CCAC: Despite Intense Competition, Lower Rates and More Services in Wireless Industry, California Regulators Propose Rules That Will Increase Rates, Reduce Services.

Business Editors/High-Tech Writers

Wireless Carriers Unite in Detailing

Negative Impacts to Consumers in CPUC Filing

The leading providers of wireless telephone service in California united today to file objections to a massive regulatory proposal that would unleash a host of unintended consequences certain to anger consumers.

In its filed comments, the Cellular Carriers Association of California (CCAC) addresses a host of unintended consequences that would be unleashed by new rules proposed by Commissioner Carl Wood. Interested parties are required to file their comments to the proposed rule today.

The CCAC's comments filed with the California Public Utilities Commission (CPUC) point out that the proposed regulations would:

-- End the ability of California customers to activate new service, or make changes to their current wireless service, over the phone without subsequent written authorization.

-- End radio, billboard and television advertising for wireless services. The proposed rules in California would require lengthy and legalistic "disclosures" of all contractual terms for every service offered. This will drive up the cost of radio, billboard and television advertising so much that wireless carriers will no longer advertise their products and services over these mediums -- a key element of the market competition that has brought consumers lower rates and new services.

-- Delay investment in new wireless network infrastructure (such as new towers) in California that is needed to improve signal quality and coverage capability for consumers so as to be able to fund costs of compliance with proposed rules.

"The lower rates for wireless service that consumers have come to expect will be the first casualty if these rules are adopted," said Susan Pedersen, Executive Director of the CCAC.

"There has never been an industry that could achieve complaint-free operation, yet that seems to be the CPUC's goal," continued Pedersen. "Unfortunately, their solution to achieving the impossible has resulted in an unwieldy and costly raft of regulations to be imposed on an industry that is already fiercely competitive, to the advantage of its customers' pocketbooks and overall satisfaction.

"The quality and price of wireless phone service has steadily improved from the days in late 1980s when phones were big and rates were so high that using a wireless phone was considered a luxury. Today, thanks to market competition and regulatory restraint, California's nearly 13 million wireless subscribers enjoy better service options, better area coverage, better handset technology and better customer service -- all at prices that enable almost anyone to own a cellular phone.

"By rushing to adopt a volume of bureaucratic rules on the wireless industry and its customers, the CPUC is attempting to position its regulatory body in between consumers and their wireless carriers to address customer complaints that are neither prevalent nor best addressed by the CPUC. It is clear from the CPUC's own record that there is no consumer crisis in the wireless marketplace, yet the CPUC is pursuing an overly burdensome regulatory scheme under the rationale that a crisis does exist and that immediate intervention is needed to `protect' consumers."

"It would be in everyone's best interests for the CPUC to delay this rushed proposal for wireless carriers and take a more objective and reasoned view."

Key among the wireless carriers' concerns:

1. Rule 3 (d), which in practical terms would end the ability of

consumers to activate new service over the phone. Instead, the

CPUC would require that the customer await the mailing of a

legal form, sign it, mail it back and wait for it to be

processed before their new wireless service is activated. By

requiring millions of mailings and replies every year for

transactions that consumers now complete with one phone call,

the rule will be not only inconvenient for consumers but also

costly in its implementation.

While the proposed rule would allow service activation before

a signed contract is received, the rule also holds that the

contract's provisions are not enforceable before then.

Wireless carriers are unlikely to provide low-cost, or even

free, wireless phones and activate service without certainty

of payment for the service. Charges incurred by a consumer who

never returns the signed contract and refuses to pay, for

instance, would be passed on to all other consumers in the

form of higher rates.

2. Rule 8 (b), which would require a signed and returned legal

form for every change in service requested by a customer. Many

wireless customers enjoy the freedom to call their carrier's

toll-free customer service centers to change calling plans,

request voice mail, text messaging and other new services.

These changes usually provide more value to the customer. This

convenience will give way to days of delay, paperwork and

legalese if the CPUC's proposed rules are adopted. And, as

with the other proposed rules, the great expense of complying

with this requirement will be costly to consumers.

3. Rule 2 (d), which would end radio, billboard and television

advertising of wireless services by requiring lengthy and

legalistic disclosures of all terms and conditions for every

service offered in every advertisement. The requirements would

make radio, billboard and television advertising too expensive

for wireless carriers -- a blow to an important segment of the

state's economy -- and result in less communication of useful

product and service offers to consumers.

4. These regulatory burdens and others proposed by the CPUC will

come with great cost to consumers. In many cases, the costs of

implementation of these regulations will be passed on to

consumers in the form of higher rates. The wireless carriers

also warn, however, the cost of compliance will threaten their

ability to sustain rapid investment in wireless

infrastructure, such as cellular tower construction and other

infrastructure necessary to continue signal quality

improvement and addition of coverage area.

The Cellular Carriers Association of California is a non-profit trade association consisting of ten wireless service providers doing business in the State of California. The companies represented are comprised of national and local rural carriers. The Association participates in activities relating to legislative, regulatory and tax matters within the State of California, as well as dissemination of information regarding cellular mobile communications to the public and other interested parties.

For a copy of the comments filed by CCAC today, contact Susan Pedersen at 916/553-5810.