Wireless industry bows to 'bill shock' rules
FCC, consumers win a round
Bowing to pressure from the US Federal Communications Commission, mobile service providers have agreed on a set of guidelines designed to prevent unexpected wireless charges that induce what's become known as "bill shock".
The guidelines are a response to a set of rules proposed last October by the FCC. Although no members of the wireless industry group CTIA–The Wireless Association came out and said so specifically, the move is an apparent compromise with the FCC to stave off formal – and perhaps more stringent – rules.
The agreed-upon procedures, called the "Wireless Consumer Usage Notification Guidelines", will provide wireless users with alerts before and after they reach or exceed their monthly voice, data, and texting limits.
And no, users won't be billed for those alerts, and no, they'll not need to opt-in – although they can opt-out. In addition, users travelling abroad will be notified of international roaming charges.
The protections will reach over 97 per cent of US wireless subscribers, CTIA–The Wireless Association said in a statement announcing the agreement on Monday. That seems about right, considering that the membership of CTIA–The Wireless Association includes AT&T, Verizon, Sprint Nextel, T-Mobile USA, and a host of smaller providers.
"Today's initiative is a perfect example of how government agencies and industries they regulate can work together under President Obama's recent executive order directing federal agencies to consider whether new rules are necessary or would unnecessarily burden businesses and the economy," said CTIA–The Woireless Association headman Steve Largent.
Obama joined in the love-fest. "I appreciate the mobile phone companies' willingness to work with my Administration and join us in our overall and ongoing efforts to protect American consumers by making sure financial transactions are fair, honest and transparent," he said in a joint statement with Largent, FCC Chairman Julius Genachowski, and Parul P. Desai of the Consumers Union, which helped broker the deal.
'$34,000 cell phone bill'
Obama also outlined why he thought the guidelines are needed. "Far too many Americans know what it's like to open up their cell-phone bill and be shocked by hundreds or even thousands of dollars in unexpected fees and charges," he said. "Our phones shouldn't cost us more than the monthly rent or mortgage."
Speaking at a "Bill Shock Event" at the Brookings Institution on Monday, Genachowski said that a 2011 Consumers Union study had shown that about 20 per cent of US mobile-phone users had received unexpected charges on their bills during the previous year.
"At an FCC forum highlighting the problem," Genachowski said, "I met a woman who was shocked by an over $34,000 cell phone bill for international data and texting charges incurred while visiting her sister in Haiti after the 2009 earthquake.
"I also met a man who got an $18,000 bill after his free data downloads expired without warning," he continued. "After that event, a business executive emailed to describe how he had incurred $2,000 in charges during a recent overseas trip, despite buying an 'international plan' before the trip."
FCC commisioner Mignon Clyburn released a statement that said, in part: "Perhaps the most important aspect of these guidelines is that CTIA's members agreed to procedures that will allow the FCC staff to track their compliance with these measures." Fellow Democratic commissioner Michael Copps was less upbeat than his party's prez, saying: "While I do not think today's announcement guarantees closing the book on consumer worries over bill shock and unanticipated charges, it does represent good progress."
Republican commissioner Robert McDowell released no statement regarding the new guidelines, but he and his fellow commoner and partymate Meredith Attwell Baker argued against the rules when they were first proposed by the FCC last October. "While it may be tempting to shrug off regulatory costs," McDowell said at the time, "the reality is that businesses pass on their costs to consumers. We all pay for the cost of government mandates."
Purely partisan positioning may or may not have been McDowell's reason for declining to make a statement on Monday, but Baker's silence had a different source: she left the FCC this May to take a job lobbying for Comcast – just a few months after she had argued strenuously for the FCC to approve that company's $6.5bn acquisition of NBC Universal, which they did on January 18 of this year. ®
As was the case with DVD – which once stood for Digital Video Disc, then Digital Versatile Disc, then for nothing other than the three letters in its name – the CTIA in CTIA–The Wireless Association went through a acronymic compaction. Originally it stood for Cellular Telephone Industries Association, then Cellular Telecommunications Industries Association, and now it's merely CTIA.