MIL. SERVICE: CELL PHONE CONTRACT S.B. 371: ANALYSIS AS REPORTED FROM COMMITTEE
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Senate Bill 371 (as reported without amendment) (as passed by the Senate)
Sponsor: Senator Valde Garcia
Committee: Senior Citizens and Veterans Affairs


Date Completed: 6-4-09

RATIONALE


When active duty military personnel are deployed overseas or transferred, they or their families typically have a lot of personal and financial matters to address before the deployment or transfer. Often, one of those matters involves the continuation or cancellation of a contract with a cellular phone service provider. If a service member has such a contract, he or she may be unable to cancel it without paying an early termination penalty, even though the service member might be sent to an area not served by that provider. Some people believe that wireless telecommunication service providers should be required to allow service members who are deployed overseas or transferred for an extended period to terminate their cell phone contracts without penalty.

CONTENT The bill would create the "Military Personnel Wireless Contract Act" to do all of the following:

-- Allow a service member who was transferred, or deployed overseas, on active duty for at least 180 days, to an area not served by his or her wireless telecommunication provider, or the service member's spouse, to terminate a contract with the provider, without an early termination charge.
-- Require the person terminating the contract to give written notice, and document the service member's transfer or deployment orders.
-- Require the person terminating the contract to return equipment acquired from the provider and not owned by the service member.
-- Authorize the Attorney General to seek civil damages for a violation of the proposed Act, and require that the recovered money be deposited into the Military Family Relief Fund.

The proposed Act would not apply to prepaid wireless telecommunication services.


Specifically, if a service member were transferred, or deployed overseas, on active duty for a period of 180 days or more, to an area where his or her existing wireless telecommunication provider did not offer facilities-based wireless service, the service member could terminate any contract with the wireless telecommunications provider if all of the following applied:

-- The service member was a party to the contract.
-- The contract was entered into on or after the Act's effective date.
-- The contract was executed before the service member was transferred or deployed overseas.
-- The wireless service was not to a telephone or other telecommunication device installed in a motor vehicle.


Under the same circumstances, the spouse of the service member could terminate the contract on his or her behalf if the spouse were authorized by the service member to make changes to the account.


The termination would be effective on the date that both of the following were met:

-- -- The service member or spouse gave the lessor a written notice by certified mail of the intention to terminate the contract, a copy of the military or gubernatorial orders transferring the service member or calling him or her to active duty, and a copy of any orders further extending the service member's period of active duty.
-- Any wireless telecommunications equipment not owned by the service member, and acquired from the wireless communications provider, was returned to the custody or control of the provider within 30 days after the written notice was delivered.


If a contract with a wireless telecommunications provider were terminated under the proposed Act, the provider could not impose an early termination charge. The service member would remain responsible for any use charges incurred before termination.


In addition to any other penalty provided by law, the Attorney General could file a civil action in which the court could impose on a wireless telecommunications provider a civil fine of up to $2,000 for each violation. Money recovered under this provision would have to be forwarded to the State Treasurer for deposit into the Military Family Relief Fund created in the Military Family Relief Fund Act.

"Active duty" would mean active duty pursuant to an executive order of the U.S. President, an act of Congress, or an order of the Governor. "Service member" would mean a member of the Armed Forces, a reserve branch of the Armed Forces, or the Michigan National Guard.

"Armed forces" would mean that term as defined in the Veteran Right to Employment Services Act (the Army, Air Force, Navy, Marine Corps, Coast Guard, or other military force designated by Congress as a part of the Armed Forces of the United States). "Michigan national guard" would mean that term as defined in the Michigan Military Act (the Army National Guard and the Air National Guard).

ARGUMENTS (Please note: The arguments contained in this analysis originate from sources outside the Senate Fiscal Agency. The Senate Fiscal Agency neither supports nor opposes legislation.)
Supporting Argument In recent years, many Michigan citizens have been deployed, as part of regular, reserve, or National Guard units, to perform military duty outside of the State or overseas. When a service member is transferred, or deployed overseas, he or she must make arrangements for various personal and financial matters before shipping out. One issue that a deployed or transferred service member may have to address is a cell phone contract. Typically, these are multiple-year agreements, with financial penalties for early termination. Since someone who serves in the military and is deployed overseas, or is transferred for an extended period of time, does so out of duty and not out of personal choice, he or she should not have to pay a fee to cancel a cell phone contract. Allowing a service member or his or her spouse to terminate such a contract without an early termination charge, if the service member were transferred, or deployed overseas, on active duty for at least 180 days to an area not served by the wireless carrier, would recognize the sacrifice made by Michigan's military personnel, and would ease their burden of preparing for deployment or transfer. Michigan's men and women in service should not be financially tethered to the terms of an unusable cell phone agreement at a time when they are providing a great service to the people of Michigan and the United States.


Legislative Analyst: Patrick Affholter

FISCAL IMPACT
Any civil fines collected under the bill would be deposited into the Military Family Relief Fund created for grants to military families in need of financial assistance. The amount of revenue to the Fund would depend on the number of enforcement actions and the size of the fine imposed by the court. Currently, the Military Family Relief Fund is funded primarily by donations via a check-off on the Michigan income tax return. Since its beginning in tax year 2004, the Fund has received donations totaling $3,466,589.


Fiscal Analyst: Bruce Baker

Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. sb371/0910