Proposed Minnesota Wireless Regs Are Unneeded, Destructive

Published June 1, 2008

Minnesota is no different from other states facing budget problems. While Minnesota lawmakers grapple with a $935 million deficit, they waste time trying to regulate the wireless telecommunications industry through HF 635 and SF 833, named “The Minnesota Wireless Telephone Consumer Protection Act.”

Those benign-sounding House and Senate bills threaten the affordability and accessibility of cell phone and other wireless services by changing how wireless consumers interact with their service providers.

There is no problem with wireless service in Minnesota, yet HF 635/SF 833 would pile on needless regulations by micromanaging customer contracts, billing, and coverage terms. Enacting these bills into law will drive up costs, limit choices, and stifle innovation.

12 Percent Burden

Minnesotans already pay more than 12 percent in federal, state, and local wireless taxes, surcharges, and government fees on their wireless bills each month. Wireless users think that is more than enough. A survey of 600 likely voters in Minnesota showed 67 percent believe HF 635/SF 833 will make their service more expensive.

The wireless industry is one of the most dynamic in the world. Today’s phones not only provide high-quality voice service but also are used for Internet access for Web browsing, e-mail, music, video, and more. Many businesses, especially small firms, could not function without wireless devices.

According to CTIA, an international association representing the wireless industry, wireless subscriptions jumped from 28 million in 1995 to more than 243 million in 2007. That growth has occurred because providers are constantly introducing new, lower-priced plans and innovative products. Innovation in the wireless market is moving faster than anyone could have forecasted.

A March 2008 survey by the Pew Internet & American Life Project found Americans said it would be harder to give up their wireless phones than Internet, television, or landline phone service.

Dubious Spending

With any burgeoning industry comes the irresistible temptation to regulate and tax it. It is easier for politicians to increase regulations and raise taxes than to cut wasteful government spending. In 2006 the Taxpayers League Foundation and Citizens Against Government Waste published the 2006 Minnesota Piglet Book, which highlighted $636 million in wasteful or questionable state spending.

Among the questionable expenditures were:

  • $34 million in subsidies to ethanol producers that saw a 300 percent increase in profits in 2005;
  • $30 million for bear exhibits at the Minnesota and Como Zoos;
  • $12 million to renovate the Shubert Theater in downtown Minneapolis; and
  • $1 million for a replica Viking ship in Moorhead.

Satisfied Customers

Aside from the general need to cut waste instead of raising taxes, there is a more specific reason to avoid any additional monetary penalty on cell phone customers. In a recent poll of Minnesota wireless customers conducted by, 93 percent of respondents said they were satisfied with their cell service; only 6 percent responded they were dissatisfied.

Every year, hundreds of thousands of additional Minnesotans choose to subscribe to wireless service at competitive prices. The only impediment to the speed of innovation is more government regulation.

Cellular phone companies are fighting each other tooth and nail to attract and keep Minnesota customers. There is no better incentive than competition for driving innovation, customer service, and low prices.

Those dynamics work for consumers without the bureaucracy and additional expense that would be created by government regulations and micromanagement under HF 635/SF 833.

Thomas A. Schatz ([email protected]) is president of Citizens Against Government Waste, a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.