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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:
cellphones@consumerwatchdog.org.

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

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