Out of Control Policy Blog

Wireless Remains a Favorite Target

You can almost set you watch by it. Once again, members of Congress is calling for regulation of marketing and customer service rules in the wireless industry.

Here's a report from Friday's Chicago Tribune:

The latest draft legislation is a wireless consumer protection act from Rep. Edward Markey (D-Mass.) who proposes, among other items, requiring operators to offer a service plan with no early termination fee and letting consumers cancel their contracts within 30 days without penalty.

Sen. Mark Pryor (D-Ark.) has also floated legislation to set up uniform requirements for wireless customer service.

The cell phone industry, a category that includes service and equipment, generates the most complaints out of the roughly 3,800 industries tracked by the Council of Better Business Bureaus. However, according to BBB data, the wireless industry has a higher rate of resolving consumer complaints than the overall rate for all businesses.

The industry says it's open to light national regulation, though it emphasizes that operators already respond to consumer and competitive pressures.

Regulations should protect customers from false or intentionally misleading service offers and pricing plans, but legislators should of careful of sweeping rules that address anecdotal problems. With millions of people using their cell phones on daily, sometimes hourly basis, it's no surprise that service, pricing and quality problems occur. Yet overall, usage continues to grow, prices have declined measurably, companies that have failed to meet competitive standards have been punished by loss of market share. Many Americans are comfortable enough with the reliability of wireless service that it's the only phone service they use.

The problem with large-scale customer service regulations, such as a "Wireless User's Bill of Rights," however well-intended, is that government, not the marketplace, ends up setting the customer service standard. If the law mandates cell phone companies offer a 30-day service cancellation window, or reduce on-hold waiting time to no more than five minutes, that's the requirement every service provider will meet. Go light on regulation, and competition will force service providers to make quality a differentiator. Pro-rated service contracts, pre-paid phone accounts and more flexible service bundling all emerged due to competition, not regulation, as service providers sought more ways to one-up the other.


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