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Cell phone users share their stories on bills and surprise charges.

FCC initiative aims to protect consumers from cell phone overage charges

by Jesse Young
June 03, 2010


Jesse Young/MEDILL

The author's wireless phone bill in February, which registered $25.40 in overage charges for exceeding the allotted text messages by 254.

While vacationing in California, Estela Tallarico and her family took part in the common practice known as roaming. Data roaming, that is. Unbeknown to them, the Tallaricos, residents of Riverside, were tacking on steep charges to their bill with each call they made on their cell phone.

“We had taken our phone, thinking we were going to use it for a little, like calling a cab to the airport,” Tallarico recalled.

In the span of a few days, the Tallaricos amassed some $300 in charges for using the phone outside their coverage area. That was five years ago, and the family is no longer with Verizon Communications Inc.

In response to such oft-told tales of exorbitant cell phone bills, the Federal Communications Commission’s Consumer and Governmental Affairs Bureau issued a public notice in May to solicit ideas for better consumer protection. Of special interest is a system that alerts customers when they are at the risk of running up a high bill.

“We have gotten hundreds of complaints about bill shock,” or the experience of getting an unexpectedly high wireless phone bill, said Joel Gurin, chief of the Consumer and Governmental Affairs Bureau.

Of course, bill shock is avoidable now. Customers of the Big Four – Verizon Communications Inc., AT&T Inc., Sprint Nextel Corp. and Deutsche Telekom AG – and many smaller carriers can access their usage information in several ways. By dialing a few shortcut numbers, customers can check their minutes and text count directly from a cell phone. They also can access this information, along with more detailed figures, from a computer or by calling a service representative. However, not everyone thinks this is sufficient.

“The problem arises when people get charged for things they had no idea what the cost is,” said Sascha Meinrath, director of the New America Foundation's Open Technology Initiative.

While penalties and fees are spelled out in the contract, few consumers actually read or understand the fine print. Usage information is technically accessible, though it still requires cell phone users to actively seek it. The solution might be found, perhaps, by emulating our European neighbors.

In June 2009, the European Union adopted regulations to bring more transparency to charges incurred by wireless customers. The rules require European carriers to alert customers who are running up roaming charges or nearing voice or data limits. The notification, delivered as a free text message, explains the costs and procedures to continue using the service. United States Cellular Corp., the sixth-largest wireless carrier in the U.S., implemented a similar feature last November.

“We believe that customers should never be surprised,” said Derek Estes, U.S. Cellular’s director of sales in Chicago. “We responded to their feedback.

U.S. Cellular’s overage protection program sends text alerts when customers reach 75 percent and 100 percent of their allotted minutes or text messages. The Big Four, however, have yet to offer a similar notification service.

“I guess the reason is that there is no incentive for them to do that. It’s an important source of revenue when people overuse what is stated on their contract,” said Dongning Guo, an assistant professor in the engineering department at Northwestern University.

Motives aside, the Big Four carriers face challenges different from those of smaller carriers. So while it makes sense for U.S. Cellular, given its smaller user base, to roll out an overage protection program, larger carriers may bear steeper costs and technological hurdles. But some find these claims dubious.

“The technology is already there,” assured Guo, who does research in wireless communications. “It’s not difficult.”

Shortly after the FCC issued its public notice on bill shock, the CTIA-The Wireless Association, an organization representing the wireless communications industry, released a statement. In it, CEO Steve Largent pointed out that the “hundreds of complaints” referenced in the public notice amounted to less than “four ten-thousandths of a percentage” of the approximately 285 million wireless customers.

“We hope [to] put this discussion in the right context that is factually based and not based on a couple unfortunate anecdotal experiences,” said John Walls, the association’s vice president of public affairs. 

The minuscule amount of complains cited by the FCC could be attributed to a lack of awareness on the consumer’s part. When grievances arise, the Better Business Bureau or a state attorney general’s office usually comes to mind rather than the FCC. In 2008, the Better Business Bureau received 35,631 complaints attributed to the cell phone industry, topping all other industries. Nevertheless, some consumers follow the adage of “buyer beware” rather than “the customer is always right.”

Joe MacDonald, a Chicago visitor, described himself as a responsible user, though he couldn’t say the same for his friends.

“I have friends who thought they were on one text messaging plan only to find out when they were 1,500 messages over that they had 200 a month,” said MacDonald.

Others, such as Kate Connolly, a Chicago resident, learned from her mistakes. When Connolly was with Verizon, she habitually sent more text messages than her plan included, running up bills sometimes as high as $250. To prevent overage charges, she switched to AT&T and upgraded her plan.

“I have unlimited, and it definitely makes life easier because I don’t have to worry about going over,” Connolly said. “I know that every month, my bill will be $108.”

The list of proposed reforms ranges from reduced fees to capped overage charges. Some are calling for carriers to offer cheaper plans for light users such as senior citizens, as suggested by Jim Chilsen, communications director at Citizens Utility Board in Chicago. However, overregulation could lead to negative effects.

“To have too many regulations for this market is not a good thing,” Guo warned. “Wireless companies have a lot of challenges to meet,” especially given the meteoric rise in data usage from smart phones.

Meinrath estimates that the FCC could have a ruling in the next six to 12 months, with a lot depending on the strength of the consumer protections and extent to  which companies are fined for breaking rules. The window for public comment closes in late June, and in the meantime, speculation abounds about what the FCC will decide.

“The cell phone market is a jungle out there, and consumers need all the help they can get,” Chilsen said.