Madame Chairwoman and Members of the Subcommittee, thank you for the opportunity to appear today to testify on H.R. 3786, the Servicemembers Telecom Relief Act.

My name is Bobby Franklin, and I serve as the Executive Vice President for CTIA – The Wireless Association® (“CTIA”). The Association I represent is proud to count among its members wireless carriers, equipment providers, and applications developers. CTIA’s carrier members collectively serve 95 percent of America’s approximately 260 million wireless consumers. Our members provide consumers with a wide array of services, equipment, and applications that permit Americans to stay connected to their families, friends, and businesses no matter where they go.

CTIA’s carrier members, as a matter of their respective corporate policies, permit members of the U.S. armed forces facing deployment to terminate contract-based service without penalty. Additionally, many carriers (including the six largest, representing nearly 93 percent of “post-paid” consumers) have policies regarding contract suspension which offer a servicemember the ability to stop service and reserve his or her existing telephone number for a set period of time. Our members take these obligations seriously, and they train their customer service representatives to implement these policies with care and consistency.

Notwithstanding these efforts, unverified reports have circulated here and in many state capitals suggesting that wireless carriers have not released from contracts servicemen and servicewomen who are serving in military units posted overseas or in locations within the U.S. where they cannot use their wireless phones. These reports have generated a variety of legislative proposals both in Congress and in state legislatures. While CTIA has determined that these unverified reports are contrary to the policies of our member companies, and while we generally oppose federal mandates of any sort, we want to put an end to these suggestions. For that reason, CTIA’s Board of Directors has authorized us to support federal legislation that would amend the Servicemembers Civil Relief Act to address these well-intentioned but unjustified concerns at both the federal and state level.

While we support enactment of legislation to provide a template for when and how contracts may be terminated when a servicemember receives deployment orders, CTIA has several suggestions for how to improve H.R. 3786. These suggestions are consistent with the recommendations we offered the Subcommittee when it held a hearing in April on H.R. 3298, Representative Patrick Murphy’s 21st Century Servicemembers Protection Act. CTIA’s suggestions fall into three categories.

First, the descriptions of the covered services in the “Covered Contract” portions of the bill should be amended to conform to the definitions used for these services in the Communications Act. This will eliminate any potential for confusion regarding what services are intended to be covered by the regime imposed by the legislation.

Second, we propose a clarification of the bill’s provisions on “Arrearages and Other Obligations and Liabilities” to better reflect the way that wireless service is purchased. The vast majority of the more than 260 million wireless subscribers in the United States purchase service on a “post-paid” (as opposed to “pre-paid”) basis, and nearly all “post-paid” consumers subscribe to flat-rate “bucket” plans that allow them to use a fixed number of minutes per billing cycle for a flat fee. These flat fee plans have been an overwhelming consumer and competitive success and allow consumers a broad choice of plans to suit their widely varying calling needs. These plans do not make any distinction regarding whether the consumer uses all of the covered minutes on the first day or last day of the billing cycle, or whether the consumer distributes the minutes equally over all days covered in a particular billing cycle, and carriers employing this business model do not pro-rate a flat fee if a consumer deactivates service in the middle of a billing cycle. Accommodating a pro-rating requirement would require an industry-wide expenditure of millions of dollars for billing system modification and customer care retraining. Because of the magnitude of the compliance costs associated with this type of pro-rating, and the relatively small number of service termination requests, CTIA recommends modifying the legislation to better accommodate existing industry practices.

Third, while CTIA’s carrier members have individual corporate policies that provide for contract termination without penalty when a servicemember provides appropriate deployment orders, and while our carriers train their customer service representatives to follow these policies, errors can happen. In the event of such a mistake, the limit of any customer harm is the imposition of an early termination fee, which generally is less than $200 (and increasingly is being pro-rated so as to decline across the term of the contract). Given this, the penalty provisions in the bill should be clarified and narrowed to cap fines at no more than $10,000. Additionally, CTIA asks that any legislative history accompanying the bill clarify that fines at that level should only be levied in cases where there is knowing and repeated violation of the law.

The wireless industry recognizes the dedication of members of the U.S. armed forces and is pleased to work toward enactment of appropriate legislation to benefit servicemen and servicewomen facing deployment. CTIA and its members look forward to working with the Subcommittee and sponsors of both H.R. 3786 and H.R. 3298 to ensure that this issue is addressed during the remaining days of the 110th Congress.

Thank you again for the opportunity to appear today, and I would be pleased to answer any questions you may have.