PUC Urged to Probe Cellular Phone Prices

State Sen. Herschel Rosenthal (D-Los Angeles) has called on the state Public Utilities Commission and attorney general to investigate possible price fixing by cellular telephone operators in California.

Rosenthal’s move is the boldest of several recent efforts by state officials to pressure cellular operators to lower rates that, in some cases, have remained unchanged since wireless phone service premiered nearly a decade ago. Rates in California, whose 1.1 million cellular subscribers make it the wireless phone capital of the nation, are among the highest in the country.

Neither the PUC nor the attorney general’s office would comment on Rosenthal’s request. And cellular operators vigorously disputed any suggestion of anti-competitive practices.

“PacTel does not engage in price fixing,” said a spokeswoman for PacTel Cellular, which has operations in Los Angeles, Sacramento, San Francisco and San Diego.

Rosenthal’s action comes amid increasing tension between California regulators and cellular operators.

The operators want Congress to remove them from state control and put them under the jurisdiction of federal regulators. But state regulators, noting that wireless communications systems represent the first major competition to local phone service, are fighting the effort. Rosenthal said he is especially concerned that cellular operators in the Los Angeles basin, San Francisco and San Diego have charged virtually identical monthly service fees.

Given this, Rosenthal said, there “may have been, and may still be, a price-fixing conspiracy that has led to excessive rates for cellular service in California.” However, he offered no evidence of a price-fixing scheme.

During the last year, state regulators have increasingly leaned on cellular operators to lower their rates, arguing that the two companies selected by the federal government to serve each region have not demonstrated truly competitive pricing practices.

“This is a very competitive business,” said Scott Morris, vice president of McCaw Cellular, which serves Los Angeles and San Francisco.

“The fact that pricing plans may be identical is not evidence of collusion,” he said.

Morris said prices were set 10 years ago when the industry was emerging.

He blamed state regulators for making it difficult for operators to lower prices.