Federal News Service Transcript - Press Conference with Senator Charles Schumer

Federal News Service

June 18, 2003 Wednesday

SECTION: PRESS CONFERENCE OR SPEECH

LENGTH: 1917 words

HEADLINE: PRESS CONFERENCE WITH SENATOR CHARLES SCHUMER (D-NY)
 
RE: CELL PHONE SERVICE AND NUMBER PORTABILITY
 
LOCATION: SENATE RADIO/TV GALLERY, THE CAPITOL WASHINGTON, D.C.

BODY:
SEN. SCHUMER: Hello, everybody. And we're here to talk about something that I think burns more people in this country from one end to the other, which is poor cell phone service. There is nothing that bothers people more, I find. (Laughs.) And when I started taking up the cudgels about this in New York, the number of calls and letters and comments we got was just enormous. Because people don't mind paying for good cell phone service. They really don't. And there is price competition. But what they really object to is poor service and lack of knowledge about who gives better service as well as, most of all, being handcuffed to stick with one provider, no matter how bad the service is.

And that's what's happened. The wireless industry holds consumers hostage by locking them into long-term contracts with opaque billing practices, and then by preventing customers from taking their phone numbers with them when they switch providers. And you say, well, what's the big deal? You change your phone number. If you're a small business person and you've given out a thousand business cards to people you've seen, you don't even know who they might be, you don't want to change your number. Even if you're just, you know, not in business, all your friends have a number, you say, It's such a pain in the neck to change phone numbers that I'll stick with my present provider and provide bad service.

Now, we've always known this to be the case. But a new survey that we're releasing today shows how real this is.

According to the survey of over 2,700 cell phone users conducted by the telecommunications consulting and research firm TMNG of Kansas City, almost one-third of all wireless users, 42 million customers, would switch providers if number portability were a reality. Is that incredible? One-third of the people feel locked in to bad service because they can't switch their phone numbers.

Let me put it in perspective. That would mean that if wireless consumers could take their phone numbers with them, the population equal to those people living in the states of New York, Texas and Oklahoma would switch. Forty-two million people. And that's an astounding fact.

Now, only now, because number portability does not exist, consumers are locked in. One of the great things about our free market system—I love it—is competition. If one company doesn't do what you need, if one company treats you poorly, you can go to another one. Everywhere but in the cell phone world.

This survey underscores the need for cell providers to smarten up and become more consumer-friendly. From number portability to customer service to billing practices to transparency, the cell phone industry is the proverbial bad boy of the telecom sector. And that's got to change.

Unfortunately, the message doesn't seem to be getting through to the lobbyists who represent the wireless companies. The cell phone industry is stuck in a cell phone dead zone. They hear no evil, see no evil, do no evil, and they don't want to change.

Change is upon them. And now, they're in a last-ditch effort to try and prevent that change. Because while I disagree with Michael Powell on a whole lot of things, he has been very strong on this issue. And he has said that the FCC will implement number portability by the November of 2003 deadline. That's a mandate, by the way, that was extended three times in the '90s at the wireless industry's request. But I've talked to Commissioner Powell repeatedly about this, and I can tell you, on the phone privately, he feels every bit as strongly, if not more strongly, than how he speaks of publicly.

Because of the FCC's determination, the industry has relied on a bag of dirty tricks. It included a court challenge to the FCC's portability rule, which the D.C. Circuit Court of Appeals, hardly a liberal circuit these days—they rejected it earlier this month. And now, because they've been rejected by the court, they've gone back with another request to extend the November deadline. They say they can't get it done. They've been saying it from the '90s. Everyone who studies this issue knows they can get it done. And in fact, many smaller companies already offer it that don't have the capability of the big boys, who have all the customers and want to lock people in.

So now, finally, we're down to—it's high noon at the OK Corral. They have a last-ditch effort, and that is to take to introduce legislation to overrule the FCC. And that could happen as early as Thursday. There were two potential vehicles that Senator Stevens, who's carrying this legislation, could have used. One was the FCC reauthorization. That's been pulled from the agenda. But the other is the media ownership bill. I, for one, will do—even though I support the media ownership bill, I feel so strongly about this that I will do everything I can to block it if the Stevens amendment that would allow the cell phone industry to delay portability is included within it.

What's really mind-boggling about this whole situation is that throughout the wireless industry's attempts to avoid implementing number portability, it's been charging customers millions of dollars in hidden fees to pay for this non-existent service, adding to consumers' upset. According to the National Association of Regulatory Utility Commissioners, the industry will collect $1.18 billion in so- called regulatory fees next year to implement both number portability and E911. And the industry is even claiming that implementing portability will prevent them from getting their E911 systems up and running in time, even though they're getting money for it. So, this is truly grasping at straws.

