Who's your daddy..I mean, Can you hear me now?

pO157.

Posted to Business on Fri Aug 03, 2007 at 06:36:58 PM EST (promoted by port1080). RSS.

Under the backdrop of the recent service termination by Amp'd Mobile the House Subcommittee on Telecommunications and the Internet held hearings recently on the mobile telecommunications industry and the potential need for increased oversight and regulation.

The cell phone industry has long been recognized as being one of the lowest scoring markets in terms of customer service. The American Customer Satisfaction Index recognizes it as one of the lowest industries scored. The internet is full of consumer blogs listing tales of woe regarding some of the cell phone companies alleged misdeeds. Some even help customers get out of those lengthy 2 year contracts, even advising consumers to fake their own deaths (note: Sprint, Verizon, or Cingular have been known to ask for a death certificate as documentation).

Recent hearings entitled "Wireless Innovation and Consumer Protection" were held on July 11th by
the subcommittee. Lawmakers and interested members of the public heard testimony from members of the telecommunications industry and consumer advocacy groups on the current state of the mobile phone business.

Chris Murray, Senior Counsel for the "Consumers Union, Free Press, and the Consumer Federation of America," a consumer interest group that also publishes Consumer Reports, testified that cell phone companies need to be carefully monitored. He pointed out that the 2-year contract and its Early Termination Fee (ETF) can land a family with multiple lines in deep debt if they try to switch, thus potentially locking them into a company with shoddy service and no recourse. His testimony (pdf) highlighted anecdotes where families have faced bills of over $1,000 simply for switching services and accused the industry of widespread price gouging (pg 2). This is exacerbated by the company demanding a renewal of the 2 year contract agreement for every simple plan change, according to Murray. He also claims that the industry needlessly ads in fees for every new service, even if phone handset manufacturers want to include them for free (pg 3). He points to a lower rate of innovation and new product roll-out by profit hungry cell phone companies, giving the example of the FCC expecting Wi-Fi enabled cell phones for several years now, but they are generally not available stateside. He claims Europe and Asia have better service due to a market where the phones are not locked into single networks.

His viewpoints are countered (pdf) by the testimony of industry representatives like Steven Zipperstein, General Counsel for Verizon Wireless. He says that Congress has had the foresight to have a "hands-off" approach towards cell phone regulation since 1993, and Congress would be wise not to interfere at this time. He states that the industry is competing well enough as is, and does a good job of regulating problems voluntarily. Mr. Zipperstein even points to the industry response to the widespread "pre-texting scams" of 2005. Mr. Zipperstein heralds new innovations in competition including a program by his company to allow new customers to try their service contract free for 30 days (pg 3). In fact, he argues, that if Congress is to regulate anything it should use its power to prevent patchwork actions by various states to regulate the cell phone industry within their own borders (pg 4).