FCC chief lays out plan for cell phone fees - WMC Action News 5 - Memphis, Tennessee

FCC chief lays out plan for cell phone fees

WASHINGTON (AP) - The chairman of the Federal Communications Commission laid out plans Thursday to regulate the expensive fees that cellular phone companies charge consumers for canceling their contracts early. His plans are similar to an industry proposal put forward last month.

FCC Chairman Kevin Martin said he was skeptical ongoing class-action lawsuits would adequately resolve for consumers all the pending issues about the unpopular fees. Martin made his comments at a public hearing.

Martin joked that his wife objected to the fees and had volunteered to testify at the hearing. He also criticized the fees, saying that "in practice, it can leave people locked into a service that they really want to leave."

Companies charge early termination fees that can range from $150 to $225 to recover the cost of cell phones, which they subsidize under long-term service contracts, according to wireless companies. The fees also defray costs for signing up new customers, companies said.

The fees have resulted in class-action lawsuits in several states and legislative proposals on Capitol Hill and in state legislatures.

Martin's plan would require the fees be related to the actual cost of the phones. A fee for a $50 phone would be higher than for a $5 phone, he said.

Martin said such fees should be pro rated, or reduced over the time of the contract. The nation's two largest wireless carriers have both begun pro rating fees with other national carriers promising to follow.

The chairman also said the contract should be a "reasonable length of time" and extension of contracts should not necessarily include a renewal of the termination fee.

Finally, he said consumers should have a chance to examine their first bill before they are subjected to the fees.

The Associated Press last month revealed details of the industry's efforts to help consumers avoid such fees in exchange for letting companies off the hook in state courts where they are being sued for hundreds of millions of dollars by angry customers.

The plan was similar to what Martin is proposing.

State officials have resisted the imposition of federal control over the fees, saying state consumer protections are more responsive to consumers.

Thursday's hearing included representatives from state government, the cable and satellite television industries as well as consumers and consumer advocates.

(Copyright 2008 by The Associated Press.  All Rights Reserved.)

Powered by Frankly