Business Community Leaders Urge CPUC to Reject Regulations That Would Harm Wireless Consumers.

Business Editors

California Chamber of Commerce, CMTA and AeA Warn of Higher Consumer

Prices, Inconvenience and Barriers to Improved Service Quality

Sweeping regulations proposed by the California Public Utilities Commission (CPUC) would cost wireless consumers more money, cause major inconveniences and slow down investment in wireless infrastructure needed to improve coverage and signal quality, according to leaders of three of California's largest business organizations.

California Chamber of Commerce President Allan Zaremberg, California Manufacturers & Technology Association (CMTA) President Jack M. Stewart and American Electronics Association (AeA) Vice President for California Public and Legislative Affairs Roxanne Gould announced their opposition today to proposed rules being considered by the CPUC.

The voluminous proposal would prohibit consumers and wireless carriers from initiating service by telephone and instead require the consumer to await a mailed legal form, sign and return it to the wireless carrier and finally have service activated when the form is received and processed.

The proposal, by Commissioner Carl Wood, would also impose similar mail-and-wait restrictions on consumers and their wireless carriers whenever the consumer wishes to make a change to their existing service, such as changing rate plans or adding a new service such as voice mail or web access.

Zaremberg: "Consumers will pay higher rates for worse service and fewer retail outlets to serve them."

"The proposed regulations will be extremely costly to implement," said Zaremberg. "The fast and efficient customer service that people expect will be bogged down by paperwork and delay, while the regulations will stifle competition among retailers of wireless telephones and services, reducing consumer choices. These changes are unnecessary with the current wireless marketplace marked by robust competition that has provided consumers lower rates, better customer service and increased coverage and signal quality. If the CPUC, which was created to regulate monopoly utilities, meddles in the wireless marketplace, consumers will pay higher rates for worse service and fewer retail outlets to serve them."

In addition, Zaremberg noted the costs of compliance and the likely depression of consumer purchasing of wireless services would adversely impact investment by wireless carriers in cellular tower construction and other infrastructure, which this year includes about $3 billion in California. "Wireless telephone usage has become integral with commerce in California. These proposed regulations would divert needed resources from the continuing improvement of wireless networks to the inefficient costs associated with regulatory compliance."

Stewart: "The regulations will only backfire on the consumers the CPUC is purportedly aiming to protect."

"The rule under consideration is not new, but it was only last month that dozens of new restrictions on wireless carriers were added," said Stewart. "A competitive industry that delivers consistently improving products, services and costs to its customers should not be hauled down by a tangled web of new regulations without serious justification." Stewart noted that most California consumers have a choice of six or more wireless carriers. "Frankly, the record offered by the CPUC fails to demonstrate that more than a tiny percentage of the millions of California wireless consumers have lodged complaints. Compared to other industries, the wireless industry is proving its value to consumers. The regulations will only backfire on the consumers the CPUC is purportedly aiming to protect."

Gould: "Thousands of California's best jobs would be in jeopardy."

"This process has been remarkably devoid of serious analysis of the impacts to California's economy, not to mention to consumers," said Gould. "By micromanaging the relationship between consumers and the wireless carriers they choose, the CPUC would only add costs and discourage new product development, which has been a hallmark of the fierce competition within the wireless industry. Companies that supply the wireless industry or perform necessary services ranging from construction to information technology management would suffer under these regulations. Thousands of California's best jobs would be in jeopardy."

Other proposed rules would require advertisements to include lengthy disclosures about terms and conditions for every service offered by a wireless carrier, which is likely to accomplish nothing more than to cause wireless carriers to stop all radio, television and billboard advertising as it becomes too expensive to comply with the regulations.

In addition, the proposed regulations appear to undercut the contractual use of arbitration to settle billing disputes and prohibit wireless carriers from offering new services without first obtaining permission from the CPUC after regulators assess the service's "privacy implications."

The wireless industry has demonstrated value to consumers through competitiveness.

According to the U.S. Bureau of Labor Statistics, while the Consumer Price Index rose by 9.5% from 1997 through 2001, the wireless "CPI" dropped by 33%. In fact, United States' wireless carrier revenue per minute (a proxy used by industry analysts for mobile pricing) is among the lowest among developed countries, according to the Federal Communications Commission.

From 1997 through 2001, average usage per subscriber more than tripled to nearly 400 minutes per month, while the average bill climbed only slightly.

Subscriber and usage growth does not come without substantial investment by the wireless carriers competing for market share. They will spend more than $25 billion in the U.S. this year -- about $3 billion of it in California -- on improving coverage, adding capacity to support greater usage, and upgrading their networks for next generation wireless data services.