FTC
Bureau of Consumer Protection
CRC-240
600 Pennsylvania Ave, NW
Washington, D.C. 20580
To whom it may concern:
I write to you today to urge an investigation into the business practices of Sprint PCS, a nationwide wireless service provider, for engaging in both unfair and deceptive trade practices. In short, Sprint PCS makes bold claims of superior wireless service. However, these representations are false and harmful to reasonable consumers. Furthermore, Sprint PCS asks its customers to enter into contracts without informing them of statistics that are necessary to evaluate the company’s claims of superior service. All wireless service providers that make claims of superior service while withholding information such as the rate of dropped calls and service outages engage in unfair practices as defined in the 1980 FTC Policy Statement on Unfairness. Fn1
Sprint PCS has engaged in deceptive trade practices
The FTC will find a deceptive trade practice where there is a representation that is likely to mislead and harm a reasonable consumer. Fn2
Sprint PCS has widely disseminated print and broadcast advertising that touts its wireless service as being superior to other providers. Sprint PCS’ claims go beyond mere puffing, and the claims are not offered with clear qualifications or disclaimers. For instance, Sprint PCS sales brochures for the Washington Area read:
"Clear Calling. Clarity. It’s what Sprint PCS is all about. That’s why we built the only all-digital, all-PCS nationwide network…No matter where you’re calling from on our nationwide network, you’ll get call quality comparable to your home phone&endashmaking Sprint PCS the clear choice for wireless." "Consistent nationwide service." "No matter where you are on our digital nationwide network, you won’t pay roaming charges." "The clear alternative to cellular." Fn3
The "Getting Started Manual" reads:
"Thank you for choosing the clarity of Sprint PCS…" "Reliable communications for the future…the Sprint PCS Nationwide Network offers a greater likelihood of call completions and fewer dropped or disconnected calls." "The clear alternative to cellular." Fn4
I found these representations to be false. I had frequent problems with dropped calls, poor call quality, long delays between pressing the send button and actually getting a connection, network outages, holes in coverage, and being billed for roaming within my home coverage area. Fn5 I experienced the same poor service when traveling in Denver, CO and Atlanta, GA. Even after upgrading the phone’s software at a Sprint store, the service continued to be so unreliable that I could not make important calls for fear that the connection would be dropped. Had I known that Sprint PCS service was so unreliable, I would have chosen a different provider.
Sprint advertising also implies that PCS is better than the cellular service offered by competitors. This representation is false as well. In the past, I have had accounts with Airtouch, Bellsouth, and AT&T wireless networks. All three offered more reliable service. In fact, I have found that the best service was on Bellsouth, despite the fact that the service was cellular rather than Sprint PCS’ "clear alternative."
In the 1983 FTC Policy Statement on Deception, the agency highlighted certain elements that indicate misleading or deceptive practices. These include "false oral or written representations," "systematically defective products or services," and failure to perform promised services. Fn6 All three of these elements are present here. Further, Sprint PCS’ claims are material, as they are express representations involving "efficacy," "performance," and "quality."
Sprint PCS has been pursued by government authorities before for misleading advertising. In 2000, Sprint PCS settled a case led by New York Attorney General Eliot Spitzer for engaging in false advertising and deceptive trade practices. Fn7 Sprint PCS agreed to alter misleading advertisements and pay $100,000 of Spitzer’s investigation costs. Spitzer commented that, "As wireless phone services have become increasingly competitive, so, too, have the marketing claims aimed at attracting customers. This has led to a heightened need for vigilant oversight and aggressive enforcement to ensure that consumers are provided with the most comprehensive and accurate information."
Sprint PCS has misled consumers by disseminating false claims of network clarity and reliability. Reasonable consumers who rely on these repeated express guarantees of quality are likely to be injured. Consumers may choose Sprint PCS over other providers based on the company’s representations. Even worse, consumers who rely on Sprint PCS’ claims may be laboring under a false sense of security, as unreliable service may jeopardize safety in an emergency.
Sprint PCS and other wireless service providers have engaged in unfair trade practices
Practices that cause substantial customer injury, are reasonably unavoidable and are not outweighed by countervailing benefits to competition or consumers are unfair under the FTCA. Under this standard, Sprint PCS and other major wireless providers have engaged in unfair business practices.
Many wireless service providers, including Sprint PCS, withhold certain information regarding dropped calls, network outages, and holes in service from consumers. At the same time, the wireless service provider requests that the consumer sign a service agreement with penalties for early termination. As a result, the consumer is bound into a contract without being able to adequately evaluate the service for dropped calls, network outages, and holes in service. This is an unfair trade practice.
It would be reasonable to assume that wireless providers already collect and maintain data on dropped calls, network outages, and holes in service. Sharing this information with the public would not burden wireless service providers. But, the benefit to the public from the disclosure of this information would be significant&endashconsumers could fairly and empirically assess the relative reliability of wireless providers. The withholding of this data suggests that Sprint PCS is aware of its serious network reliability issues.
The harm caused by withholding this critical performance data is substantial. The harm takes its toll on consumers both financially and in consumers’ time. Switching wireless providers usually requires the purchase of a new phone and a phone number change. In addition, many wireless providers charge a weighty early termination fee to prevent consumers from finding a better provider. Sprint PCS, for instance, charges $150 for early termination.
All of the above factors operate as obstacles to the free exercise of consumer choice. Consumers are held in the dark by an industry that withholds critical performance data. They are tantalized by strong advertising to purchase a service they cannot fairly evaluate. Then, they are stuck with a phone that doesn’t work as guaranteed and a contract that prevents them from trying a competitor’s service.
In conclusion, I urge the FTC to investigate Sprint PCS for deceptive and unfair business practices. Sprint PCS makes bold claims of reliable and clear service, yet it provides service that falls far short of its representations. This practice misleads and harms reasonable consumers. Further, Sprint PCS and other wireless service providers ask consumer to sign contracts but withhold important quality data from consumers. This results in substantial injury to consumers, and is not justified by benefits to competition or consumers.
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Sincerely,
 /s Chris Hoofnagle
Cc: Representative Weiner
Better Business Bureau
Virginia Office of the Attorney General
Maryland Office of the Attorney General
District of Columbia Office of the Attorney General