February 29, 2008

To: All Members of the House of Representatives

Re: Wireless Consumer Protection and Community Broadband Empowerment Act of 2008

Dear Member of Congress,

I’m writing today to make you aware of a disturbingly anti-free market piece of draft legislation making its way around Capitol Hill called the Wireless Consumer Protection and Community Broadband Empowerment Act.  This draft, being circulated by Congressman Ed Markey, inserts the government into areas where it has no business, the contracting between private citizens and private companies.

Under the guise of “consumer protection,” the WCPCBE would mandate how wireless phone companies go about their business, even down to what information must be included in their billing statements.  This is not the job of the federal government. 

It also mandates contractual changes between willing adults in the area of early termination fees.  Early termination fees are the clearly spelled out in the contract and help cover the subsidy the wireless company pays for the actual phone consumers buy.  Without that subsidy, consumers would pay several hundred dollars for their phone, so it is a clear benefit to them.  If a customer breaks a contract where they received a benefit, some of that cost to that subsidy should be recouped by the company.  The WCPCBE seeks to impose limits on that fee and arbitrarily impose standards that will harm more customers that it seeks to help.  Companies simply will not offer a subsidy if consumers can break their contracts without having to pay the penalty for outlays the company made in order to incentivize the deal. 

The bill also seeks to force wireless companies to offer no-term contracts, allowing consumers the benefits of a given network without any conditions or requirements on them.  This business model already exists in the “pay as you go” phone market.  People are free to choose a service without contracts now, but the majority of users prefer the benefits that come with a contracted service, i.e. the ability to make calls whenever they like without having to go “recharge” their minutes, the latest models of wireless devices, and so on. 

There is a measure of personal responsibility consumers must maintain when entering into any contract that government should not seek to lessen or insulate them from.   The alternative, a contract-free phone already exists for those who choose it.

The draft also allows local governments to enter the wireless, cable, broadband or phone service business if the community is unhappy with the service provided by the private sector.  This is socialism.  The government, any government, has no business competing with private sector enterprises, especially those they have regulatory power over.  We wholeheartedly agree that there should be more competition in the telecommunications arena, but that competition should come from deregulation and the private sector, not government.

The Wireless Consumer Protection and Community Broadband Empowerment Act draft circulating on Capitol Hill is a dangerously anti-free market piece of legislation that needs to be opposed vigorously. 

Sincerely,
 
Derek Hunter
Executive Director,
Media Freedom Project