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Mobile Phone Bill Shock: FCC, Carriers Face Off

By Bill Snyder, CIO
October 18, 2010 12:53 PM ET

CIO - If your wireless bill spiked by more than $18,000 one month, would you think that was a "trivial" issue? Of course, not. But the big telcos and their conservative allies are trying to stop the FCC from putting rules in place that will make wireless bill shock a much less common occurrence.

Rather than take a simple, step to protect their customers, the wireless companies (with an assist from Wall Street and various lobbyists) are claiming that implementing safeguards against wildly spiking bills would cost consumers money, promote expensive litigation and, in general, be too burdensome.

All this because the FCC is proposing a few simple rules that would use technology which is already in place to warn a customer that he or is about to exceed the limits of voice, data or text messages. When that occurs, consumers can be hit with heart-stopping overcharges.

Surprise: You Owe $18,000 in Data Charges

That's exactly what happened to Robert St. Germain, a 66-year-old retired marketing professional in Dover, Mass., after his free data downloads expired without warning. When St. Germain renewed his family's mobile service contract, he says the agent did not tell him that the free data downloads were expiring. Under the terms of the new contract, he and his family were charged for each kilobyte of data. The bill was a shocking $18,000 bill. (Because the matter is being investigated by the FCC, the name of the provider is being withheld.)

[For more information on protecting yourself, see CIO.com's How to Avoid Mobile Phone Bill Shock: 5 Fixes. ]

St. Germain's case is an extreme example, of course, but according to a recent survey by the FCC 30 million Americans--one in six mobile users--have experienced bill shock. More than half those consumers saw an increase of $50 or more, but few were alerted by their provider--before or after the bill arrived.

Unlike wireless issues such as dropped calls or slow data speeds, bill shock would be easy to fix: Providers would just have to send a text message to subscribers when they were about to use up their allotted minutes or downloads. It appears that there's no technical obstacle.

U.S. Cellular, the no. 5 carrier, already does it, and AT&T, which just ended its unlimited data plans for new customers, will be sending notifications to customers approaching the limit. But on the voice side, AT&T, Verizon and T-Mobile, don't deign to do so while Sprint offers a rather confusing series of options, with one set of rules for new customers and another for old, as well as this: "Existing customers will be notified by email if they incur $20 or more in voice, text or data overages in two of the last six months." I have no idea what that means. Wouldn't be much simpler to just send a notice to all customers as their usage starts to redline?

Overcharges represent an easy revenue opportunity that carriers are reluctant to give up. According to Consumer Reports, consumers pay 35 cents to 45 cents a minute for minutes over their allotment, compared to an average base charge of six cents a minute, an increase of up to 650 percent.

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