GAO Report: Nowhere to Turn -- FCC Not Protecting Wireless Consumers, While New York PSC Abstains

On December 10th, the federal Government Accountability Office (“GAO”) issued a stinging analysis of the FCC’s inability to resolve consumer complaints about wireless service. Compounding matters was the realization that the states, including New York, lack the authority to enforce consumer protections for wireless users. FCC Needs to Improve Oversight over Wireless Phone Service.

The GAO survey indicated that most wireless users (84%) are at least “somewhat satisfied” with their service many customers have experienced problems with billing, early termination fees, contract terms, and customer service. While the percentage of dissatisfied users may be downplayed in the statistics, they represent millions of wireless consumers. According to the Cellular Telecommunications Industry Association (“CTIA”) there were over 276 million subscribers nationwide in June 2009. If 16% are not at least “somewhat satisfied,” that represents over 44 million customers.

On top of that, the GAO reported that the FCC "processes tens of thousands of wireless consumer complaints each year but has conducted little additional oversight of services provided by wireless phone service carriers because the agency has focused on promoting competition." The FCC "processes" the customer complaints but does not actually decide them!

The regulatory agency simply forwards customer complaints to the wireless companies for a response, and closes the case if the company simply addresses the issue raised, basically allowing the utility to decide the complaint:

Once FCC receives a response from the carrier, the agency reviews the response, and if it determines the response has addressed the consumer’s complaint, it marks the complaint as closed.

Thus, after punting customer complaints to be decided by the utilities themselves, the FCC tells customers that they can, if dissatisfied with this deregulatory approach, file a real complaint:

When FCC considers a complaint to be closed, it sends another letter to the consumer, which states that the consumer can call FCC with further questions or, if not satisfied with the carrier’s response, can file a formal complaint.

The GAO doesn't mention this in its report, but according to the FCC, "The current fee for filing a formal complaint is $200.00."

So if you complain to a wireless carrier about an unreasonable charge or error, and the wireless company decides not to adjust the charge, and you complain to the FCC, the FCC refers the matter to the wireless utility, and if the utility decides not to change its position, you will have to pay $200 to ask the FCC to decide the issue

The FCC conducts little oversight of wireless company practices because “the agency has focused on promoting competition.” In addition, the survey found that most wireless consumers who have issues with their provider do not complain to the FCC and may not know where they can complain. Since the FCC “lacks goals and measures that clearly identify the intended outcomes of its complaint processing efforts,” the FCC is unable to “demonstrate the effectiveness of its efforts to process complaints.” By not analyzing consumer complaints, the GAO found that the “FCC may not be aware of emerging trends in consumer problems, if specific rules are being violated, or if additional rules are needed to protect consumers. FCC has rules regarding billing, but has conducted no enforcement of these rules as they apply to wireless carriers.” Ouch.

As a result of its findings, the GAO made the following recommendations to the FCC Chair to improve the effectiveness and accountability of the FCC’s efforts to oversee wireless phone service. According to the GAO, the FCC should:

1. Clearly inform consumers that they may complain to the FCC about problems with their wireless phone service and what they can expect as potential outcomes from this process, as well as expand the FCC’s outreach to consumers about these efforts;

2. Develop goals and related measures for the FCC’s informal complaint-handing efforts that clearly outline intended outcomes and address important “dimensions of performance;” and

3. Develop and implement policies and procedures for monitoring and analyzing consumer complaints in order to help the FCC identify trends and emerging issues regarding wireless service and determine whether carriers are complying with existing rules or whether new rules may be needed to protect consumers.

Further, the FCC was also directed to:

1. Develop and issue guidelines which delineate federal and state authority to regulate wireless phone service, including addressing the issues of truth-in-billing and early termination fees, and, if needed, seek statutory authority from Congress; and

2. Develop and implement policies and procedures for communicating with states about wireless service oversight.

CTIA claims 89% of the US population has a cell phone and over 20% (55 million) have cut the cord and rely on wireless exclusively for their voice communications. States like New York have regulations and other requirements in place to protect wireline telephone customers. While PULP believes that more can be done to enforce these telephone fair practices rules, they do not do anything to protect wireless customers who may be saddled with poor service quality, long term contracts, and early termination fees in the hundreds of dollars.

New York is not among the 21 states that have taken some steps to create and to enforce consumer protections for wireless users. The relevant federal law leaves ample room for state regulation to protect consumers, as noted by GAO:

Federal law provides that while a state may not regulate a wireless carrier’s rates or entry, it may regulate the other terms and conditions of wireless phone service. Section 332(c)(3)(A) of title 47 of the U.S. Code does not define what constitutes rate and entry regulation or what comprises other terms and conditions of wireless phone service. This has left it up to FCC and courts to further define which specific aspects of service fall within the scope of these respective terms.

The New York legislature has given the PSC the power to exercise jurisdiction over terms and conditions of wireless phone service if the PSC finds that to be in the public interest. Yes, the FCC should take a long, hard look at itself and how its hands-off approach to wireless protects consumers, especially now that wireless is developing into a major platform for voice communications. But, the states also need to recognize that the telephone consumer protections they have in place do not apply to wireless – or the voice services offered by the cable companies for that matter – and that they are “protecting” an ever diminishing pool of citizens as they migrate to other technologies but still require the same protections and dispute resolution services. In New York, more than half of the population of telephone users are no longer covered by the state’s consumer protections or service quality requirements.

Now that the non-partisan GAO has recognized that wireless customers have nowhere to turn regarding their service complaints, let’s see the New York State Public Service Commission (“PSC”) take the initiative to apply its telephone consumer protections to wireless and cable voice services. If legislative intervention is necessary, the PSC should be advocating for this change.

Lou Manuta