Background
Most consumers find value in cell phone technology and its capacity to keep them connected, but many also have strong negative opinions about the service provided by their wireless carriers. One indicator of cell phones’ central role in modern life is the growth in the number of wireless subscribers in the US over the past decade and a half: from 16 million in 1994 to more than 377 million in 2015. For many consumers, including older people, cell phones have become indispensable. With a cell phone—increasingly a web-connected smartphone—each consumer has more freedom and flexibility to stay connected with family and friends, conduct business, stream audio and video, navigate, and coordinate schedules. Moreover, in the event of an emergency, a cell phone is a safety device, empowering people with a sense of security and confidence that help is always nearby.
The wireless industry’s growth, however, has been accompanied by widespread unfair, misleading, and deceptive business practices and, as a result, chronic consumer frustration with wireless service. Better Business Bureau (BBB) data show that in 2015 customers filed 35,395 complaints about cell phone companies. Consistently over the past decade, more people complained to the BBB about cell phone companies than about any other industry.
Under federal legislation passed in 1993, states are preempted from regulating the entry and exit as well as the rates charged by wireless companies except under certain conditions. States are allowed to regulate “other terms and conditions” of wireless services that do not pertain directly to rate levels. This includes placement of wireless facilities, practices related to billing and marketing, as well as other consumer protection matters. Where exactly the line between rate regulation and “other” oversight falls has been an ongoing subject of contention between the wireless industry and state and federal regulators.
Wireless Communications: Policy
Consumer protection
Legislators should enact, and regulators should vigorously enforce, consumer protection principles for wireless services. The principles should include:
- price and quality comparisons—to facilitate and encourage comparison shopping, regulators should require that consumers have access to information that is low cost or free, comprehensive, and easy to read. Regulators should sponsor and disseminate price and quality comparisons of wireless goods and services;
- disclosure—prices for wireless goods and services should be disclosed up front. Contract terms should be clear and concise;
- choice—consumers should have a choice of vendors, all of whom should have a fair chance to compete for customers;
- service area coverage information—consumers should receive maps or other information from vendors that identify network holes or high-traffic areas that disrupt service;
- oversight and enforcement—consumers should have a right to aggressive oversight and enforcement of consumer protections by state and federal regulators;
- public participation—consumers should be adequately represented in public policy decision-making related to wireless communications;
- redress—timely and effective means of redress should be available to consumers when they encounter problems. Vendors must clearly explain how and where consumers can lodge complaints. Mandatory binding arbitration should be prohibited; and
- usability—consumers should have easy access both to customer service agents—rather than just an automated call system—and to user-friendly instructions for wireless goods and services.
Policymakers should:
- ensure all consumers are able to cancel, without penalty, any contract for wireless telephone service within a period of at least 20 days after the date of the first bill for monthly service following service activation—consumers should be able to return for a full refund any equipment acquired from the provider or its agents or authorized dealers;
- ensure service providers substantially reduce or eliminate fees that they charge customers for terminating a service contract before it expires; and
- prevent wireless carriers from using handset-locking software or other techniques that disable otherwise functional cell phones when consumers switch providers.