Here's the real skinny: It's a pain in the neck to change your phone number when you change your service provider, because you have to hope all your business associates and friends remember your new number. So people stick with the old number and they tolerate bad service.

The reason we want number portability is to free the consumer and create competition not only on price, but on service. That's what we're attempting to do. I would hope that the Commerce Committee would reject any attempt on Thursday to amend this legislation. If they do, I will introduce some legislation on the floor to undo it, and do whatever I can to stop the telecommunications deregulation—regulation bill.

Thanks.

Yes?

Q Have you done a count of the Commerce Committee to get a sense of where fellow Democrats are on this?

SEN. SCHUMER: Well, obviously, the cell phone industry and the CPIA are lobbying and lobbying and lobbying. But right now, I'm not sure they have the votes. I don't know. It's close, that I can tell you; it's very close.

Q Aren't there also a lot of other vehicles? And is that a concern of yours --

SEN. SCHUMER: Yes, let me say this. Good point. Even if they don't do it on the ownership, they will try to do it on the appropriations bill, where Senator Stevens, obviously, as chair of the committee, has tremendous sway. And I'll make a fight to undo it there as well.

Q As part of this fight, would you put a hold, you know, one of the famous Senate holds, on whatever vehicle it is attached to?

SEN. SCHUMER: I sure would consider that, yes. I think this is so important and so outrageous, and we've waited so long, that I would certainly consider putting a hold.

Q Senator, what arguments, if I may ask, are being advanced to block your bill? What possible arguments does the cell phone industry have to not go along with it?

SEN. SCHUMER: They say they're incapable, they're not ready yet to implement this. They've had—they've delayed it three times, is it, Cindy?

STAFF: Four.

SEN. SCHUMER: Four times, saying they're not capable. But I think that's hogwash. I think --

Q (Off mike.)

SEN. SCHUMER: Mm-hm. Because smaller companies do it right away.

Q Senator, is there a potential problem also—there's a lot of emphasis now placed on the E911 rollout. One of the arguments being made is that E911, you can't—the cell phone industry said they can't do both at once, they want to concentrate on E911.

SEN. SCHUMER: Well, of course they would.

Q (Off mike.)

SEN. SCHUMER: I think they look for any excuse to avoid this. But for them, number portability or blocking number portability keeps creating the goose that lays the golden egg, so they'll look for any excuse.

Q How do you rebut the notion that the FCC statistics every year show pretty consistently that about one third, or just under one third of consumers change their provider on a regular basis? And the industry points to that as robust competition.

SEN. SCHUMER: Well, again, if you have one third of the people who say they're not changing because they're locked in, as this survey shows, it overwhelms that argument.

Q You said you talked to Chairman Powell. What is—is he going to get involved in this in any way?

SEN. SCHUMER: He's strong. Well, he has said that he has—he wants to implement portability in November of 2003, and he's going to stick with that. So the only thing—and now they've failed in the courts, so the only thing they have left is legislation. The battleground is here.

As this fight gets hotter, yeah, I'll ask Chairman Powell to weigh in.

Q If they're successful in adding—if Senator Stevens is successful here, then the FCC is powerless to enforce --

SEN. SCHUMER: Yeah, they'll overrule him. Correct. Correct.

Q So the legislative would trump whatever they --

SEN. SCHUMER: The regulation, yes.

Okay. Thank you—whoop.

Q Some would say it's ironic that, just as the cell phone industry is saying they don't have enough money to do this, that Nextel announced yesterday that they're going to become—or it looks as if they're going to become the sponsors of NASCAR.

SEN. SCHUMER: Yeah, NASCAR. They have more than enough money to do it. They have the technical ability to do it They have the ability to do this and 911, which they're getting paid for. They want to avoid competition, particularly competition on service. What bothers most people about cell phones is not price. This is sort of the opposite of competition in a lot of other areas; it's service.

And, you know, I've introduced the Cell Phone Users' Bill of Rights, which would not only do this, do portability, that was one fight, but would also even put service, you know, dead zones on a website.

Consumers should have information. Adam Smith is looking on us this morning and smiling. And the cell phone industry—you know, many of the very same people who are part—who own cell phone companies, who are baby Bells and others, say they want competition—in other areas, but not here. You know, I believe in competition up and down the line here.

Q Would you, in your consumer bill of rights legislation on the cell phone, would you try to address the cell phone companies charging for number portability?

SEN. SCHUMER: Well, again, I think to me, our Cell Phone Bill of Rights is very "Adam Smithy" and very free market. It wants disclosure that people can understand, and then they can make a decision. I don't really believe in blocking things unless you have to. On credit card interest rates, another area where I was involved for years, I never was for a cap. I rather said just put it in big numbers how much you're charging, and the consumer will do the job. And it worked. Same thing here.

Okay, thank you everybody. Have a nice day.