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State Fines Cingular Over Charges, Service

September 24, 2004|James S. Granelli | Times Staff Writer

California regulators on Thursday approved a $12.14-million fine against Cingular Wireless for violating state laws three years ago when the nation's second-largest mobile phone company was signing up customers faster than it could deliver service.

On a 4-1 vote, the state Public Utilities Commission also ordered Cingular to reimburse, with interest, customers who paid early termination fees of $150 to $550 to end their contracts during the period at issue, from January 2000 to May 2002.

The PUC, acting on a year-old recommendation from its staff, found that Cingular had not allowed customers to cancel service during a trial "grace period" unless they paid the fee, even though the company said that testing its wireless service was the best way to figure out whether it met the customer's needs.

"The corporate practice became more egregious during 2001 when Cingular acknowledged that its network couldn't keep up with the addition of customers," Commissioner Carl W. Wood said. "It made no effort to disclose those network problems and prohibited refunds and early terminations."

The agency's decision followed settlement discussions that went on all month and into Wednesday night.

Cingular, a joint venture between SBC Communications Inc. and BellSouth Corp., said in a statement that commissioners ignored the facts. The PUC "insists on penalizing Cingular for failing to meet then-nonexistent standards for a grace period and network service."

"This type of unreasonable, out-of-touch regulation makes doing business in California and meeting the needs of our customers far more difficult than virtually any other state," the company said.

Cingular said it would pursue "all options available."

In other action, the PUC:

* Approved, 3 to 2, audits of SBC and Verizon Communications Inc., the state's largest and second-largest local phone companies. The audits found that Verizon delivered very good service to both businesses and consumers and that SBC had generally good service, though it responded too slowly to residential customers with outage, billing or other problems.

* Approved, 3 to 2, a temporary restraining order it issued last week that required Verizon to make its new packet-switching technology available to competitors at regulated wholesale prices until the agency could make a final ruling in the case. As a result, said Verizon California's president, Timothy J. McCallion, the company would not install in California its "platform for the network of the future" until it could get the decision reversed in the final ruling.

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