Nextel Sues Over Rules on Wireless

Nextel Communications Inc. has sued the California Public Utilities Commission to overturn regulations that created the stiffest cellphone consumer protection laws in the U.S.

Nextel, which filed its suit in U.S. District Court in Los Angeles last week, charged that the PUC’s approval of the Telecommunications Bill of Rights would exert state regulatory control over wireless services in violation of federal policy and the U.S. Constitution.

The rules would force Verizon Communications Inc. and SBC Communications Inc.’s Cingular Wireless and other mobile phone carriers to make contracts easier to understand and give customers more time to cancel service. When the rules were passed in May, regulators said they had received more than 5,000 complaints about wireless carriers and had acted to prevent companies from luring customers with deceptive offers.

The rules are “inconsistent with the deregulatory goals and policies that govern the federal regulatory scheme applicable to the wireless industry, as well as certain provisions of the United States Constitution,” Nextel said in its lawsuit.

A call to the PUC’s media line was not immediately returned. Commissioner Geoffrey F. Brown, who proposed the rules, also did not immediately return a call seeking comment.

Nextel, which sells combined mobile phone and walkie-talkie service, said the rules violated several constitutional protections, including the Commerce Clause, the Contracts Clause, the Due Process Clause and the 1st Amendment right to free speech.

The PUC, which passed the rules by a 3-2 vote May 27, gave wireless carriers 180 days to implement most of the rules and 14 months to meet others that would force billing changes. Nextel’s suit seeks a court order to block implementation of the rules as well as a decision that they are illegal.

Customers would be able to cancel service within 30 days of signing up without a penalty. They also would get 25 days’ notice of rate changes and would be able to cancel service without a penalty if carriers make restrictive changes to service plans.

California’s rules marked the first time a state exerted oversight over the wireless industry, according to Consumers Union, publisher of Consumer Reports.

Nextel, based in Reston, Va., is the smallest of six nationwide U.S. wireless carriers. Shares of the company rose 52 cents to $25.55 on Nasdaq.