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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 1601 - Bowen Hearing Date:
April 9, 2002 S
As Amended: April 1, 2002 Non-FISCAL
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DESCRIPTION
Current law permits states to establish consumer protection rules
for cellular telephone service customers.
This bill requires cellular telephone companies to provide new
customers with a 30 day grace period within which a customer
could rescind his or her contract if they find the cellular
service quality is unsatisfactory.
BACKGROUND
Cellular telephone usage continues to enjoy spectacular growth.
The number of cellular subscribers has more than doubled since
1998 to 133 million nationwide. Not only are more people using
the phones, they're also using them more intensively - the
average monthly use has grown by 75% to 422 minutes per customer
over the past two years. New wireless uses, such as data
transmission and Internet access, are starting to show growth,
too.
This growth in popularity has been accompanied by a growth in
customer expectations and, not surprisingly, a growth in customer
complaints. Complaints about cellular service at the California
Public Utilities Commission (CPUC) jumped 47% last year.
"Consumer Reports" magazine surveyed cell phone users and
observed that customers rate their service as "mediocre." A
recent J.D. Power & Associates survey noted that three times as
many cellular customers call customer service than local
telephone company customers.
An indicator of customer dissatisfaction may be churn rates,
which are anywhere from 25% to 80%, according to the Yankee
Group, a consulting firm. Recent articles in the New York Times ,
"Business Week," the Wall Street Journal , and USA Today all note
user complaints about wireless service quality, which many
customers feel doesn't live up to the advertising promises made
by many companies. While cellular telephone service has many
benefits that landline telephone services don't have, few would
disagree with the notion that cellular telephone service is
neither as clear nor as reliable as regular landline telephone
service.
A prospective cellular phone customer can't rely on the coverage
maps provided by the cellular carriers because they all contain
disclaimers that the map is not a guarantee of service
availability or quality. In the absence of accurate maps, the
only way for a customer to know if the cellular phone meets their
needs is to use it for a period of time. If a customer is
required to sign a long-term contract to obtain service, that
customer is potentially stuck if he or she finds the service is
less than was advertised or promised. The goal of this bill is
to provide customers with a reasonable way out of that long term
commitment if the product they're buying doesn't live up to their
expectations or to the promises made by the carrier.
COMMENTS
1.Getting the best service quality . The author's goal is to give
people the information they need to try and make sure they'll
get what they pay for when they sign a cellular service
contract.
If cellular service coverage maps could be made more accurate
and if the "test drive" in the store could account for the
topography, underpasses, tunnels, buildings, trees, atmospheric
disturbances, other radio signals, and intensity of usage
challenges that a customer will face out on the "open road,"
there would be no need for a grace period because the customer
would be able to make an informed choice right in the store.
Since that isn't an option, the author believes the next best
solution is to allow customers to rescind their contracts if
the service proves to be unsatisfactory. This bill gives
customers 30 days to rescind the contract.
2.Pay for what you use . The bill gives customers 30 days to
cancel their cellular service contract, but it's silent on what
happens relative to charges the customer may have incurred
during that 30 day period. The author and committee may wish
to consider amending the bill to make it clear that any
customer who does terminate a contract in that 30-day window is
still responsible for any air time charges that have accrued,
any charges associated with wear and tear on the actual phone,
and any damage to the telephone that may have occurred during
the 30-day "test drive."
3.Who does what now . Some cellular carriers already provide
their customers with a grace period in which they can choose to
terminate their service contract. AT&T Wireless gives
customers a 30-day grace period and Verizon has a 14-day great
period. Cingular does not allow any grace period.
POSITIONS
Sponsor:
Author
Support:
Office of Ratepayer Advocates
Oppose:
Cingular Wireless
Sprint Communications Company
Verizon Wireless
Randy Chinn
SB 1601 Analysis
Hearing Date: April 9, 2002