Subject: [NEXTEL-1] Consumer Group Sues Cell Phone Companies for "Locking" Handsets

From: NEXTEL-1
Date: Fri, 11 Jun 2004 02:47:11 -0400

NEWS RELEASE
Jun 07, 2004

CONTACT: Harvey Rosenfield (310) 392-0522 ext. 303 or Jordan Lurie (310)
208-2800
Consumer Group Sues Cell Phone Companies for "Locking" Handsets

T-Mobile, AT&T and Cingular Use Software to Disable Cell Phone
Portability, Prevent Customers from Taking Phones to New Company

Santa Monica, CA -- In a new effort to protect consumers against cell
phone rip offs and anti-competitive tactics, a California consumer group
sued three of the nation's top cell phone companies, alleging that the
companies surreptitiously insert software in the phones they sell that
disables the phones from being used on another company's system. Read
the complaint here:
http://www.consumerwatchdog.org/corporate/rp/rp004334.pdf.

According to the suit, filed in Los Angeles Superior Court under
California's powerful consumer protection law, cell phones sold by
T-Mobile, AT&T and Cingular were designed to allow users to swap a chip
inside their phone that identifies them as a customer of one of the
companies. Consumers who wished to take advantage of the Federal
Communications Commission's recent "number portability" rule by going to
another new company and keeping the same phone number would also be able
to keep their phones under this built-in technology. However, the
complaint alleges that the three companies have inserted software inside
the phones they sell to prevent such interchangeability. Thus, a
dissatisfied customer of one company must be willing to buy a new phone
and throw away an otherwise perfectly good phone in order to change
carriers. The result, the consumer advocates said, is that many
consumers are forced to stay with a cell company whose service they find
unsatisfactory, competition is frustrated, and usable phones clog our
landfills.

"If you can use the same phone number with other carriers, you should be
able to use the same phone, " said Jordan Lurie, of the Los Angeles
office of Weiss & Yourman, FTCR's co-counsel. The practice by companies
that all use the same Global System Mobile (GSM) network is particularly
egregious, Lurie noted. "Pop out the SIM-chip, pop in a new SIM-chip.
That's how easy it should be to use your GSM phone with another carrier.
Handset locking is just another unfair way to lock customers into their
networks."

"Like the 'early termination fees' that cell phone companies charge
dissatisfied customers, this handset locking scheme is designed to force
unhappy consumers to stay with a cell phone company no matter how poor
the service is," said consumer advocate Harvey Rosenfield, also
representing FTCR.

Group Challenging Other Abuses

FTCR called today's action "Round 2" in its effort to protect
Californians against rampant abuses by cell phone companies that range
from poor service quality to unfair billing practices. Last October,
FTCR sued Nextel for unilaterally deciding to begin charging its
customers $2.50 to get a fully itemized bill, which makes it nearly
impossible for consumers to determine if they are being billed
correctly. Indeed, the new policy made it nearly impossible for Nextel
customers to detect charges for four phony text messages Nextel
transmitted to every California customer that month.

FTCR's case against Cingular centers on Cingular's inability to provide
adequate coverage for its customers, and for misleading advertisements
regarding the quality of its cellular service. The Cingular lawsuit has
been joined with two related cases in San Diego Superior Court.

The FTCR lawsuits are brought under California's powerful consumer
protection statute known as he Unfair Competition Law (Business and
Professions Code section 17200). That law authorizes members of the
public to challenge illegal or unfair practices.

"Consumers are mad as hell about cell phone service," said Rosenfield.
"First of all, you can't get access, you can't make a call or you get
disconnected in the middle of a call. Then there are the bogus fees and
overcharges that nickel and dime us out of our money and the
deliberately lousy customer service that prevents you from getting the
bill fixed. If you try to walk away, they punish you with an 'early
termination fee.'"

Cell phone companies are deregulated. As a result, only court action can
protect the public against improper conduct. The non-profit said it
intended to pursue other cell phone abuses.

The group can be contacted at www.consumerwatchdog.org or by sending an
email to:
[email-masked].

FTCR is a non-profit, non-partisan citizen research and advocacy
organization.

-30-
http://www.consumerwatchdog.org/corporate/pr/pr004332.php3

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