On June 15th, San Francisco became the first city in the United States to pass a law requiring retailers like Best Buy (BBY) and Wal-Mart (WMT - Free Analyst Report) to post the SAR, or specific absorption rate, for each cell phone on sale. This law goes into effect in February. The SAR measures the amount of electromagnetic waves accumulated by the human body. The Federal Communications Commission has set a maximum SAR of 1.6 watts/kilogram for one gram of tissue. All phones on the market are in compliance. San Francisco is concerned that heavy phone use poses a brain cancer risk. There is little evidence that phones are a significant danger. We don’t expect other municipalities to adopt such laws. The potential impact on manufacturers such as Apple Inc. (AAPL) and Research in Motion (RIMM), and service providers like AT&T (T - Free Analyst Report), Verizon (VZ - Free Analyst Report), and Sprint (S), does not appear meaningful.

Domestic wireless-phone market penetration is quickly approaching complete saturation. Since their introduction, cell phones, which emit electromagnetic radiation in the microwave range, have raised concern about their effects on the human body. Many consumer advocates worry that the phones can cause brain cancer. Interest in this potential health risk has increased in recent time, especially since heavy usage among children and teens is proliferating. Young people may be particularly vulnerable.

Over the years, scientists around the world have conducted several studies on this subject. Measurements of peak power for analog phones have been found to be as high as 3.6 watts. More-advanced digital phones generate peak power ranging from below 1 watt to 2 watts. Power levels vary according to reception, falling when signal strength is high and vice versa. Various effects of radiation have been considered.

 Microwave radiation from a phone heats the surface skin on the head. Scientists have determined that this thermal effect is less than that typically produced by direct sunlight. Lab tests on lower primates at SAR levels in the low 100-watt range produced no significant tissue damage.

 Some have speculated that low-frequency carrier signals can produce harmful thermal effects on the molecules of human cells. Such an impact, however, has proved extremely difficult to measure and conclusively prove that a danger exists. Certain Swedish investigators have confirmed that microwave radiation produces some blood-brain barrier damage in rodents, but it appears that further study on the possible effects on humans is required.

 Extensive Swedish, Danish, German, British and Australian studies on several hundred thousand people over a couple of decades all found no definitive evidence of a link between cell phone radiation and brain cancer. Most do, however, suggest additional review, especially for children, and limiting exposure as a precaution. Some studies have reported instances of cognitive impairment, sleep disruption, dizziness, headaches, burning/tingling sensations and, among other effects, DNA (deoxyribonucleic acid) damage, providing some support for more research.

 The largest study ever conducted, the Interphone project, undertaken by 13 nations, was unable to find any relationship between wireless phones and brain tumors. The World Health Organization, reviewing this and other reports from international scientists and medical researchers, has determined that mobile phones pose no serious cancer or other health risks.

 The Cellular Telephone Industries Association has referenced the above studies and opinions in its efforts to defeat labeling laws. Last March, the association helped to defeat proposed legislation in Maine that called for warning labels describing the possible harmful effects of phone radiation on children. In June, the California Senate voted down similar legislation. Currently, Congressman Dennis Kucinich of Ohio is putting together a federal bill that would require SAR information on cell phone packaging. The bill faces considerable resistance from well-heeled lobbying groups made up of major phone companies and industry associations. Mr. Kucinich admits that there’s no conclusive evidence of a mobile phone health risk, but believes that consumers have the right to know the SARs of mobile devices.

 Given the uncertainty of health risks, consumer advocates and a number of scientists and doctors recommend precautions. These include limiting phone use (especially inside automobiles), avoiding low-signal areas, communicating via text messaging (rather than by voice), keeping phones away from the body as much as possible (i.e., out of pockets), and using hands-free headsets and speakers.

 If national labeling laws were to be enacted, an occurrence that we don’t expect, phone manufacturers would incur additional production costs, which might trim profitability. Such costs, though, would probably be passed on to consumers.