FCC will have tough time reining in burgeoning wireless industry

Billing, terms of service, customer service only a few issues with wireless services

With word that the Federal Communications Commission will next week begin to take a broad look at the wireless industry and how it is regulated, one wonders: What took so long?

The Government Accountability Office pretty much wondered the same thing in June with a report on the FCC's handing of the wireless industry. That report, which was none-too-popular at the FCC, said the agency needed to reexamine its handling of a number of growing problems.  The key areas of concern from the GAO report:

Billing: Complexity of wireless billing statements leads to lack of consumer understanding. Bills contain unexpected charges and errors.

Terms of service contract: Consumers are subject to fees for canceling their service before the end of their contract term (early termination fees), regardless of their reason for wanting to terminate service, and effectively locking consumers into their contracts. Consumers are not given enough time to try out their service before having to commit to the contract. Carriers extend contracts when consumers request service changes.

Explanation of service: Key aspects of service, such as rates and coverage, are not clearly explained to consumers at the point of sale (when they sign up for the service).

Call quality: Consumers experience dropped or blocked calls as well as noise on calls that makes hearing calls difficult. Consumers experience poor coverage, which in rural areas may be the result of lack of infrastructure and in urban areas stems from lack of capacity to manage the volume of calls at peak times.

Customer service: Consumers experience problems such as long waits, ineffective assistance, and insufficient resolution to problems.

Some other interesting facts from the GAO survey/report:

-GAO estimates about 21% of wireless phone users who contacted their carriers' customer service were dissatisfied with how their carriers addressed their concerns; FCC's efforts to handle complaints are an important means by which consumers may be able to get assistance in resolving their problems. However, the results of the GAO's survey of 1,143 randomly selected consumers, suggested that most consumers would not complain to FCC if they have a problem that their carrier did not resolve. Specifically, the GAO said that of 13% of wireless phone users would complain to FCC if they had such a problem and that 34% do not know where they could complain.

-Wireless carriers have taken a number of actions in recent years. For example, officials from the four major carriers, Verizon Wireless, AT&T, Sprint Nextel, and T-Mobile, reported taking actions such as prorating their early termination fees, offering service options without contracts, and providing Web-based tools consumers can use to research a carrier's coverage area, among other efforts. In addition, according to CTIA-The Wireless Association, the wireless industry spent an average of $24 billion annually between 2001 and 2007 on infrastructure and equipment to improve call quality and coverage.

-The GAO estimates that about 19% of wireless users wanted to switch carriers since the beginning of 2008 but did not do so. Then 42% of these wireless phone users who wanted to switch but did not because of the early termination fee.

The GAO plans to complete a full report in the fall and expects to make more recommendations then.

The GAO has tweaked the FCC in the past.  Last year in fact it issued a report highly critical of the way the commission handled some of the 454,000 complaints it received between 2003 and 2006 saying the agency needs to improve how it tracks and responds to consumer, safety and service complaints.

The FCC didn't like the report disagreeing with the way its research was conducted and saying it already has implemented measures to address concerns.

Regarding the complaint process, FCC officials told the GAO that the agency's role in addressing complaints, as outlined in the law, is to facilitate communication between the consumer and the carrier and that FCC lacks the authority to compel a carrier to take action to satisfy many consumer concerns. Thus, it is not clear if the intended outcome of FCC's complaint handling efforts is resolving consumer problems, fostering communication between consumers and carriers, or both.

In its hearing next Thursday, the FCC will examine three key aspects of the wireless industry.  In the first portion of the meeting, the FCC will consider ways it can better "support and encourage further innovation and investment" within the wireless industry.  In the second portion, the FCC will assess the state of competition within the wireless market.  And in the final portion, the FCC will discuss whether carriers can do more to disclose relevant billing information to their customers.

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