Bill Would Also Undermine Local Control of Video Services and Eliminate Net Neutrality

Santa Monica, CA — Acting at the urging of the cell phone industry, the Senate’s telecom deregulation bill would forbid states from enacting consumer protections for cell-phone customers. This last-minute addition to the measure, on which the Senate Commerce Committee may vote Thursday, is a blatant capitulation to the cellphone industry’s Washington lobbyists, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights.

Telephone companies and other telecom interests have donated more than $7.76 million dollars to federal candidates and parties during the 2006 election cycle, according to www.opensecrets.org.

“It is a slap in the face to consumers who already suffer poor service, exorbitant ‘termination fees’ and inability to cancel a service contract once signed,” said Judy Dugan of FTCR. “Telecom giants have spread millions of dollars around Washington in order to get rid of consumer protections proposed around the country.”

At the behest of consumers, state legislatures and regulators are contemplating reforms of the cell phone industry that would be swept away by this Senate proposal, according to FTCR. Preemption of state regulation would undo consumer bills of rights like the measure now moving through the New York State legislature, which includes the right to cancel a cell phone contract after receiving the first bill.

Existing consumer protections are also at stake. On Tuesday, a California Court of Appeal ruled against Cingular Wireless, which had challenged the State Public Utilities Commission‘s right to fine the cell-phone giant for charging early termination fees without a grace period and for misleading customers about service coverage and known network problems. The court specifically ruled that current federal law does not pre-empt the state from regulating terms and conditions of wireless service. Under the Senate proposal, the California PUC would be pre-empted and barred from enforcing consumer protection rules.

The measure, forbidding states to regulate “any terms and conditions” of cell-phone service, instead hands all regulatory power to the Federal Communications Commission (FCC), a politically appointed body whose own powers would be substantially weakened by the telecom bill, said FTCR.

The measure, already passed as H.R. 5252 by the House, is sponsored in the Senate by Sen. Ted Stevens (R – Alaska). The preemption clause was added just last week to the Senate version of the much more limited House measure.

Proposal Ends “Net Neutrality” and Removes Local Control Over Video/Cable Services

The Stevens bill also rejects “net neutrality,” the ability of all web sites to be accessed at equal speeds, in favor of allowing internet providers to charge web sites for “express access” to subscribers, while small businesses and nonprofit groups wait far back in the electronic line.

The federal bill, as well as a measure in the California Legislature, preempts cities’ ability to negotiate contracts with cable providers and with the telephone companies eager to enter the cable market. Both bills remove local power over customer service, including stiff requirements for responding to customer problems. Localities would lose much of their control over excavation and repair of streets dug up to lay new video transmission lines and the ability to leverage public interest programming.

Both the Stevens bill and the California proposal are heavily backed by AT&T and Verizon.

“These companies want to sell bundled video, phone and Internet services to consumers, while also charging Internet organizations steep fees for high-speed access to subscribers,” said Dugan of FTCR. “That means lightning access for big businesses, while bloggers, small businesses and nonprofits plod in a slow lane, effectively restricting access to them. The federal and state bills are part of a double whammy by the phone companies, which say they want to improve competition in the cable market, but in truth want to dominate the market.”

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