Regulators Launch Probe of Cingular

California regulators are investigating Cingular Wireless, the second-largest U.S. wireless telephone company, after receiving thousands of consumer complaints about shoddy service and cancellation fees.

In its order for the probe, the state Public Utilities Commission said Cingular’s system appeared “fundamentally unfair to consumers.”

Complaints focused on limited phone coverage areas; frequently disconnected, or “dropped,” calls; misleading advertising; and a termination fee of $150 or more to cancel service early, the order said.

The commission, which regulates the telecommunications industry in California, said it has received more than 4,700 complaints about Cingular’s operations in the state since 1999.

“Customers found they did not have coverage where they lived, worked or commuted, or that their calls were routinely dropped,” the commission said. “... Customers felt trapped into inadequate service with Cingular.”

The Atlanta company, a joint venture between BellSouth Corp. and SBC Communications Inc., has more than 22 million voice and data customers nationwide. It ranks behind market leader Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group.

Cingular said in a statement that it is committed to “best-in-class” service in California and is “disappointed” that state regulators are investigating it.

On May 1, Cingular started a nationwide “no questions asked” return policy under which customers do not have to pay an early termination fee if they cancel the service and return the phone within 15 days of signing up.

The company, however, will charge a nonrefundable $36 “activation fee,” Cingular spokesman Clay Owen said.

Cingular is spending $945 million to upgrade its system in California, Nevada and Washington, Owen added.

The PUC will schedule a hearing with Cingular but has not set a date, said spokeswoman Sheri Inouye.