National Journal's Technology Daily, January 28, 2005

Telecommunications interests groups and others Friday hailed the decision by California's public utility commission to suspend a recently approved telecom "bill of rights," while consumer advocates viewed the move as a setback.

Members of the National Telecommunications Cooperative Association (NTCA) found the bill of rights to be "quite onerous," said Tom Walker, the group's director of government affairs. In May 2004, the California Public Utility Commission approved rules regulating the marketing, billing and contract practices of wireless firms. Carriers were required to more clearly label bills, avoid deceptive marketing practices and allow customers to opt out of their contracts within the first 30 days of purchase.

NTCA members thought "that elements of this bill of rights included things that were as minute and ridiculous as mandating the font size of marketing materials," Walker said. Making such changes requires money, and some small companies are dipping into funds earmarked to bring telecom service to all Americans to cover those costs.

As "universal service" is funded by fees on telecom services, consumers eventual incur those costs, he said. "On the surface, the law appears to advance the public's interest by making telecom and wireless companies more responsive to consumer interests," said Larry Ponemon, director of the Ponemon Institute. "However, the implementation of the telecom bill of rights could sorely diminish the economic viability of certain telephone and wireless companies, ultimately causing the California consumer to pay higher costs or have fewer choices."

In addition, the rules "would have standardized service procedures among all the carriers, essentially wiping out competition on that score," said Sonia Arrison, director of technology studies at the California-based Pacific Research Institute.

Walker contends that companies had "regulations in place and consumer protections that were fairly stringent" even before the commission crafted the bill of rights. The Consumers Union (CU) accused the commission of bowing to industry demands and called the suspension "shocking." The rules were "modest" in nature and necessary to make sure consumers were not cheated, the group said.

"The PUC has already bent over backwards to accommodate the industry's complaints about implementing these rules," Janee Briesemeister, head of the CU's EscapeCellHell.org campaign, said in a statement. "The commission today went overboard in giving them what they want, ignoring the pleas of phone consumers to be treated as fairly as consumers of other goods and services are."

"The message to the industry is clear," said Bob Finkelstein, executive director of TURN, The Utility Reform Network. "Why implement a decision you don't like? Just unleash your lobbyists and get the CPUC to reverse itself."

A spokesman for California Gov. Arnold Schwarzenegger, who opposed the rules when first approved, said there are no immediate plans to issue a statement on the matter. Commissioner Susan Kennedy, who opposed the bill of rights, pledged Thursday to rewrite more effective rules by year's end.

Commissioner Geoffrey Brown, author of the original rules, penned an angry, six-page response to the suspension. "Only a studied ignorance, coupled with a drumbeat recitation of 'competition solves everything,' can deny the reality of a confusing, deceitful and fraudulent marketplace," he wrote.