In a long-awaited move to equip consumers with the information they need to better manage their wireless bills, the Federal Communications Commission and wireless trade association CTIA said carriers would start sending consumers alerts before and after subscribers reach their monthly limits on voice, data and text.
The idea is to help consumers avoid what's been dubbed "bill shock," an unexpected increase in the monthly mobile bill.
"It's about time the phone companies did this. The reason they are doing it is quite simple: Every month consumers are suffering from bill shock and they call up the phone company and refuse to pay it," said Michael Disabato, vice president of network and telecom at Gartner. "There could be two things the wireless carriers are trying to do. One is to prevent doing all these adjustments. The second is to stop hurting their bottom line."
The announcement is a significant development, since CTIA represents carriers whose customer base includes more than 97 percent of wireless consumers in the U.S. Wireless carriers will send the alerts free of charge. The plan also includes notifications to give consumers a warning about international roaming charges while traveling overseas. All wireless consumers in CTIA member companies will automatically be included in the program, unless they purposely opt out.
The initiative got the attention of President Obama. "Our phones shouldn't cost us more than the monthly rent or mortgage," he said. "So I appreciate the mobile-phone companies' willingness to work with my administration and join us in our overall and ongoing efforts to protect American consumers by making sure financial transactions are fair, honest and transparent."
But not all of these notifications will start making their way to consumers immediately. The Wireless Consumer Usage Notification Guidelines, as it's called, has a phased approach. The initiative is part of a broader CTIA "Consumer Code for Wireless Service" that provides disclosures and practices for wireless service to individual consumers. By Oct. 17, 2012, participating carriers will provide customers with at least two out of the four notifications for data, voice, text and international roaming, and all of the alerts by April 17, 2013.
The move comes after the FCC proposed new rules in 2010 to help mobile-phone users. The FCC issued a study last year that found one in six mobile users had experienced bill shock. The tools in place to eliminate bill shock varied widely between service providers and type of service, and most of the alerts that were offered didn't cover all services or were not sent before the overage charges were incurred, the FCC discovered.
"Last year, the FCC identified a growing problem known as bill shock and took important steps toward a solution, which led to today's victory for more than 97 percent of wireless consumers," said FCC Chairman Julius Genachowski. "These alerts will give consumers the information they need to save money on their monthly wireless bills. Consistent with the FCC's ongoing efforts, these actions harness technology to empower consumers, and ensure consumers get a fair shake, not bill shock."