Reaction was swift to the FCC's announcement it had sent
letters to some top wireless carriers and Google seeking information on early
termination fees (Google's has an equipment recovery fee connected with the
Nexus One handset it offers customers agreeing to a two-year contract with
CTIA, the wireless association, said it agreed with the FCC
that transparency and disclosure were keys, as was understanding what was in
contracts. The FCC said the letters were the first initiative of a consumer
tasks force it launched with a mandate of, among other things, making sure
those consumers were aware of the terms and conditions of various
telecommunications services, including broadband and wireless telephony.
"While we understand that the FCC's Consumer Task Force
is only looking into the issue of early termination fees," the association
said, "we hope that there is a recognition by the FCC that these fees are
part of the rate and rate structure that allows wireless carriers to, among other
things, subsidize phone purchases. Additionally, consumers of all of the
carriers that received letters from the FCC have multiple options when it comes
to choosing plans and devices without early termination fees. About 20% of
Americans have chosen a prepaid plan without a contract. It is also important
to note that consumers can avoid ETFs by completing the contract terms."
In its letter, the FCC said it did recognize that there may
be various scenarios under which those fees would be collected.
The letters were seen as a sign of increased FCC interest in
the issue by a number of consumer advocacy groups critical of the fees.
Calling the letters a "probe," Media Access
Project said it was a good first step, but that the FCC "must take
decisive action based upon the responses it receives. In short, the FCC should
be prepared to propose new rules when the answers it gets back demonstrate that
high ETFs are both a symptom of a failed market and a contributing factor to
that market failure."
Free Press Policy Counsel Chris Riley echoed that call for
action in a statement. "Excessive and poorly disclosed early termination
fees are a symptom of the dire need for FCC intervention in a broken
market," he said. "The state
of consumer disclosure must be improved for there to be any hope of meaningful
competition in the wireless industry."
Consumers Union Policy Analyst Joel Kelsey said it was time
to begin adding tough questions. "We look forward to the next several
steps the FCC takes to protect wireless consumers from abusive practices."
Broadcasting & Cable Newsletter
The smarter way to stay on top of broadcasting and cable industry. Sign up below
Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.