Wireless providers heed regulators’ call to end bill shock
The days of shockingly high and unexpected charges on cellphone bills could be coming to an end.
AT&T Inc., Verizon Wireless and other major cellphone providers have agreed with U.S. regulators to begin sending alerts to customers who are approaching monthly voice, text or data limits.
The aim is to help them avoid hefty additional charges that cause what consumer advocates call bill shock.
Under the voluntary industry guidelines, developed under the threat of new government regulations, companies also would send alerts when customers exceed their plans’ limits and are subject to overage charges. Customers traveling abroad would be warned that they are about to incur often pricey international roaming fees, according to Federal Communications Commission officials.
The alerts will be free to customers, who will automatically receive them unless they choose not to, said the officials, who requested anonymity to release details ahead of the official announcement.
FCC Chairman Julius Genachowski will unveil the guidelines Monday at a news conference with the head of wireless industry trade group CTIA and an executive from advocacy group Consumers Union, which has pushed for regulations and will help monitor compliance.
The guidelines come a year after the FCC proposed mandating over-the-limit and out-of-the-country alerts.
Genachowski at the time cited one person who was hit with a $35,000 bill for data and texting charges incurred while visiting a relative in Haiti after the 2010 earthquake. He said the agreement was a victory for the nation’s more than 300 million wireless users and will “ensure consumers get a fair shake, not bill shock.” Some wireless companies had started providing their own alerts in the absence of standardized rules.
The White House, which has been under fire from Republicans and business groups for expanding government regulation, touted the voluntary agreement with a major industry to protect consumers.
“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,” President Obama said in a statement. “Our phones shouldn’t cost us more than the monthly rent or mortgage.”
The new guidelines, expected to be in place within 18 months, come at a time when consumers could be more vulnerable to overage charges as some wireless carriers move away from unlimited smartphone data plans.
“I learned my lesson,” said Lisa G. French of Los Angeles. 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, she said.
“Now when I leave the country, when I’m boarding the plane, I turn everything that could possibly transmit information off,” said French, 36, who works at an ad agency.
An FCC survey last year found that 1 in 6 wireless customers — or about 30 million people — were hit with monthly cellphone bills that had jumped suddenly from the previous month even though their voice, text or data plans had not changed. More than half said the increase was at least $50, and many had no warning.
A Consumers Union poll in May showed that more than 60% of wireless customers supported a government rule to avoid bill shock.
CTIA opposed the FCC’s proposed regulations, arguing that the problem was not widespread and that government rules could harm industry growth. But as the lengthy rule-making process began, the trade group and the FCC started discussing voluntary guidelines.
Steve Largent, the group’s president, said the agreement was “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 among other things requires participating companies to post accurate coverage maps and give new customers 14 days to cancel service without early termination fees.
AT&T, Verizon, Sprint Nextel Corp. and T-Mobile USA — the nation’s four largest wireless providers serving more than 90% of the market — have signed on to the consumer code and will follow the new bill-shock guidelines, FCC officials said. Other major participants include US Cellular Corp. and Clearwire Corp.
CTIA’s consumer code began in 2003, and the group touts on its website that the voluntary system is better for customers than federal rules.
“Regulations, no matter how well-intentioned, simply cannot be as flexible and responsive to consumer needs as a self-regulatory code,” CTIA said.
Participating companies have agreed to provide any two of the four alerts — voice, data, text and international charges — within 12 months, and all of them within 18 months.
That timeline is quicker than it would take to adopt and phase in new government regulations, which probably would require at least two years, FCC officials said.
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