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It's Time for Change in Cellular Industry

June 18, 1995

Despite occasional promotional gimmicks, basic access and rates for cellular phone usage in Southern California remain among the highest in the nation.

One way to lower these rates--while encouraging innovation and improving customer service--is to allow cellular resellers to compete equitably against the large and powerful carriers, which currently enjoy duopoly status in each market area. Resellers are wholesalers who buy cellular service in bulk at a discount and then resell the service to the public.

According to the California Public Utilities Commission: "Increasing competition into an industry with only two wholesale service providers should result in more choices for customers and lower rates."

To compete effectively against the carriers, however, resellers must be able to provide their own switch-based interconnection and purchase only those services needed--a practice called "unbundling," in which resellers are charged separately for each wholesale service.

If services are unbundled, only those services that are needed are paid for. As a result, resellers can offer reduced rates to consumers and compete with the large carriers on a level playing field.

The PUC has ordered the dominant cellular carriers to provide switch-based resellers with unbundled wholesale rates, but so far that order has been ignored.

I have authored legislation (SB 1090) which assures that the carriers comply with the PUC order and introduces effective competition in the cellular industry so that cellular phone users will have real choice--for the first time--about the kinds of cellular services they receive and the prices they pay.

NEWTON R. RUSSELL

State Senator

Glendale

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