Newsroom: Phone & Cell Phones

For Immediate Release                                

Washington, D.C. – Consumers Union, nonprofit publisher of Consumer Reports magazine, called on the cell phone industry to end three common practices stifling competition in the wireless market—either pro-rate or eliminate early termination fees, end cell phone "blocking" of new applications, and end locking or tying cell phones to a particular service provider.

Chris Murray, Senior Counsel for Consumers Union, testified before the U.S. Senate Committee on Commerce, Science and Transportation on behalf of Consumer Federation of America, and Free Press.

"Ideally, policymakers would rely on the force of competition to police bad behavior in the wireless market—yet at every turn the industry is operating to throw gravel in the gears of competition, with early termination fees, handset locking and other practices that increase switching costs. They cannot have it both ways," testified Chris Murray, Senior Counsel for Consumers Union. "While it's a first step that Verizon and now AT&T have agreed to pro-rate early termination fees, they still are failing to provide consumers adequate relief from these costly charges."

Recently the groups endorsed legislation proposed by Senator Klobuchar and Senator Rockefeller, the Cell Phone Consumer Empowerment Act of 2007. The legislation would require companies to pro-rate Early Termination Fees (ETFs) and force carriers to provide consumers with better information about the service they are buying, for example, accurate coverage maps and information regarding dropped calls.

"We think that the aim of this bill is on target—to provide consumers more fairness in the marketplace and to provide them with better information about the cell phone service they are buying," said Murray. "Markets work best with good information, and this bill aims to get real information into consumers' hands."

In the annual Consumer Reports' customer satisfaction survey, cell phone service ranks near the bottom of the list providing satisfactory service, ranking 18 of 20 industries with only "computer makers' tech support" and "digital cable TV service" receiving lower marks.

"We can do better. It's not that consumers have no choices in this market, the issue is that they have fewer choices without openness and they would have more choices with it," added Murray. "Policymakers have an opportunity to save consumers money, get exciting new applications to market, regain our standing as a world leader in broadband, and provide citizens with a new wireless ‘town square' that is open and democratic."

Click here to view a copy of Murray's testimony.

Contact:  Jennifer Fuson, 202-462-6262

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