Senators to Cell Phone Carriers: Can You Hear Us Now?

Congressional Democrats this week ramped up their calls for wireless industry reform, as key Senators blasted the major cell phone companies for deceptive billing practices, onerous early termination fees, and bad service.

During a Senate Commerce Committee hearing on Wednesday, Byron Dorgan, a Democrat from North Dakota, said that Verizon Wireless's recent, controversial move to block text messaging from an abortion-rights group, "demonstrates the need to pass legislation keeping the Internet free."

Verizon recently prevented NARAL Pro-Choice America from sending text messages to its supporters, and in August, AT&T censored the webcast of a Pearl Jam concert after lead singer Eddie Vedder criticized President Bush. Both actions provoked fury from free speech advocates.

Dorgan also said that the cell phone companies' policy of "locking in phones, making them exclusive to one provider, and requiring consumers to purchase a new phone when changing carriers," is a practice that deserves Congressional scrutiny.

Senator Jay Rockefeller, a Democrat from West Virginia, ripped the cell phone companies for what he called "deceptive billing" policies, according to a report in eWeek. He has also introduced legislation to reform wireless industry practices.

"One practice of deep concern to me is the explosion of deceptive charges that now appear on wireless bills," said Rockefeller. "In the last few years, traditional and wireless carriers have concocted a number of line item charges, fees and surcharges."

He added that the wireless industry is "literally passing the buck for ordinary operating costs and tax liabilities on to the consumer. That's not right."

Republicans, meanwhile, rejected calls for greater regulation of the wireless industry, arguing that such regulation would harm the carriers and lead to greater costs for consumers.

One Republican, Jim DeMint of South Carolina, said the Rockefeller bill "is likely to set back the wireless industry by many years. We need to take a step back and let the wireless industry fix whatever problems there are."

Another, John Sununu of New Hampshire, said he did not see anything in the cell phone companies' practices that would "warrant significant intervention in the marketplace."

Rockefeller countered by arguing that current regulations do not go far enough in protecting consumers.

"I do not believe that this limited regulatory scheme is now working given the industry size and its domination by four major carriers," Rockefeller said, according to a CNET report. "I believe it's time to revisit the entire regulatory framework that governs wireless service."

Verizon Wireless C.E.O. Lowell McAdam told the committee that Rockefeller's legislation was not only unnecessary but could be "harmful to the consumer," and would "slow down a very innovative and dynamic industry."

Meanwhile, consumer groups praised Democratic Senators for ramping up the pressure on the cell phone carriers.

Markham Erickson, Director of the Open Internet Coalition took aim at Verizon Wirless and AT&T's recent moves to censor content on their networks.

"The telcos' recent anti-free speech activities demonstrate that an open Internet is at increasing risk," Erickson said, in a statement sent to Portfolio.com.

"Hearings by the Senate Committee on Commerce are necessary to help ensure the telcos are held accountable for their recent anti-free speech acts," Erickson added, "and will jump start an overdue discussion on legislation that will protect open communication on the Internet."

Public Knowledge President Gigi B. Sohn also praised Dorgan, who she said "rightly recognizes that the telephone companies have almost unlimited discretion to determine what speech goes over their networks."

"Consumers don't recognize that their freedoms are more limited for text messaging or cellular calls than for regular telephone calls," Sohn said in a statement. "The Committee should examine whether the increased power of telephone companies to act as censors and gatekeepers—power that was brought about by the Federal Communications Commission, is in the public interest, and whether new legislation is needed."

In an apparent response to political pressure, AT&T and Verizon said it would relax restrictions on consumers who want to change their calling plans, according to a Washington Post report. AT&T also said it would prorate early termination fees.

"The political pressure appears to be working," said Christopher Murray, senior counsel for the Comsumers Union in his testimony at the hearing.

by Sam Gustin