Senate Bill Targets Wireless Termination Fees

Lawmakers accuse wireless carriers of passing on operating costs disguised as fees and taxes.

U.S. Senators Jay Rockefeller (D-W.Va.) and Amy Klobuchar (D-Minn.) want wireless carriers to change the way they do business, including offering consumers prorated early termination fees for switching carriers.

In legislation introduced Sept. 7, the two lawmakers called for a wide range of new policies calling for wireless carriers to provide "simple, clear information" on their services and charges, a 30-day window in which to exit a contract without early termination fees and greater flexibility to exit contracts with services that dont meet a consumers needs.

"Anyone whos looked at a cell phone bill knows its a hodge-podge of fees and surcharges that supposedly cover regulatory or administrative costs," Rockefeller said in a joint statement with Klobuchar. "The reality is, often these are nothing more than operating costs that the companies are passing on to the consumer disguised as fees and taxes. Its high time to protect cell phone users from these deceptive billing practices."

Rockefeller and Klobuchars bill—the Cell Phone Consumer Empowerment Act of 2007—also calls for detailed data on coverage areas and dropped calls provided to consumers before committing to a long-term contract and seeks a Federal Communications Commission study of "locking" cell phones to make them exclusive to one carrier.


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"The rules covering our wireless industry are a relic of the 1980s, when cell phones were a luxury item that fit in a briefcase instead of a pocket," Klobuchar said. "[Consumers] should be able to…understand what to expect in their monthly bills once you pile on charges and fees. Its a simple matter of fairness."

Chris Murray, an attorney for the Consumers Union, immediately hailed the introduction of the bill in a Sept. 7 statement.

"Contract extensions and early termination fees are the No. 1 consumer annoyance with the wireless industry," he said. "Consumers are powerless to negotiate better terms with their cell phone carrier, but this bill would help to level the playing field."

Not surprisingly, the wireless industry was less enthusiastic over the legislation.

"It is disappointing and unfortunate that Senators Klobuchar and Rockefeller intend to introduce legislation based on incomplete and misleading data," CTIA President and CEO Steve Largent said in a Sept. 6 statement. "The truth is that complaints about wireless service to the Federal Communications Commission are infrequent and declining."

Largent added that wireless consumers "enjoy the most affordable service in the free world" and that the proposed legislation "threatens to increase the cost of wireless service and reduce the number of choices available."

The bill has been referred to the Senate Commerce Committee.


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