that competition isn’t protecting consumers enough. Although Verizon Wireless prorates termination fees and AT&T Inc. just announced it would also do so, many other carriers do not, senators said. And published coverage maps can be inaccurate, Klobuchar said.
Carriers should publish information on coverage and dropped calls on a county or Zip-code level, she said. “We’re not forcing you to put up towers,” she added. “We’re simply saying, give the people the correct information.”
Verizon’s McAdam suggested customers should look for other ways to determine whose service they should subscribe to.
“Like any consumer product, I think the best thing is to ask your friend and neighbors and try the service yourself,” he said.
