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Montana Telecommunications Association (MTTA) "dealing with “soft dial tone” and “early termination fees.”"

September 6, 2007

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I thought you might be interested inn the monthly commentary of the Montana Telecommunications Association (MTTA). This month's commentary discusses two recently-adopted telecom resolutions by the National Association of State Utility Consumer Advocates (NASUCA), dealing with “soft dial tone” and “early termination fees.”

Please feel free to call or reply if you have any questions or comments.

Best regards,

Geoff Feiss Montana Telecommunications Association 406.442.4316 (office) 406.594.0424 (mobile)

MTA Commentary- September 4, 2007 Consumer Advocates Adopt Telecom Resolutions

Earlier this summer, the National Association of State Utility Consumer Advocates, or NASUCA, met to discuss state and national regulatory policies. NASUCA is an association of consumer advocates in 42 states and the District of Columbia. Its members are entities established by state law to represent the interests of utility consumers before state and federal regulatory agencies and in the courts.

The Constitutionally-established Montana Consumer Counsel, or MCC, is a member of NASUCA. At the summer meeting, NASUCA passed two resolutions of interest to telecommunications consumers in Montana.

The first calls for “soft dial tone” requirements to be adopted by the Federal Communications Commission, or FCC. Soft dial tone refers to the ability to place a telephone call on an otherwise disconnected telephone. NASUCA’s concern focused on the ability of consumers to reach emergency service numbers, like E911.

The “Whereas” clauses illustrate the importance of soft dial tone to NASUCA members. For example,

• E911 emergency access has become a critically important service that is relied upon by millions of Americans;

• expanded availability of E911 service to premises with no active telephone service would promote public health, welfare and safety to people who occupy these premises;

• Wireline telephone companies continue to be subject to universal service and public service obligations that exceed those imposed on the wireless industry.

NASUCA thereby called for a national requirement for soft dial tone and urged the FCC to adopt such a requirement. NASUCA pointed out that some local phone companies already provide E911-only service on telephone lines that have been disconnected or suspended. That is the case with Montana’s independent telephone companies, which already offer soft dial tone on their nnetworks. The other resolution that NASUCA passed this summer calls on the FCC to reexamine wireless phone companies’ early termination penalties. Here’s something that’s needed greater scrutiny for a long time! NASUCA’s “Whereas” clauses include statements like this:

• Wireless providers typically require customers to sign service contracts that obligate them to maintain service with the company for one or more years and often extend the contract’s term in response to customer-initiated changes in service.

• Most wireless companies impose early termination fees (ETFs) ranging from $150 to $240 on customers who seek to, or for various reasons, must cancel their service.

• In addition to ETFs imposed by wireless companies, many independent vendors of wireless equipment impose additional ETFs.

• Consumer complaints regarding ETFs are consistently in the top five categories of informal complaints received by the FCC.

• Consumers seeking redress on service quality and/or billing issues often have no state or federal venue for recourse and are tied to their contracts due to the onerous ETFs. This is due in most cases because wireless carriers are not regulated at the state level, and federal rules are weak or non-existent.

• In fact, the FCC has not revised its 1992 policy of “subsidizing wireless phones” via the use of ETFs. (?!)

• Conditions in the wireless market that might have justified the FCC’s policy in 1992 have changed radically since 1992. Indeed the industry is flourishing with nearly 250 million consumers, actually outnumbering the number of wireline consumers.

• Meanwhile, wireless companies aggressively are seeking federal universal service support to subsidize their operations. This subsidy to wireless carriers has grown from $15 million in 2003 to over $1 BILLION this year—and it’s expected to grow to $2.5 BILLION by 2009.

NASUCA thereby resolved to call upon the FCC to reexamine the economic and policy assumptions underlying its 1992 wireless service order to determine whether wireless carriers, or their independent vendors’ use of ETFs remains an “efficient and promotional device” that benefits (yes—benefits!) consumers and wireless carriers. NASUCA also urged the FCC to investigate claims by the wireless industry used as justification for ETFs. Further, the consumer advocates wanted in no way for their resolution to construe the impression that they support the proposition, asserted by wireless carriers, that the FCC has exclusive jurisdiction over wireless carriers’ ETFs.

Fortunately, Montana’s rural wireline telephone companies consistently look out for their customers and provide valuable services like soft dial and consumer-friendly service contracts—without early termination penalties!

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Contact: Geoff Feiss Montana Telecommunications Association 406.442.4316 gfeiss@telecomassn.org
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