Cell Phone Fees: ‘Bill Shock’ Forces FCC Crackdown

Regulator responds to consumer outrage over jaw-dropping charges

The Federal Communications Commission is considering changes to cell phone regulations after high volumes of consumer complaints over astronomical wireless bills.
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The Fiscal Times
May 13, 2010

While the government can’t exactly lower your cell phone bills, it can require carriers to give subscribers a heads-up before they incur jaw-dropping charges for exceeding text message, voice and data limits, or racking up roaming charges. The Federal Communications Commission (FCC) is considering doing just that after receiving huge volumes of consumer complaints that wireless bills are running hundreds and thousands of dollars above what their monthly contracts state.

Preventing what the FCC calls “bill shock” is already a law for cell phone carriers in the European Union, where since June 2009 carriers have been required to send users a text message when they are about to enter “roaming” territory or hit 80 percent of their monthly usage limit.

Though the issue of roaming charges is much more pronounced in the EU, where traveling between countries is simpler, Joel Gurin, the FCC’s chief of Consumer and Governmental Affairs, says the same system can benefit U.S. consumers. “This is an avoidable problem,” said Gurin. “Avoiding bill shock is good for consumers and ultimately good business for wireless carriers as well.”

While extreme horror stories like that of a man who got charged $27,000 by AT&T for watching a Chicago Bears game from a cruise ship docked in Miami are rare, hidden charges are becoming a more widespread problem as more consumers buy smartphones, and text messaging becomes an even more integral part of daily life, said Joel Kelsey, a policy analyst with Consumers Union.

  

According to a survey by wireless trade association CTIA, text messaging continues to grow, with 1.5 trillion text messages sent in 2009 — an average of almost 5 billion messages per day.

The FCC is currently holding a 45-day comment period, seeking feedback from the public on their “bill shock” experiences. The regulator is also asking carriers how plausible it is for them to alert consumers automatically before they exceed their text message, voice or data limits.

Some experts say it is fairly straightforward and inexpensive for wireless companies to do so. The concept is similar to the system used by credit card companies to notify customers at the point-of-sale when they are approaching their credit limit, said Kelsey. “A text message costs carriers anywhere from one-fifth to one-tenth of a penny to deliver — so the idea that they could give a free text message to folks is pretty reasonable,” Kelsey said.

“In the world of consumer expectations, where broadband is much less than thousands of dollars a month to sign up for, the idea that a similar mobile data connection should be exponentially more money is outside the realm of what consumers expect and what should be happening,” said Kelsey.