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Scrutiny of Phone Fees May Broaden to TV, Internet
FCC Chairman Kevin J. Martin said the hearing on early-termination fees will attempt to rein in complaints that have begun spread to other industries.
(By Manuel Balce Ceneta -- Associated Press)
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Consumer groups are calling for carriers to explain what kinds of costs are put into an early-cancellation fee on cellphones, cable and other paid television, and Internet services.
"We'd rather see carriers hang on to customers through better quality of service and competitive prices rather than locking people into indentured servitude," said Chris Murray, senior counsel for Consumers Union.
In response, the carriers have renewed a lobbying effort in recent weeks to persuade the FCC on a legal definition that would stave off the state lawsuits on cancellation fees. On May 6, 2008, Verizon Wireless chief executive Lowell McAdam and the company's chief lobbyist, Tom Tauke, met with Martin, urging him to adopt a federal policy, according to FCC records.
They are pushing the agency to rule that cancellation fees are part of the rates carriers charge their customers, as opposed to a fee. That distinction would put early-termination fees under the supervision of the FCC, which could then adopt a federal policy. That would preempt lawsuits currently underway or about to begin in state courts.
"Carriers may be able to recover legitimate out-of-pocket expenses or costs. On the other hand, we want to make sure this isn't being used as an artificial means of locking consumers in to a particular service provider," Martin said in the interview.
Martin has said he supports a "national framework" with stronger safeguards for consumers.
A source familiar with discussions between the wireless carriers and Martin said the state lawsuits also contributed to the more aggressive approach by wireless industry executives to preempt the states.
"It would be foolish to suggest there is not connection," said the source, who spoke on condition of anonymity out of concern he could influence the FCC hearings.
Some lawmakers and consumer groups warn that a federal policy would hurt cellphone users. Sen. Amy Klobuchar (D-Minn.) has introduced a bill that would ease carriers' policies on early-termination fees. She said the states have been the best watchdogs for the cellphone industry.
"Rewarding companies for making practical change is unacceptable," Klobuchar said.
