by Bill Snyder

Mobile Phone Bill Shock: FCC, Carriers Face Off

Oct 18, 2010
CarriersMobileSmall and Medium Business

The FCC has proposed new rules designed to eliminate mobile bills with large, nasty surprise charges. Not surprisingly, carriers are fighting back to keep the revenue from overage fees flowing.

If your wireless bill spiked by more than $18,000 one month, would you think that was a “trivial” issue? Of course, not. But the big telcos and their conservative allies are trying to stop the FCC from putting rules in place that will make wireless bill shock a much less common occurrence.

Rather than take a simple, step to protect their customers, the wireless companies (with an assist from Wall Street and various lobbyists) are claiming that implementing safeguards against wildly spiking bills would cost consumers money, promote expensive litigation and, in general, be too burdensome.

All this because the FCC is proposing a few simple rules that would use technology which is already in place to warn a customer that he or is about to exceed the limits of voice, data or text messages. When that occurs, consumers can be hit with heart-stopping overcharges.

Surprise: You Owe $18,000 in Data Charges

That’s exactly what happened to Robert St. Germain, a 66-year-old retired marketing professional in Dover, Mass., after his free data downloads expired without warning. When St. Germain renewed his family’s mobile service contract, he says the agent did not tell him that the free data downloads were expiring. Under the terms of the new contract, he and his family were charged for each kilobyte of data. The bill was a shocking $18,000 bill. (Because the matter is being investigated by the FCC, the name of the provider is being withheld.)

[For more information on protecting yourself, see’s How to Avoid Mobile Phone Bill Shock: 5 Fixes. ]

St. Germain’s case is an extreme example, of course, but according to a recent survey by the FCC 30 million Americans—one in six mobile users—have experienced bill shock. More than half those consumers saw an increase of $50 or more, but few were alerted by their provider—before or after the bill arrived.

Unlike wireless issues such as dropped calls or slow data speeds, bill shock would be easy to fix: Providers would just have to send a text message to subscribers when they were about to use up their allotted minutes or downloads. It appears that there’s no technical obstacle.

U.S. Cellular, the no. 5 carrier, already does it, and AT&T, which just ended its unlimited data plans for new customers, will be sending notifications to customers approaching the limit. But on the voice side, AT&T, Verizon and T-Mobile, don’t deign to do so while Sprint offers a rather confusing series of options, with one set of rules for new customers and another for old, as well as this: “Existing customers will be notified by email if they incur $20 or more in voice, text or data overages in two of the last six months.” I have no idea what that means. Wouldn’t be much simpler to just send a notice to all customers as their usage starts to redline?

Overcharges represent an easy revenue opportunity that carriers are reluctant to give up. According to Consumer Reports, consumers pay 35 cents to 45 cents a minute for minutes over their allotment, compared to an average base charge of six cents a minute, an increase of up to 650 percent.

What FCC Proposal Means to You

Last week the FCC proposed three rules that would go a long way towards eliminating bill shock.

1. The FCC’s proposed rules would require customer notification, such as voice or text alerts, when approaching and having reached monthly limits that will result in overage charges.

2. Mobile providers would have to notify customers when they are about to incur international or other roaming charges that are not covered by their monthly plans, and if they will be charged at higher-than-normal rates.

3. Clear disclosure of any tools offered by mobile providers to set usage limits or review usage balances. The FCC is also asking whether all carriers should be required to offer the option of capping usage based on limits set by the consumer.

None of that seems very radical. But the carriers and their allies are gearing up to fight the proposed regulations. Ryan Radia, associate director of the conservative Competitive Enterprise Institute called the issue “trivial,” and said: “Educating mobile subscribers about where to locate their up-to-date usage information—which all major wireless providers make available—is a far better solution to ‘bill shock’ than prescriptive federal regulation.”

And Sprint was quick to issue a press release touting the options I mentioned above. The other carriers have generally been silent, but when queried say that few of their customers run up unexpected charges.

Consumer advocates, though, welcomed the proposal. “The FCC’s proposal is a good start, but it needs to follow through by enacting rules that protect consumers from deceptive billing practices and that promote transparency and disclosure by mobile providers,” said Joel Kelsey of Free Press, a non-partisan advocacy group.

State regulators, who still have some say over wireline issues, have little authority when it comes to wireless communications. Thus any regulatory steps would have to be taken by the FCC.

The carriers argue that because there is competition among them, there is little need for more governmental oversight. Helen Mickiewicz, a managing attorney for the California Public Utilities Commission, agrees that the market is competitive. “But in many cases, all or most of the carriers have adopted exactly the same practices. Nothing could be more basic then letting people know they are about to encounter a large overcharge,” she says. “This is a good example of why regulation is needed.”

Mickiewicz adds that the FCC takes public comments into account when it decides on new regulations, especially when the volume is high. If you believe that consumers deserve a better deal, write or email the FCC. You can file a comment or complaint about bad service by going to the FCC’s Consumer Help Center Web site. Use the “File a Comment With the FCC” and let them know what you think.

San Francisco journalist Bill Snyder writes frequently about business and technology. He welcomes your comments and suggestions. Reach him at

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