Washington – FCC Aims to Ease Shock of Cellphone Bills

Washington – New Yorker Gamel Ghazi used to fight with his two teenage boys over texting charges that ranged from $20 to $100 per month. One month, he canceled the data plan for the phones, only to see his kids run up $120 in charges for extra voice minutes on the next bill.

“They should let people know before they have to pay extra,” said Mr. Ghazi, a van driver who takes people to medical appointments. “For texts and for voice minutes, too.”

Officials at the Federal Communications Commission on Tuesday proposed just that. The agency is considering requiring wireless companies to send a text message or other real-time alert to subscribers on the verge of racking up pricey charges for exceeding their plan’s data or text-messaging limit.

The proposal aims to reduce so-called “bill shock,” and is similar to rules enacted in March in the European Union after consumers complained about inadvertently amassing large data-roaming charges while traveling. The EU now requires carriers to warn consumers when they’re getting close to their data roaming limits and allows customers to automatically cut off service if they exceed their limits.

The FCC’s proposal is part of a broader inquiry into how to overhaul “truth in billing” rules to provide consumers with more information about the services they’re receiving, such as data speeds, and what all those line charges on phone bills actually mean.

“This very simple solution of requiring text or voice alerts when someone is getting into dangerous territory could be helpful,” said Joel Gurin, head of the FCC’s Consumer and Governmental Affairs Bureau. “Our sense is that this has not been a particularly difficult thing to implement in the EU and the same principle could be applied in the U.S.”

He said the agency has received hundreds of complaints about excessive charges.

“This is a helpful first step down what we hope will be a much longer road to provide wireless consumers with relief and protection in the marketplace,” said Joel Kelsey, a policy analyst at Consumers Union, publisher of Consumer Reports magazine. “When a consumer signs up for wireless service, they don’t expect to receive a monthly bill that can sometimes equal the cost of a used car.”

But even warning messages sometimes fail to solve the problem.

Many wireless carriers have crafted family plans that take into account teenagers’ texting habits—teens send an average of 3,100 texts per month—to help prevent consumers from exceeding their package limits, says Roger Entner, head of telecom research at Nielsen Co. The company calculates that the average phone bill has overage charges of $2.60 per month.

“It’s in the carriers’ interests to have customers on the right plan,” Mr. Entner said. “Very often, if it happens the first time and you say you made a mistake, they’ll retroactively give you a higher plan that would have covered it.”

Subscribers who inadvertently go over their plan limits can appeal to their carrier. Verizon Wireless says it allows customers to retroactively switch to a higher data or minutes plan if they exceed their limits for the month. That’s allowed some subscribers to avoid pricey overage charges. Sprint says it monitors new subscribers’ usage for the first six months of service and contacts customers with suggestions on rate plans that will help them avoid overages if they exceed their minutes, texting or data allotments.

FCC officials haven’t figured out some details of the plan—and they note they haven’t decided to do anything yet. But they say they’ll consider things like what sort of alerts (text message? email? voicemail?) should be required and who’ll get them (kids? parents? both?).

Wireless carriers didn’t say they’ll oppose the plan, but several carriers on Tuesday took pains to note how their subscribers can check their bill charges and usage online or on their phones.

T-Mobile USA Inc., for example, let parents set monthly allowances of texts, minutes and data on their kids phones, although the service costs an extra $5 a month.

An AT&T Inc. spokesman said the company was still reviewing the announcement but said it already offers “customers a variety of ways to keep track of and manage their usage.”

“Even though the ‘hundreds of complaints’ that [the FCC] references is less than four-ten-thousandths of a percentage of the industry’s total subscribers, the industry strives to serve and provide all of our 285 million customers with the necessary tools to have a positive experience,” said CTIA, the wireless industry’s lobbying group, in a statement.

“We have a number of ways customers can check their bill and put usage controls on devices,” said Lowell McAdam, chief executive of Verizon Wireless. “Our standing policy is that if you go over, and you want to go retroactive, we’ll give you the right plan” for the past month’s usage.