Washington Listens to Angry Cell-Phone Users

Hate your cell-phone company? If you answered yes (and chances are you did), just be thankful you're not one of the 175,000 customers of bankrupt Amp'd Mobile who were informed last week, by text message, "Your svc may be disconnected" in 48 hours. Or one of the Verizon users recently dropped for going over the 5 gigabyte limit on the company's "unlimited" data plan. Or one of the 1,000 Sprint Nextel subscribers let go last month for calling customer service too frequently. (A Sprint spokesperson says the company felt that since the customers still weren't satisfied after repeated calls, that "indicated they'd likely be happier using another service.") No wonder the cell-phone industry ranks among the bottom five businesses in the American Customer Satisfaction Index.

But customers may be getting some satisfaction out of Washington. The House Subcommittee on Telecommunications and the Internet held hearings this month to discuss whether wireless companies should be regulated at the federal level rather than by state public utility commissions, and to consider possible rules for the wireless broadband market. Holding up a new iPhone, Rep. Ed Markey of Massachusetts asked why it was fair to charge early termination fees for a device that costs $500 or more and can only be used on AT&T's network. "Instead of innovating, the wireless industry has become a cozy cartel of a few dominant providers," Chris Murray, senior counsel for Consumer Reports publisher Consumers Union, testified at a July 11 hearing.

Critics point to several industry practices they see as unfair: high termination fees for switching cell providers before a contract is up; handsets that only work with a single carrier; and limitations that providers place on customer access to certain Web sites, so that the companies can charge for the content. Carriers say these practices are simply part of the business model that allows them to stay profitable, and that the restrictions on handsets and Internet content are there to keep the networks secure. Detractors point out that European cell carriers operate without any such restrictions.

The specter of stricter oversight has carriers spooked. Steve Zipperstein, general counsel for Verizon Wireless, reminded Congress that, so far, "the marketplace, not government intervention, has addressed concerns about wireless carriers." And industry lobbying group CTIA (Cellular Telecommunications and Internet Association) filed a brief last week with the FCC refuting that European cell users enjoy better wireless service. That's a "romantic fallacy," said John Walls, vice president of CTIA. "You have all these high level proceedings going on making the claim that the industry is an oligopoly ... The claims are dead wrong."

Cell carriers do admit they have an image problem, however. "It is an industry that, for years, hasn't been viewed as caring about their customers," says Sue Nokes, senior vice president of sales and customer service at T-Mobile (she hastens to add that her firm is an exception). Until now, customers have only been able to express their dissatisfaction with their feet—leading to an attrition rate at some carriers of one third of their customers per year. Now that Washington is listening, though, customers may finally get an answer to their plea, "Can you hear me now?"