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FCC chair dings carriers over 'bill shock'

Genachowski says consumers need more info on wireless expenses

By Brad Reed, Network World
October 13, 2010 03:14 PM ET

Network World - FCC chairman Julius Genachowski said Wednesday that the commission would be holding hearings in the near future to address wireless "bill shock."

Cell phone "bill shock" hits a nerve, says FCC

During a talk at the liberal Center for American Progress think tank, Genachowski praised some wireless carriers that had made vast improvements in informing consumers when they were about to exceed their monthly voice and data limits, but then added that these efforts were "the exception, not the rule." Because of this, Genachowski said it was time for the FCC to hold public forums with consumer groups and industry representatives about ways to mitigate unexpected wireless charges that some consumers face.

Genachowski said that addressing bill shock concerns was particularly important during a time when many carriers are planning to change their pricing models to metered data services that give consumers a bucket of megabytes per minute. He said consumers would find tracking how many megabytes they use significantly more challenging than keeping track of the number of minutes they use on cellular voice services.

To remedy this, Genachowski said carriers may have to adopt practices similar to what AT&T currently does with its iPad subscribers where they send users a message letting them know they're about to exceed their monthly data cap. This way consumers would be better informed and would at least anticipate higher wireless bills if they chose to exceed their data limits.

"People may not know what a megabyte is but they do understand when they get an alert telling them they're about to go over their limit," he said. "These are good, smart tools but they're the exception, not the rule."

Genachowski's remarks on "bill shock" came less than two weeks after Verizon agreed to pay an estimated $50 million back to roughly 15 million subscribers who were hit with wrongful data charges. The carrier's decision to repay its customers came more than one year after the FCC had started investigating so called "mystery fees" that consumers had reported receiving on their monthly wireless bills.

Genachowski today wouldn't specifically comment on the FCC's ongoing investigation of "mystery fees" but he did say that the commission was continuing to investigate the matter.

"Companies should compete on value, price and service, not customer confusion," he said.

A survey commissioned by the FCC earlier this year found that nearly one in five American consumers has been subject to sudden and unexpected rises in their monthly cellular phone bills. The FCC survey, which was conducted by research firms Abt/SRBI and Princeton Survey Research Associates, found that 17% of U.S. cell phone users said that their bills had "increased suddenly from one month to the next" even if they "did not change the calling or texting plan" they subscribed to.

The survey interviewed a total of 2,463 mobile phone users living in the United States. A plurality of those who saw their bills unexpectedly increase reported that the amount of the increase was relatively small, between $1 and $24 per month. However, 23% of those who saw their bills unexpectedly increase experienced increases totaling more than $100 in a month.

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