FCC and Wireless Carriers Reach “Bill Shock” Accord

FCC Chairman Julius Genachowski recently announced an agreement with the mobile wireless industry by which it has agreed to abide by new voluntary guidelines to prevent “bill shock” through the delivery of advance warning messages to subscribers at risk of incurring high charges on their monthly mobile service bills. Bill shock is a term used by the FCC to describe when a consumer claims a sudden, unexpected increase in their monthly bill, usually as the result of exceeding limits on voice, data, or messaging plans. As a result of the agreement, the FCC suspended its plans to adopt new wireless billing regulations that it proposed last year, but warned that the Commission would not hesitate to adopt regulations in the future if the industry self-regulation proves ineffective.

The FCC, CTIA (the mobile wireless trade association) and the Consumers Union jointly negotiated the industry guidelines, which come a year after the Commission released a report that concluded approximately 30 million Americans experienced some form of bill shock. The report indicated that bill shock for some individual subscribers amounts to thousands of dollars. The guidelines would require wireless network operators to send voice or text alerts to subscribers when they approach and meet their plans’ limits, and when they will incur international roaming charges. Mobile operators would also notify subscribers of available methods to self-monitor their data and roaming charges. The new warnings would be free of charge and occur automatically unless the customer elects to opt-out of the alert program

The alerts will be fully implemented by Spring 2013, with mobile operators deploying some notifications within a year. President Obama released a statement in support of the new guidelines, calling the alerts a “simple step” to avoid bill shock. FCC Chairman Genachowski stated that the FCC will take a “trust but verify” approach to this industry self-regulatory effort. FCC Commissioner Michael Copps expressed a similarly cautious reaction to the accord when he stated that the bill shock accord represents progress but does not “close the book” on bill shock concerns. Some consumer groups praised the guidelines as providing subscribers with necessary information in order to moderate their usage and avoid overage fees, while others questioned the reliability of the alert systems.