BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
MARTHA M. ESCUTIA, CHAIRWOMAN
AB 1010 - Ruskin Hearing Date:
June 27, 2006 A
As Amended: June 14, 2006 Non-FISCAL B
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DESCRIPTION
Current law bars states from regulating the entry of, and the
rates charged by, cellular telephone companies, but permits
states to regulate the other terms and conditions of service.
This bill requires cellular telephone companies to provide their
customers with a 30 day right of recission exercisable if the
customer finds the service unsatisfactory. This provision does
not apply where customers have month to month accounts or
prepaid service.
BACKGROUND
The fight over telephone consumer protection issues has raged
since the turn of this century. A five year effort to establish
and enforce strong consumer protection rules at the California
Public Utilities Commission succeeded and was then rescinded a
victim of an ideological battle over the proper role of
government.
There can be no doubting the popularity of cellphone service.
Over 200 million Americans have cellphone service, 23 million of
which are Californians. Along with the popularity has come some
consumer dissatisfaction. The FCC has noted an increase in
consumer complaints. Poor cellular service is the second
largest complaint to the Better Business Bureau, trailing only
auto dealers. Forty-five million cellphone customers switch
every year, according to a recent report by a respected market
research firm. Even the industry admits it has problems, an
officer of one of the largest cellphone companies recently
admitted to the New York Times: "It's no secret that the
wireless industry doesn't have the world's greatest reputation
for customer service."
COMMENTS
1. Unnecessary? -- Opponents argue that this bill is
unneeded, and that there is little demand for a 30 day
right of recission. Better, they argue, to let the market
decide what return policy is best. A cellphone company
should be able to choose whether to spend money on
improving the quality of its network rather than
establishing a costly 30 day return policy.
2. Will The Phone Work Where I Want To Use It? -- Every
cellular telephone company provides coverage maps to show
where their service is available. However, those maps are
very generalized and are not guarantees of coverage. A
customer's ability to complete or continue a call in a
given location can vary depending on the time of year, the
height of the buildings in a given area, call volumes,
radio interference, and phone 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. This bill guarantees customers a
reasonable way to get out of a long-term contract
commitment if the product they bought doesn't live up to
their expectations or to the promises made by the carrier.
Cellphones are almost indispensable, and the technology is
truly amazing and evolving. But when one of the major
cellular carriers advertises that its service isn't as bad
as their competitors (e.g. fewest dropped calls), it helps
make the case for this bill.
3. State Mandated Warranties Are The Rule, Not The
Exception. -- Most products sold in California are covered
by the Song-Beverly Consumer Warranty Act (Civil Code 1790
et. seq.) that provides buyers with a 60-day implied
warranty of fitness. Because cellphone service is
considered a "service" and not a "product," those contracts
aren't covered by the Song-Beverly Consumer Warranty Act,
though it is a fair question as to whether Song-Beverly
applies to the cellular phone.
4. 30 Days is the Norm -- For a short time in late 2004 the
CPUC instituted a rule requiring a 30 day cancellation
policy, though that rule was rescinded when two CPUC
commissioners were replaced by the current Administration.
Most major cellular carriers still offer 30-day
cancellation policies.
5. Preempting the States -- Congress is currently
considering a major rewrite of telecommunications laws.
One little-noticed provision of the Senate version of the
telecommunications bill is further preemption of state
authority, this time limiting states' ability to establish
consumer protection rules for cellular companies.
6. Prior Legislation -- The Senate has passed similar bills
before in 2002 and 2003. This year AB 2622 by the same
author was moved to Interim Study in the Assembly Utilities
and Commerce Committee.
ASSEMBLY VOTES
Assembly Floor (73-5)*
Assembly Appropriations Committee (13-5)*
Assembly Transportation Committee (12-0)*
*Votes on a prior version of the bill
POSITIONS
Sponsor:
Consumer Federation of California
Support:
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|Asian Law Alliance |Eastside Neighborhood Center |
|Attorney General of California |Echo Park Community Coalition |
|Boat People S.O.S. |El Concilio of San Mateo County |
|California Alliance for Retired |Engineers and Scientists of |
|Americans |California |
|California Community Technology |International Longshore and |
|Policy |Warehouse Union |
| Group |Legal Aid Foundation of Santa |
|California Conference Board of |Barbara County |
|the |Madera Coalition For Community |
| Amalgamated Transit Union |Justice |
|California Conference of |Merced Lao Family Community, |
|Machinists |Inc. |
|California Labor Federation |Professional & Technical |
|California Public Interest |Engineers, Local 21 |
|Research Group |Strategic Committee of Public |
|California Rural Legal |Employees, |
|Assistance Foundation | Laborers International |
|California Teamsters Public |Union of North |
|Affairs Council | America |
|Central American Resource |The Foundation for Taxpayer & |
|Center |Consumer |
|Communications Workers of | Rights |
|America |The Utility Reform Network |
|Consumer Attorneys of |UFCW Local 428 |
|California |UNITE HERE! |
|Consumers Union |United Food & Commercial |
|Concerned Citizens of South |Workers Union, |
|Central Los | Western States Council |
| Angeles |Utility Consumers' Action |
|Disability Rights Advocates |Network |
|Division of Ratepayer Advocates |Victory Resource |
| |Center |
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Oppose:
California Public Utilities Commission
Cingular Wireless
CTIA-The Wireless Association
Sprint Nextel
T-Mobile USA
Verizon Wireless
Randy Chinn
AB 1010 Analysis
Hearing Date: June 27, 2006