Thursday, January 24, 2008

Goldwater Institute: Cell Phone Bill of Rights Could Raise Prices

New report says legislation would hurt consumers with higher prices, fewer choices

During this legislative session lawmakers will consider a host of proposals aimed at protecting consumers. But a new report says one of those, the "Cellphone User's Bill of Rights," will likely hurt the consumers it aims to help.

The report released today by the Goldwater Institute, Hold the Phone: Why Arizona Doesn't Need a Wireless Consumer Bill of Rights, says the legislation will limit cell phone plan choices and raise prices. The Cellphone User's Bill of Rights would limit cell phone contracts to one year and allow customers to cancel contracts within 30 days for any reason, among other things.

"Lawmakers should not be in the business of telling consumers what terms of cell phone service they can or cannot buy," said Solveig Singleton, Senior Adjunct Fellow with the Progress & Freedom Foundation's Center for the Study of Digital Property and author of the report. "The government doesn't dictate our gym membership or our Blockbuster contracts, and it shouldn't mandate cell phone service terms either."

Many of the provisions in the Cellphone User's Bill of Rights have already been addressed voluntarily by cell phone providers. Verizon Wireless gives consumers 30 days to cancel contracts. AT&T, Sprint, and T-Mobile have introduced more flexible contract terms, and several companies are prorating termination fees. "Markets are working well in this industry. There is no reason to change course," says Singleton.

Some companies are willing to offer a lower monthly price in exchange for a two year contract. If these companies are no longer allowed to offer a two year contract, even if a customer wants one, prices may go up.

Five other states have considered similar proposals, but Minnesota is the only state to actually enact legislation. That legislation was later found unconstitutional by the U.S. Court of Appeals.

Congress began deregulating the cell phone industry in 1993, and consumers saw a 40 percent price drop in six years, along with better, more affordable equipment, and more service options. The Cellphone User's Bill of Rights would reverse the national trend towards deregulation.

Hold the Phone: Why Arizona Doesn't Need a Wireless Consumer Bill of Rights is available online or by calling (602) 462-5000.

The Goldwater Institute is a nonprofit public policy research and litigation organization whose work is made possible by the generosity of its supporters. Please click here to make a tax-deductible contribution. Contact: Starlee Rhoades Vice President of Communications (602) 462-5000 x 226

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