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FCC Looks at Bill-Shock

Sarah Thomas
5/26/2010

2:10 PM -- Shortness of breath; dizziness; temporary blindness; uncontrollable anger; stomach pains: These are all symptoms of bill shock, a disease that one in six Americans is suffering from, according to the Federal Communications Commission (FCC) .

In its ongoing battle to increase competition, the FCC released a survey today that shows the damage that high cellphone bills and early termination fees (ETFs) can do to consumers. (See US Wireless Competition: Does It Exist? and Carriers Respond to FCC's Competition Concerns.)

According to the survey, 80 percent of adult Americans pay their own cellphone bill. Of these, 58 percent are happy with the coverage, but 17 percent -- or 30 million -- have received higher-than-anticipated bills. Those bills ranged from a jump of $25 to $75 for one-fourth of the respondents to $100 or more for 23 percent of the survey takers.

With these findings, the FCC isn’t necessarily looking to lower phone bills, but it is mulling bill-shock regulations that mandate carriers warn you when the bill starts to encroach into shocking territory.



The FCC might, however, order carriers to lower their ETFs, which stop consumers from jumping to a competing carrier when it introduces a new exclusive handset (another issue the FCC is probing). Both Verizon Wireless and, more recently, AT&T Inc. (NYSE: T) upped their ETFs on smartphones -- AT&T from $175 to $325 and Verizon to $350. (See Will Verizon Have a Q3 iPhone Launch?)

Of the FCC’s respondents, 43 percent with contracts said ETFs were a major reason they would stay with their current service, but nearly half didn’t know just how high their ETF obligations were.

CTIA president Steve Largent weighed in on the survey as he has on all of the FCC’s reports, saying that he is “very troubled with the current direction the FCC is taking with respect to the wireless industry.” He believes the industry provides simple and easy-to-understand plans for every type of American consumer. I would argue that a victim of bill shock disagrees, but I have to give Largent credit for his last, very valid point to the FCC:

"If the FCC is interested in controlling 'shock' on consumer bills, they should address the most egregious part of consumers' bills, which is the almost 16 percent rate of taxes and fees imposed by federal, state and local governments on wireless consumers," Largent wrote in the CTIA blog.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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sarahthomas1011
sarahthomas1011
12/5/2012 | 4:34:41 PM
re: FCC Looks at Bill-Shock


Yep, that was the third option after mailed or paperless.

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:34:41 PM
re: FCC Looks at Bill-Shock


 


That one of 6 cell phone bills are actually electric?


seven :)

sarahthomas1011
sarahthomas1011
12/5/2012 | 4:34:40 PM
re: FCC Looks at Bill-Shock


I completely agree that bill shock is a problem. I've been burned on international roaming charges and when I went off the good ol' family plan. Both times, AT&T was willing to reduce the charges, but it would have been nice to know up front. Okay, I should've read the fine print, but that's not enough of a warning, I don't think.

shygye75
shygye75
12/5/2012 | 4:34:40 PM
re: FCC Looks at Bill-Shock


As tempting as it is to join Mr. Largent -- a superb wide receiver in his day and the only person I can think of who has won an award named after himself -- in bashing the FCC, the wireless operators have to take much of the credit for their perceived billing issues. Service charges are inconsistent and can seem capricious, much like prices for airline tickets. Customers will always be unhappy if they think they are being taken advantage of, or if they feel victimized by fine-print practices.

Michelle Donegan
Michelle Donegan
12/5/2012 | 4:34:39 PM
re: FCC Looks at Bill-Shock


The European Commission handled bill shock by requiring operators to warn customers by text message when they approach their international data usage limit. Customers can then be offered a choice to top up their service or just accept the data limit. 


is this where the FCC is headed?

Abundant_bits
Abundant_bits
12/5/2012 | 4:34:37 PM
re: FCC Looks at Bill-Shock


I find Mr. Largent's claim that mobile plans are simple and easy to understand about as confusing as- My monthly mobile phone bill.


The convolutions involved in data plans, additional lines, special charges for this phone, that phone, bandwidth usage for services- (oh your texts are free, but if you click on the links, or download the pictures we'll charge you - a LOT- for bandwidth fees)


I can see why prepaid and companies like MetroPCS are making inroads- they offer straight up, easy to understand, no BS billing plans that the average individual can follow.


Perhaps I should mail a copy of my last Sprint bill to Mr. Largent, and see if he can discipher why a 9.99 additional line resuted in an additional 59.99/month in blackberry service fees- no, the phone added wasn't a blackberry. My point is that the billing systems and plans are so complicated that even the employees can't figure them out half the time.


 


Simple and easy to understand? Puh-leeze.....

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