CTIA CONSUMER CODE KNOCKED FOR BEING TOO LITTLE, TOO LATE

The wireless industry unveiled a voluntary code of conduct last week it hopes carriers will follow in their interactions with consumers, ostensibly to give subscribers greater protections. But critics assailed the credo as a thinly veiled attempt to keep regulators and lawmakers at bay.

The Cellular Telecommunications & Internet Association, which spearheaded the effort, said the nation's big six wireless carriers—AT&T Wireless Services, Cingular Wireless, Nextel Communications, Sprint PCS, Verizon Wireless and T-Mobile USA—would honor the code, as would “countless smaller wireless companies.” Other participating carriers of note include Alltel and Western Wireless.

The code, which was a year in the making, governs how carriers communicate with current and potential customers and offers new protections, such as trial periods and early contract terminations (see figure at left).

“Consumers need information to decide the winners and losers, and that information must be clear and readily available,” CTIA President and CEO Thomas Wheeler said during a press conference last week.

The code was announced the same day the California Public Utility Commission fined Cingular $12.1 million for failing to provide trial periods for new subscribers when its corporate policy calls for a 15-day return/refund period.

While a multimillion-dollar fine is an attention grabber, there are far worse punishments policy-makers can mete out to an industry — and that's what the code really is about, said Andrew Cole, head of the wireless practice for analyst firm Adventis.

“They're very fearful of government intervention, and that's what's driving them—nothing else,” Cole said. “While it would be difficult for the government to actually mandate such guidelines, such an attempt would cost the wireless industry a lot of headaches and money.”

Wireless carriers have been under increasing attacks in recent months from federal and state regulators and legislators who believe the industry's policies and marketing tactics are unfriendly to consumers. One of the more potent threats comes from New York State Assemblyman Richard Brodsky, who had warned the wireless industry he would push forward consumer protection legislation if it didn't take proactive steps.

“The industry responded,” Brodsky said. “There is more to be done, but this is an important step that should not be minimized.”

But Sen. Charles Schumer, D-N.Y., doesn't think the code goes far enough. In February Schumer introduced legislation dubbed the “Cell Phone Users Bill of Rights” that would require wireless carriers to port numbers, provide better service, clearly disclose contract and service terms, and do a better job of monitoring signal strength and dead zones. Schumer is particularly miffed that the wireless industry's code does not address number porting and that it is not mandatory, said Phil Singer, Schumer's communications director.

“As soon as these companies decide it's unprofitable to do these things, they'll kill it,” Singer said.

The hyper-competitive nature of the sector will prevent that, however, said Michael Altschul, the CTIA's senior vice president of regulatory affairs and general counsel.

“Carriers already are running ads that pick on other carriers by name,” Altschul said. “They're going to out any carrier that's not living up to the pledge. And they're going to try to outdo each other. The code establishes a floor, not a ceiling.”