December 27, 2024
Business

Cell phone firms facing state scrutiny

AUGUSTA – Several cellular telephone companies that operate in Maine are being investigated by the Maine Attorney General’s Office for possible violations of anti-trust and consumer protection laws.

“I can only confirm those companies that have disclosed they are under investigation,” said Assistant Attorney General Linda Conti. “We are not looking at all of the companies [that operate in Maine], but we are looking at more than the two that have self-disclosed.”

Both Verizon Wireless, the nation’s largest mobile telephone company, and Sprint PCS, the fourth-largest, have confirmed that attorneys general in 22 states including Maine have requested a wide range of information relating to their marketing, advertising and billing practices.

In a filing with the Securities and Exchange Commission last week, Verizon Wireless disclosed the firm had received a letter on March 21 from the state attorneys general seeking information on the marketing of various products and services, and data on billing practices. Verizon Wireless is a joint venture between Verizon Communications and the British firm Vodafone Group Plc. Because of plans to sell stock publicly the firm is required to disclose potential legal problems.

“We have provided documents and other information responsive to the request,” the company said in an amendment to its stock prospectus, first filed last August. “We cannot predict whether or not this inquiry will continue and, if it does, what impact, if any, it may have on our business practices.”

Conti said what she can say about the ongoing investigation is limited by law, but she acknowledged that all of the states have broad concerns about some of the business practices of the cell phone industry.

“Are these companies accurately representing their services in their advertising and do people understand the services they are buying?” she asked. “We have a lot of questions we ask as part of any investigation like this.”

While telephone services are regulated by states, cell phone services are not, and that concerns the Maine Public Advocate’s Office. Under state law, the advocate represents consumers before the Maine Public Utilities Commission on telephone and other utility matters.

“The line between cell phone service and telephone service is getting very blurred,” said Wayne Jortner, the staff attorney with the Public Advocate’s Office who deals with telephone issues. “There are people that are using a cell phone as their only phone, and while we try to help anyone with a problem, there is little we can do when people come to us with a [cell phone] billing problem or service problem.”

There are clear procedures established by the PUC for handling just about any telephone problem a consumer may experience. However, the Federal Communications Commission, the only agency providing any oversight of the cell phone industry, does little to protect the consumer, according to some analysts.

“The FCC does not have a very strong track record in protecting consumers,” Jortner said. “They don’t regulate prices either, they just regulate the technical issues like frequency allocation.”

If a local telephone company offers a particular service, all the costs of that service are regulated by the PUC. And there must be full disclosure of all the fees associated with the services.

“But with cell service, a customer is on their own,” Jortner said.

The Public Advocate’s Office does not collect statistics on cell phone complaints, but Jortner said there have been many calls to the agency. He said complaints range from billing errors to consumers angry they had committed to two years of service when they signed up for the service.

Conti said the Attorney General’s Office also has received a wide range of complaints, including one from a consumer who bought service from a company that did not have coverage in his town.

“We hope anyone that has had a problem with any cell phone company will contact us,” she said. “We want to hear from people what problems they have had.”

Cell phones have become big business. More than 123 million Americans subscribe to one of the scores of cell phone services. In Maine, it is estimated there are more than 350,000 cell phones in use.

As in the rest of the country, there is fierce competition in Maine among several companies, including Verizon and Sprint, for cell phone customers. Many companies advertise on radio, television and newspapers and use direct mail to reach potential customers and often offer special promotions to entice consumers.

“We’re not saying competition is bad,” Jortner said. “Our concern is who is looking out for the consumer.”


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