California Leaders and Consumer Activists Call upon CPUC for Greater Oversight and Accountability of Industry Practices and Mergers

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Legislation will aim at protecting working families from predatory practices

SACRAMENTO, Calif., Dec. 4, 2012 /PRNewswire-USNewswire/ -- Today at the steps of the California State Capitol, Senator Kevin De Leon, Senator Ricardo Lara, Assemblymember Luis Alejo, Assemblymember Nancy Skinner, Assemblymember Das Williams, and representatives from TURN and Consumer Federation of California joined the leaders of the movement – Two Counties One Voice – by calling for more government oversight on mergers that could harm millions of underserved Californians.  Two Countries One Voice is dedicated to exposing the predatory, monopolistic practices of Carlos Slim, the richest man in the world.  Recently, Slim zeroed in on California when one of his telecommunications' companies, TracFone, acquired California-based Simple Mobile without any public hearings or review by the California Public Utilities Commission (CPUC).  Prepaid mobile providers like TracFone and Simple Mobile largely serve immigrant and working families. 

TracFone currently has a pre-paid cellular customer base that is larger than that of Verizon Wireless, AT&T, Sprint Nextel and T-Mobile's.  Now, with the acquisition of Simple Mobile, TracFone has 22 million customers nationwide – over 42 percent of the pre-paid cell phone market share – making it the LARGEST prepaid mobile provider.  

"Carlos Slim is taking the model he created in Mexico that was built on the backs of the poor, charging excessively high prices and providing inadequate services, and he's expanding that model into California, the U.S., and across Latin America," said Juan Jose Gutierrez, one of the leaders of Two Countries One Voice and the President of Vamos Unidos USA.  "We're here today to shine a glaring light on the damage that such practices have on a country and its people.  We demand more oversight and protection here in California."

Senator Kevin De Leon and Senator Ricardo Lara wrote a letter to CPUC Chairman Michael Peevey calling for action and a full investigation during CPUC's upcoming evidentiary hearings from December 12-14, 2012.  Senators De Leon and Lara also announced they will be introducing legislation that will better protect working families by ensuring the CPUC has the authority and discretion to review all mergers – including pre-paid cell phone services – when it's in the best interest of the public.  

"As we become more reliant on cell phones and digital technology for every day life, we need to ensure that all consumers – especially underserved communities – are protected," said Senator De Leon.  "Our legislation is aimed at providing better protections for working families by requiring proper government oversight and rigorous review by the CPUC."

"We will not stand by quietly while hard-working Californians spend their honest-earned money on excessive charges associated with something that most of us take for granted: making a simple phone call," said Senator Ricardo Lara.  

When TracFone purchased Simple Mobile in June 2012, the CPUC did not require hearings or scrutiny of Slim's acquisition.  The current law does not require the CPUC to hold hearings on all mergers and is prescriptive as to when the CPUC may deem additional hearings necessary in the public interest.

In the United States, Slim has four million TracFone customers participating in government phone assistance programs.  Slim has collected $10 per phone he provides to these consumers, totaling a minimum of $38 million in U.S. federal subsidies this year alone.  Yet, TracFone refuses pay its share of the public services fee that funds California's programs for the poor.  By some conservative estimates, TracFone may be liable for $13 million in unpaid fees and additional penalties to the CPUC. 

"We have been watching Carlos Slim gobble up company after company – growing his empire at the expense of struggling families" said Andres Ramirez, one of the leaders of Two Countries One Voice.  "And today, we are joined by others who see this injustice and are committed to speaking up for those without a voice."

"It is important that we empower the CPUC to hold public hearings and engage in rigorous reviews of mergers that may impact consumers' rates and access to reliable services," said Richard Holober, Executive Director of Consumer Federation of California.  "Especially with companies with questionable customer service records, we must ensure our government provides protections to underserved communities with less access to digital services."

BACKGROUND:  Carlos Slim's power and fortune is made up primarily from his monopoly on the Mexican telecommunications system.  According to the independent and highly respected Organisation for Economic Co-operation and Development (OECD), Slim's company, America Movil, which controls nearly 80 percent of the total Mexican telecom, cell and internet industries, charges exorbitant prices and provides inadequate services.  Their report also shows that Slim has price-gouged Mexican customers billions of dollars for basic telephone and Internet service.  They point out that those specifically and most profoundly affected by these business practices are rural and poor communities.

The impact of Carlos Slim's monopoly has resulted in Mexico ranking LAST in public investment in telecommunications compared with the 33 other OECD countries while Slim's company Telemex had a profit margin of 47 percent – one of the highest profit margins of companies within the OECD countries.

SOURCE Two Countries One Voice