FCC chief lays out plan for cell phone fees

On Thursday Federal Communications Commission Chairman Kevin Martin announced a plan to regulate the high fees that cellular phone companies charge consumers for canceling their contracts early. His proposal is similar to an industry plan put forward last month. Chairman Martin said he was skeptical ongoing class-action lawsuits would adequately resolve for consumers all the pending issues about the unpopular fees. Companies charge early termination fees that can range from $150 to $225 to recover the cost of cell phones, which they subsidize under long-term service contracts, according to wireless companies. The fees also defray costs for signing up new customers, companies said. The fees have resulted in class-action lawsuits in several states and legislative proposals on Capitol Hill and in state legislatures. Martin's plan would: 1) require the fees be related to the actual cost of the phones; 2) pro rate fees, reducing them over the time of the contract; 3) shorten contracts to a "reasonable length of time" and dropping termination fees at renewal, and 4) allow consumers to have a chance to examine their first bill before they are subjected to the fees.
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/12/AR200806...

* Chairman Martin:
"I believe early termination fees can be a legitimate means of recovering legitimate costs. But they shouldn't be abused. Our goal at the FCC must be to protect consumers. It is therefore essential that we examine how early termination fees are being used and discuss the best way to guarantee consumer protections."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-282898A1.doc

* Commissioner Copps:
"First, I want to know with as much precision as possible about the extent to which carriers are subsidizing handsets today and how these practices are related to ETFs. Secondly, I want to understand the role that state regulators and state consumer advocates can and should play when it comes to contract provisions like ETFs. Thirdly, I hope we will learn more about how FCC actions on ETFs will impact pending state court lawsuits seeking enforcement of state consumer protection laws. Fourthly, what about such fees applied to consumer broadband? What are the facts, what justifications are put forward, what are the implications for both consumer costs and the freedom of the Internet?"
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-282896A1.doc

* Commissioner Adelstein:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-282897A1.doc

* Commissioner Tate:
"In approaching this or any public policy question, my regulatory philosophy is straightforward and, ultimately, pro-consumer. It calls for, first and foremost, regulatory humility - something I have tried to practice both as a State regulator and now as a Federal one. I look to and especially encourage industry to put forward creative, market-based solutions whenever possible, and to work with government on many other issues of importance to American families and consumers. "
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-282901A1.doc

* Commissioner McDowell:
"Since arriving at the Commission slightly more than two years ago, I have heard from an array of interested parties regarding ETFs. Over the past few months, some carriers have announced policy changes. Hopefully, more players will follow suit with even more consumer-friendly plans."
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-282819A1.doc