FCC’s Proposed ‘Bill Shock’ Rules Ignore Customer Choices

Published May 31, 2016

The wireless industry and independent analysts are responding strongly to the Federal Communication Commission’s ongoing investigation into alleged “bill shock.”

CTIA-The Wireless Association, Rural Cellular Association, and the Rural Telecommunications Group responded January 10, 2011 to regulations proposed by the FCC this past October that would mandate wireless carriers notify customers before they exceed usage limits.

“The FCC should refrain from initiating prescriptive rules that not only would likely cost carriers (and therefore consumers) tens, if not hundreds, of millions of dollars to put into practice, but that also would raise numerous legal issues, create substantial implementation challenges, and force companies to upgrade to a set of government standards instead of creatively competing in the provision of service to customers,” according to comments released by CTIA. “Instead, the FCC should use its considerable resources to make customers aware of the capabilities already available to consumers.”

‘Customers Awash in Choices’

Though there have certainly been some instances of bill shock, said Bartlett D. Cleland, director of the Institute for Policy Innovation (IPI) Center for Technology Freedom, such occurrences are relatively rare. Otherwise, he says, consumers could easily change providers in this very competitive industry.

“The problem the FCC is seeking to solve is that some people apparently are surprised by their mobile bills, having not kept track of minutes used, text messages sent, or volume of data used,” said Cleland. “The truth is that customers who are worried about costs have many available options from prepaid phones—even though the government is trying to regulate those outright—to a variety of usage tools provided by service providers, and even unlimited-use plans, which charge a flat rate for as much usage as you want,” he said.

“It’s a curious time to regulate, as customers today are awash in choices and pay less per minute than at any other time,” said Cleland. “That’s until new regulations drive up costs.”

Taxes ‘True Bill Shock’

Instead of additional regulations, perhaps the FCC should be looking at the taxes layered on mobile communications service that drive up the cost of communications, Cleland says. In some cases, government prevents companies from disclosing tax charges as a separate line item.

“This results in true bill shock,” Cleland said. “A common complaint of consumers is that they are sold a plan and then get the bill, loaded with fees and taxes required by the government.”

Whitey Bluestein, owner of Bluestein & Associates, LLC, a San Rafael, California-based firm that offers mobile strategy services, notes there are at least five or more wireless service providers in every market.

“Customer choices have never been broader or better,” Bluestein said. “The prepaid, or no contract, space, which now accounts for more than one in five wireless subscribers and [is] growing fast, as well as Pay Go offerings, have been marked by falling prices such that no-contract, unlimited voice and text plans are in the range of $40 a month, less than half [the cost] of the postpaid offerings.”

Bluestein added, “Given the very competitive marketplace, which offers the best choice in handsets, plans, and providers consumers have ever had, consumers have the power to vote with their feet.”

‘All in This Together’

“Consumers are increasingly relying on wireless voice and data devices to keep in touch with family and friends and, of course, to conduct business,” added John Marick, CEO of Consumer Cellular in Portland, Oregon, which specializes in providing wireless services for American Association of Retired Persons members.

“The growing dependence on connectivity has placed a lot of power into the hands of wireless service providers, but it also has generated high expectations,” Marick said. “As a whole, the wireless industry has fallen short of consumers’ standards, with concerns raised over long-term contracts, complex plans, overage charges, and various other fees. Increased regulation, however, will not necessarily resolve these issues.”

Marick notes customers and phone companies rely on each other.

“It’s important to recognize that we’re all—service providers and customers—in this together,” he said. “Each of us has a responsibility to one another. Service providers should consider how they can improve the customer experience and ensure that plans, fees, and other pertinent information are accessible, clear, and easy to understand.”

But Marick also points out wireless customers should be expected to manage their accounts responsibly.

“Consumers, too, have an obligation to read their agreements and ask the appropriate questions to make sure they fully understand what they’re buying,” he said. “Also, wireless users must be cognizant of their usage needs and patterns and develop an understanding of how their usage behaviors will impact them financially.”

‘An Ongoing Conversation’

Marick acknowledged consumers may need some help in managing their accounts to avoid bill shock, but he says this is just one of many issues that should be part of an ongoing, meaningful conversation between consumers and providers.

“Wireless carriers should be listening to what customers want from a service provider and consider making some changes that are not necessarily mandated,” Marick added.

“The competitive nature of the industry is already helping some providers adjust their strategies, as many are incorporating measures to address customer concerns, such as overage alerts to enable consumers to make more informed decisions about their accounts” he said,. “As providers seek to improve their services and features, consumers should reward them with their business and loyalty.”

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