Nov. 16, 2006

T-Mobile USA Inc. has been slapped with a class action lawsuit over the No. 4 mobile phone operator’s early termination fee policy.

Filed in an Idaho federal court, the lawsuit says T-Mobile USA’s practice of charging subscribers $200 for cancelling service before the end of their contract violates as many as 13 state consumer protections laws.

T-Mobile USA offers no allowance for how long the consumer has been with the mobile phone carrier or for its overall quality of service its customers receive.

“T-Mobile distributes the agreement on preprinted standardized forms that are not subject to mediation or negotiation, or, if the consumer is shopping on the Internet, through read-only screens that cannot be modified by users.

Furthermore, T-Mobile presents these agreement to prospective subscribers on a ‘take it or leave it’ basis. These agreements are therefore contracts of adhesion,” the lawsuit states.

The suit involves more than 100 people, and asks for damages of more than $5 million.

"We do not comment on pending litigation." said Peter Dobrow, a T-Mobile USA spokesman.

CTIA, the cell phone operator trade association, has pressed the Federal Communications Commission to pre-empt state oversight of ETFs, arguing such fees are components of wireless rates.

A 1993 law prohibits states from regulating mobile phone rates. The association also lobbied for federal legislation to repeal that statute’s clause reversing to states jurisdiction over “other terms and conditions” of wireless service.

However, telecom reform legislation, which includes expanded federal pre-emption for the wireless industry, is likely dead for the year due to Congress’ schedule.

The FCC has yet to act on the cellular industry’s ETF petition. Having been overturned by a federal appeals court on its 2005 wireless pre-emption billing, the agency could find it legally difficult to make ETFs off limits to states.

The cellular industry, owing to midterm election results, will have to deal with regulatory-prone Democrats who will control the House, Senate and more than half of the nation’s governorships in 2007.

Source: RCR News