December 11, 2009

FCC Not Doing Enough To Protect Wireless Customers

In an official report released on the Thursday, government auditors say that the Federal Communications Commission is not doing enough protect the interests of consumers who are having issues with their mobile carriers.  The Government Accountability Office (GAO) has suggested that the FCC step-up their activities in the communications industry.

The report follows hard on the heels of an in-depth examination of business practices in the wireless industry led by the FCC just four months ago.  The most controversial aspect of that inquiry and subsequent "Ëœrecommendations' was the so-called "truth-in-billing" clause, which mandates that wireless providers give customers an unambiguous description of all charges on their bill.

The GAO report was initiated at the request of Democratic Representative Edward Markey of Massachusetts, member of the House Energy and Commerce Subcommittee on Communications, Technology and the Internet.

The basis of the report was a random survey of some 1,100 wireless customers around the country.  If the results are indeed reflective of the population at large, GAO officials say that millions of Americans are dissatisfied with industry billing practices, customer service, and various contract terms"”though paradoxically nearly 85 percent reported being satisfied with their overall mobile service.

Government officials say that the FCC receives thousands of customer complaints every year, all of which are forwarded to the individual carriers.  The GAO report, however, indicated that the FCC may not being doing enough, stating that the federal organization "has conducted little other oversight of services provided by wireless phone service carriers because the agency has focused on promoting competition."

Key points of criticism in the report included claims that the FCC does not have a coherent system for measuring, evaluating and analyzing customer complaints and that the agency has failed to enforce their own billing rules on wireless carriers.

The report also calls on the FCC to work on developing specific goals for managing consumer complaints as well as devising a concrete set of guidelines for cooperation between state and federal regulators.

"The FCC can "” and must "” do more to make sure consumer concerns are resolved by wireless carriers and oversee the wireless industry with a greater focus on consumer protection," said John Jay Rockefeller, Chairman of the Senate Commerce Committee.

"It is time for the agency to take real action to better protect wireless consumers."

In response to the report, the FCC eagerly showed its acquiescence in a written letter, stating that it had already started "a sweeping review" of practices in the wireless industry, adding that it will take the "appropriate steps to fashion any needed regulatory action for protecting consumer interests."

In a demonstration of increasing government involvement in private industry, the FCC sent a letter to Verizon Wireless last week requesting an explanation for why the company had doubled its cancellation fees for customers with smartphones.  Verizon replied, stating that the costs associated with the smartphone division of its business are higher than traditional cell phones.  Because the company frequently offers customers cheaper prices on the expensive gadgets in exchange for a particular length of contract, the carrier stands to lose more money should the customers opt to cancel the contract.

Nevertheless, a number of government officials believe that a certain measure of transparency is lacking from current practices.

Democratic Senator Amy Klobuchar of Minnesota recently introduced a bill that, if passed, would mandate that wireless carriers unambiguously inform customers about early termination fees up front when they sign up for service.  The bill would also require that fees be prorated over the duration of the contract.


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