BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1601|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 445-6614 Fax: (916) |Version: |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 1601
Author: Bowen (D)
Amended: 8/15/02
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 6-2, 4/9/02
AYES: Bowen, Alarcon, Murray, Sher, Vasconcellos, Vincent
NOES: Morrow, Battin
SENATE FLOOR : 23-13, 4/25/02
AYES: Alarcon, Alpert, Bowen, Burton, Chesbro, Dunn,
Escutia, Karnette, Kuehl, Machado, Murray, O'Connell,
Ortiz, Perata, Polanco, Romero, Scott, Sher, Soto,
Speier, Torlakson, Vasconcellos, Vincent
NOES: Ackerman, Battin, Brulte, Haynes, Johnson, Knight,
Margett, McClintock, McPherson, Monteith, Morrow, Oller,
Poochigian
ASSEMBLY FLOOR : 58-16, 8/19/02 - See last page for vote
SUBJECT : Cellular telecommunications service
SOURCE : Author
DIGEST : This bill requires cellular telephone companies
to provide new customers with a 14-day grace period during
which the contract may be rescinded, as specified.
Assembly Amendments (a) change the grace period from 30
days to 14 days, (b) provide that the customer is
responsible to pay for services used prior to cancellation,
CONTINUED
SB 1601
Page
2
and (c) provide for exemptions.
ANALYSIS : Current law permits states to establish
consumer protection rules for cellular telephone service
customers.
This bill requires that providers of cellular
radiotelephone service extend to new customers a grace
period of at least 14 days within which a customer could
rescind his or her contract, without cost or penalty, if
they find the cellular service quality is unsatisfactory.
The bill requires every new service agreement to provide
reasonable notice of this grace period and the right of the
customer to rescind.
The bill provides that the customer is responsible to pay
for those services used prior to any cancellation of the
agreement.
The bill specifies that the requirements in this bill do
not apply to commercial accounts, meaning five (5) or more
cell phones, or to wireless phone accounts where customers
are not required to purchase more than one month of
service.
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
percent 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
percent 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
SB 1601
Page
3
call customer service than local telephone company
customers.
An indicator of customer dissatisfaction may be churn
rates, which are anywhere from 25 to 80 percent, 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 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
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
SB 1601
Page
4
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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/10/02) (Unable to re-verify at time
of writing)
Office of Ratepayer Advocates
OPPOSITION : (Verified 4/10/02) (Unable to re-verify at
time of writing)
Cingular Wireless
Sprint Communications Company
Verizon Wireless
ARGUMENTS IN SUPPORT : >
ARGUMENTS IN OPPOSITION : >
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Bogh, Canciamilla,
Cardenas, Cardoza, Cedillo, Chan, Chavez, Chu, Cohn,
Corbett, Correa, Cox, Diaz, Dutra, Florez, Frommer,
Goldberg, Harman, Hertzberg, Horton, Jackson, Keeley,
Kehoe, Kelley, Koretz, La Suer, Leach, Liu, Longville,
Lowenthal, Maldonado, Matthews, Migden, Nakano, Nation,
Negrete McLeod, Robert Pacheco, Papan, Pavley, Pescetti,
Reyes, Salinas, Shelley, Simitian, Steinberg, Strickland,
Strom-Martin, Thomson, Vargas, Washington, Wayne,
Wiggins, Wright, Wyland, Wesson
NOES: Ashburn, Bates, Briggs, Bill Campbell, John
SB 1601
Page
5
Campbell, Cogdill, Daucher, Dickerson, Hollingsworth,
Leonard, Leslie, Maddox, Mountjoy, Richman, Runner,
Zettel
NC:kb 8/21/02 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****