FCC Chairman Wants Rules to Prevent Cell Phone 'Bill Shock'

FCC chairman proposes new rules to help consumers avoid cell phone "bill shock."

October 13, 2010, 10:04 AM

WASHINGTON, Oct. 13, 2010— -- Not knowing how much data you use on your cell phone, or how many text messages you send and receive, can be costly.

Kerfye Pierre, a 27-year-old FEMA employee from Hyattesville, Md., unknowingly incurred a whopping $30,000 in roaming charges after she went to Haiti to help with earthquake recovery.

Robert St. Germain, 66, a retired Dover, Mass., marketing consultant was stunned by an $18,000 bill after a free trial on mobile phone data downloads expired without notice.

And, 59-year-old Alexander Cullison says his jaw dropped when he opened a $400 bill after his son exceeded the 250 text limit on the Fairfax, Va., family's monthly cell phone plan.

The Federal Communications Commission calls these types of surprises cell phone "bill shock" and is proposing new rules to force wireless companies to alert consumers before and when they start incurring excess charges.

"Surveys show that 30 million Americans - one out of every six mobile phone users - have experienced bill shock, and it's a real problem that we need to tackle," said FCC chairman Julius Genachowski.

"How much is a megabyte? ... Consumers are confused. They don't have the information they need and they run into real trouble at the end of the month."

The proposed regulations would require wireless companies to provide "over-the-limit" alerts; "out-of-the-country" alerts; and allow consumers to set personal usage caps.

The Commission is expected to vote Thursday to proceed with the rules, which would be open for public comment before taking effect.

"Why shouldn't consumers who are reaching the limits of their data plans get an alert that says, 'You're reaching the limit of your data plan'?" Genachowski said.

The wireless and cell phone industry opposes the new regulations and says that the average price of Americans' cell phone bills have fallen in the past year by 4 percent.

"If the FCC were to mandate prescriptive and costly rules, it could work to limit the creative offerings and the competitive nature of the industry," said CTIA-The Wireless Association spokesman Chris Guttman-McCabe.

Guttman-McCabe also said many companies already provide consumers with the ability to check usage balances and set up alerts.

FCC Seeks New Rules for Wireless Providers

The AT&T and Apple data plan for the iPad, for example, has an automatic notification system that notifies users when they near the limit their usage plan.

But Genachowski insists wireless companies that provide notifications and tools for users to track their monthly usage are "the exception, not the rule."

"It needs to be the rule, not the exception, and that's what we're driving toward," he said.

The proposed new requirements are part of a broader crackdown by Genachowski and the Commission on cell phone companies, whose practices have given rise to a flood of consumer complaints in recent months.

The FCC said last week that it has been investigating Verizon Wireless for a $1.99-a-megabyte data access fee that had appeared on the bills of customers who didn't have data plans but who had accidentally initiated data or Web access by pressing a button on their phones.

Verizon Wireless said that it had stopped charging such fees when a customer started using a data service and then shut it off quickly. It blamed the continued overcharging on a software glitch and has agreed to pay up to $90 million in refunds to affected consumers.

ABC News' Enjoli Francis contributed to this report.

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