October 17, 2011
FCC Tells Wireless Providers – No More Bill Shock
Cellphone and other mobile device users will soon have something to cheer about, as a deal between the government and the wireless industry will give warnings to those on monthly mobile plans before they are about to exceed their talk, text and data limits to avoid excessive overage fees.
The new plan comes after the Federal Communications Commission (FCC) was set to impose new rules against unexpected charges on consumers´ wireless plans. The FCC found in its 2010 study of “bill shock” -- as it has come to be known as -- that one in six mobile users have seen sudden and unexpected increases in their cell phone bills.
The guidelines on the new plan will be unveiled today by the wireless trade association -- Cellular Telecommunications Industry Association (CTIA). Companies under the plan will send alerts to customers when they near and reach monthly limits on their plans. There will also be an alert for customers who incur international roaming charges. The alerts are to be implemented within 12 to 18 months. CTIA members cover 97 percent of US wireless customers.
The FCC´s plans to impose new rules stemmed from numerous consumer complaints the regulator received last year on excessive and unexpected overage fees from their providers. The FCC considered mandating similar alerts last October after the complaints had been filed. They found in their study that 23 percent of those who experienced “bill shock,” had charges of $100 or more over their regular monthly fees.
Since carriers have been willing to work with the agency on setting voluntary guidelines and their own alert system, the FCC said it will back down from its plans to impose its rules for now.
The agreement is a “victory for more than 300 million wireless consumers,” said FCC Chairman Julius Genachowski in a statement. “These alerts will give consumers the information they need to save money on their monthly wireless bills.”
The new wireless agreement was also applauded by the President of the United States.
“Our phones shouldn´t cost us more than the monthly rent or mortgage. So I appreciate the mobile phone companies´ willingness to “¦ join us in our overall and ongoing efforts to protect American consumers,” said President Barack Obama in a statement.
However, there is “no guarantee that would eliminate overage charges. “¦ What´s needed is clearer pricing and cellular companies working harder to better align users with the proper plan,” Phillip Redman, an analyst for Gartner, told USA Today's Mike Snider.
But at least customers will now know when they are about to incur overage fees.
At least one person has been hit with a bill for $35,000 for data and texting charges, Genachowski cited in the 2010 “bill shock” study. The charges were incurred while the user was visiting a relative in Haiti after the 2010 earthquake there.
Lisa G. French of Los Angeles said she was hit with more than $500 in data charges from T-Mobile USA after a trip to Japan last year. Her normal monthly bill, which includes unlimited data, was about $70 at the time. Upon landing in Tokyo, she received a message from T-Mobile on her smartphone that warned of extra charges for data usage. But French said it was “very vague.” Once back home, she filed a complaint with the Better Business Bureau, and T-Mobile agreed to cut the data charge in half.
“I learned my lesson,” she told Jim Puzzanghera of the Los Angeles Times. “Now when I leave the country, when I´m boarding the plane, I turn everything that could possibly transmit information off.”
“Far too many Americans know what it´s like to open up their cellphone bill and be shocked by hundreds or even thousands of dollars in unexpected fees and charges,” said Obama.
Steve Largent, CTIA president, said the new agreement is “a perfect example of how government agencies and industries they regulate can work together “¦ to consider whether new rules are necessary or would unnecessarily burden businesses and the economy.”
The new Wireless Consumer Usage Notification Guidelines will be added to CTIA´s existing consumer code, which already requires participating companies to post accurate coverage maps and give new customers 14 days to cancel service without early termination fees.
The nations four largest carriers -- AT&T, Verizon, Sprint Nextel and T-Mobile USA -- have signed on to the consumer code and will follow the new guidelines, FCC officials said. Other participants include US Cellular and Clearwire Corp.
CTIA says on its website that the voluntary system is far better for both customers and wireless providers than federal rules. “Regulations, no matter how well-intentioned, simply cannot be as flexible and responsive to consumer needs as a self-regulatory code,” it said.
CTIA´s consumer code has been in place since 2003.
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