FCC Allows Telcos to Self-Regulate for ‘Bill Shock’

Published November 7, 2011

Federal Communications Commission Chairman Julius Genachowski announced in October the wireless industry trade association, CTIA, has agreed to advise its member companies to provide consumers with alert notifications when they exceed their monthly limit on wireless minutes, text, or data or will incur charges for international roaming.

The decision by CTIA probably would have been made anyway, even without pressure from the FCC following consumer complaints about bill shock, says Steve Titch, a telecommunications policy analyst for the Reason Foundation in Los Angeles, California.

It benefits both providers and consumers, he notes.

“Heavy data users can easily run over their allotted limits,” Titch said. “Data usage is something that is very difficult to track. And if someone sees that he continues to receive these notices that he’s about to run over, maybe he signs up for a larger—more minutes and higher data limits—plan.”

Titch said the FCC might have sought more onerous regulations if the CTIA hadn’t made the announcement.

‘Sufficient Disclosures’
Benjamin Lennett, policy director for the New America Foundation’s Open Technology Initiative (OTI), says the FCC should go further.

“OTI is disappointed that Chairman Genachowski has opted to rely on industry self-regulation, rather than meaningful and enforceable FCC rules to protect consumers,” Lennett said.

“Indeed,” he added, “CTIA already has a consumer code that is supposed to ensure wireless companies make sufficient disclosures to help consumers make informed choices about service offerings. Yet consumers continue to be given poor and sometimes misleading information regarding the actual price, speed, and limitations of wireless services. These types of voluntary commitments that are intended to avoid government rules have proven over and over again to be inadequate at protecting consumers and the public.”

‘Keep Regulators at Bay’
But Mike Wendy, president of Media Freedom.org in Washington, DC, says voluntary regulation is much better than the government stepping in.

“I think it is always preferable to foster and rely on industry self-regulation, especially in markets that are exceedingly competitive and consumer-friendly, as is the wireless market,” Wendy said. “Within this context, the alternative—regulatory intervention by unelected bureaucrats—seems far more likely to harm consumers by thwarting innovation and presenting lucrative avenues for public interest groups and the plaintiffs’ bar to scare providers from taking pro-consumer risk and investment.

“The evolution of technology, consumer education tools, industry best practices, self-regulation, and competition has done more for Internet and wireless consumers than just about anything federal regulators have done to promote consumer welfare.” Wendy added. “The more we can keep regulators at bay in competitive markets, the better off the America broadband consumer will be.”

Phil Britt ([email protected]) writes from South Holland, Illinois.