State Fights to Keep Control of Cellulars : Telecommunications: California, utility regulators and consumer groups fear proposed federal legislation would lead to higher rates and poorer service.
Led by California, utility regulators and consumer groups nationwide are fighting proposed federal legislation that they contend would lead to higher rates and poorer service quality for cellular telephones and other new wireless communications services.
The controversial legislation, part of President Clinton’s proposed budget bill approved by the House and now before the Senate, would strip states of most of their ability to control cellular phones and other wireless services.
Cellular operators contend that the change is needed to create more fair competition among themselves and emerging wireless services. But opponents argue that such a move would eliminate the ability of California and other states to control persistently high cellular rates--a nagging concern among some elected officials and regulators.
“This is a major consumer issue,” says state Sen. Herschel Rosenthal (D-Los Angeles). “This would prevent the Legislature and the Public Utilities Commission from lowering excessively high cellular rates in this state.”
The tiny provision in the federal budget bill, believed to have been drafted at the behest of the nation’s cellular operators, would treat equally all types of wireless communications services by putting them under jurisdiction of the Federal Communications Commission.
Cellular telephone service--the nation’s first consumer-oriented, wireless network--is now subject to regulation by federal and state governments. Meanwhile, newer wireless networks--including the Nextel cellular-like service, set to debut in Los Angeles in August, and still-experimental “personal communication services”--are not subject to any government regulation.
The move would effectively terminate the states’ ability to issue operating licenses and monitor pricing of cellular services within their boundaries, a result that enrages regulators and consumer advocates in California, which has the toughest cellular regulations and the largest number of cellular subscribers in the nation.
“Consumers are not better off under this perverted logic,” says Daniel Fessler, president of California’s Public Utilities Commission. “The federal government wants to depose us as the guardians of the public interest.”
Cellular operators argue that the pending legislation is a long-overdue move that “creates a level playing field for cellular and the other wireless services,” said Wayne Perry, vice chairman of McCaw Cellular Communications, the nation’s largest cellular operator. “We have been trying to get this for the last 10 years.”
The issue has taken on increased urgency with the expected national roll-out in August of the Nextel wireless service, which would offer an alternative wireless phone service. Without the proposed legislation, cellular operators say, they fear that Nextel, as well as the still-experimental personal communications services, would be able to offer lower prices because they are essentially unregulated companies.
At the request of the Rosenthal and the PUC, California representatives in Washington are trying to amend the legislation to exempt the state--and possibly eight others that also have stringent cellular regulations--from the proposed law.
Aides to Sens. Barbara Boxer and Dianne Feinstein said the California Democrats want assurances that state regulations will not be dropped at least until there is effective competition among wireless services.
“There is little competition between the cellular duopolists” in California, the two senators noted in a letter to Sen. Daniel Inouye (D-Hawaii), sponsor of the federal legislation.
