Proposed Law Targets Forced March to Telecom ArbitrationProposed Law Targets Forced March to Telecom Arbitration

Raises possibility that consumers, including enterprises as consumers, could take telecom providers to court for failure to meet service promises.

For a number of years, I did a lot of work for a company that owned off-site airport parking lots. The company prided itself on doing a great job in multiple markets by picking up and dropping off customers at their vehicles on their way in and out of town. I overheard the principal of the company explaining the business to an outsider. He said, "We're not in the parking business. We're not even in the real estate business. We're in the service business, and if we don't provide better services than our competitors, we shouldn't be here." In fact, he's more than right. His statement applies to every business, regardless of the nature of the work.

Slowly, over time, large communications service providers have found themselves in court disputing service promises that they may or may not have met. While corporate consumers can often pay their way into court, individual consumers usually cannot. As such, when multiple individuals have had similar problems, and when those individuals have successfully located hungry class action lawyers, we've seen class action suits filed -- and won -- when service or other problems have rendered individual consumers powerless to take on the giants of, in particular, the mobile phone industry. No one gets rich on these cases -- except the lawyers-- but the companies involved got tired of being hauled into court to defend their less-than-optimal practices. As such, most companies have inserted mandatory arbitration provisions into new contracts in an effort to keep even the most aggrieved consumer out of court and (forced) to the arbitrator's table.

Enter Senators Richard Blumenthal (D, Conn.), the state's former attorney general, and Al Franken (D, Minn.). They have just introduced the Justice for Telecommunications Consumers Act of 2016 (S.2897 – 114th Congress (2015-2016)). Both senators, along with four co-sponsoring colleagues, agree that it is time to prevent carriers from including mandatory pre-dispute arbitration agreements that have essentially eliminated the opportunity for consumers to have their respective days in court, either via class actions or otherwise. (Go to Congress.gov for a current history of the proposed legislation, and to Blumenthal's site for the full text of the bill.)

What's particularly interesting about the bill is that its provisions are not limited to protecting individual consumers. In fact, as it is currently drafted, the bill reads as follows:

...Notwithstanding any other provision of this title or the Communications Act of 1934 (47 U.S.C. 151 et seq.) no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of a dispute arising out of a contract for--

Nothing in the proposed legislation limits its applicability to individual consumers.

That's right.

In its current form, the proposed legislation prohibits carriers and other providers from forcing customers into arbitration and away from class action or other litigation options. Further, as currently written, the new legislation is NOT limited to protecting individual consumers as is much consumer-oriented legislation. The proposed bill places no limitation on who would fall under its protection -- unlike most other consumer-friendly legislation, the protections offered by the bill also apply to corporate consumers. This is nothing short of HUGE, since the arbitration provisions have made the move from individual mobile service contracts into large corporate agreements as well.

The bill is far from law, and in a Republican-controlled house, its path to actual binding legislation may be long and twisted, if it ever moves beyond the Senate Judiciary Committee to the House. For the time being (the senators introduced the bill on pril 28, so it hasn't been around for a terribly long time), it has been referred to the Senate Judiciary Committee where it may languish -- or not. In any case, it does reflect a genuine recognition of the essentially heavy-handed approach that communications providers have taken towards their customers. Despite the charm offensive launched by the sales guy when he's trying to convince a customer to sign on the dotted line -- whether the customer is an individual or corporate entity -- companies that choose to punish customers by limiting options when contracted services fail to perform should, at a minimum, reconsider their approach.

In the end, it really is all about service.