BILL ANALYSIS                                                                                                                                                                                                    




                                                                  SB 128
                                                                  Page A
          Date of Hearing:  July 7, 2003

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                                 Sarah Reyes, Chair
                     SB 128 (Bowen) - As Amended:  March 10, 2003

           SENATE VOTE  :  22-15
           
          SUBJECT  :  Cellular telecommunications service.

           SUMMARY  :  Requires providers of cellular telephone service to  
          extend a minimum 30-day grace period to new customers during  
          which the customer may rescind the agreement.  Specifically,  
           this bill  :   

          1)Requires cellular telephone carriers to allow a 30-day grace  
            period for all new cellular service customers, during which  
            the customer may rescind the agreement and terminate service  
            if the customer finds that the cellular service quality is  
            unsatisfactory.

          2)Specifies that a customer who rescinds a contract must pay for  
            those services used prior to cancellation of the agreement.

          3)Requires cellular companies to provide reasonable notice of  
            this grace period and the customer right of rescission. 

          4)Provides that the grace period shall not apply to  
            commercial<1> accounts or to contracts for cellular service  
            where customers are not required to purchase more than one  
            month of service. 

           EXISTING LAW  :

          1)Provides for licensure of cellular phone service providers  
            through the Federal Communications Commission.

          2)Provides for regulation of telecommunication services by the  
            California Public Utilities Commission (PUC).

           FISCAL EFFECT  :  Unknown.
          ---------------------------
          <1> For purposes of this bill, "commercial accounts" mean any  
          account that includes service for five or more cellular radio  
          telephones.









                                                                  SB 128
                                                                  Page B

           COMMENTS  : 

          Current federal law permits states to establish consumer  
          protection rules for cellular telephone service customers.<2>

          According to the author, it is difficult for a prospective  
          cellular phone customer to 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. 

          Cellular telephone use has grown very rapidly across the country  
          in recent years and in California, the number of wireless  
          customers has jumped by 29% since 2000.  One out of every nine  
          cellular customers nationwide is a Californian.  Cellular  
          telephones are becoming as prevalent as traditional telephones,  
          with about 16 million cellular telephones in California,  
          compared to 26 million traditional telephones. 

          The major cellular providers require customers to sign long-term  
          contracts for service.  Those contracts are typically one year  
          long, though some providers now require two-year contracts,  
          particularly if free or discounted cellular phone equipment is  
          packaged with the deal. 

          All of the major cellular providers have voluntarily given  
          customers a grace period during which the customer can return  
          the phone and discontinue service without being subject to a  
          contract cancellation fee. 

          Consumer Reports magazine found last year that Americans  
          consistently rated their cellular phone service as mediocre.   
          This year, the magazine noted the overall satisfaction with  
          cellular carriers is lower than for most other businesses that  
          they rate.  In a survey conducted in conjunction with the  



          ---------------------------
          <2> Section 332(c)(3)(A) of the Federal Communications Act.








                                                                  SB 128
                                                                  Page C
          article, poor phone service was the leading reason cited by  
          people for switching providers. 

           Opposition  

          The Cellular Telecommunications & Internet Association believes  
          this bill will undermine consumer benefits, add considerable  
          paperwork burdens, increase service costs, and limit choices  
          without providing any meaningful consumer benefit.  They note  
          that, if passed, it is almost certain that "free phone" packages  
          will be eliminated because they will not be cost effective in  
          that these are most often offered in conjunction with term of  
          service commitments. 

          Cingular notes that it currently provides customers a 15-day  
          return policy, and believes that the marketplace and competition  
          within it should determine the issue of return policies. 

          Most products sold in California are covered by the Song-Beverly  
          Consumer Warranty Act, which provides buyers with a 60-day  
          implied warranty of fitness.  Because a contract for wireless  
          service is a service and not a product, the Song-Beverly  
          Consumer Warranty Act doesn't cover those contracts. 




           Related Legislation  

          SB 1903 (O'Connell), Chapter 286, Statutes of 2002, requires  
          cellular telephone service providers to give customers a way to  
          obtain current information on their calling plan and usage. 

          AB 1379 (Calderon), is pending in the Senate Energy, Utilities &  
          Communications Committee.  This bill requires cellular companies  
          to provide a means by which a subscriber can obtain reasonably  
          current and available information on the subscriber's calling  
          plan or plans and service usage, including roaming usage and  
          charges.

          SB 1601 (Bowen) was heard in this Committee in 2002, but the  
          right-of-rescission period was shortened from 30 days to 14  
          days.  The author chose not to take this bill up for a  
          concurrence vote on the Senate floor. 










                                                                  SB 128
                                                                  Page D
           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Alliance for Consumer Protection
          California Public Interest Research Group (CALPIRG)
          Office of Ratepayer Advocates
           
            Opposition 
           
          Cellular Telecommunications & Internet Association
          Cingular Wireless


           Analysis Prepared by  :    Paul Donahue / U. & C. / (916) 319-2083