FCC Survey Estimates 30 Million Get Bill-Shocked

Half of cell phone users liable for early termination fees unaware of what those fees are

By John Eggerton -- Broadcasting & Cable, 5/26/2010 11:14:48 AM

The FCC says that a just-released survey suggests 30 million mobile device users have experienced "bill shock," which it defines as a sudden increase in their bills without any change in their service plan.

According to the commission, the survey also shows that almost half of cell phone users liable for early termination fees don't know what those fees are. That number jumps to two-thirds of those with broadband plans.

"The wireless industry has achieved remarkable innovation -- and mobile is increasingly essential to the daily lives of Americans.  But there is still more that can be done to help customers navigate what is sometimes a confusing marketplace," said FCC Chairman Julius Genachowski in a statement. "A simple and easy-to-understand mobile purchase and billing process will empower consumers to avoid bill shock and other unexpected fees.”

The survey comes on the heels of the FCC's launch of an inquiry into how to combat that "bill shock," as well as a Twitter campaign to collect personal stories. The FCC opened a general inquiry last year into insuring access to information about communications services (transparency and notification are elements in the FCC's proposed expansion and codification of network neutrality principles), but the recently launched "bill shock" inquiry drills down into the specific question of automatic notification.

Of the 30 million people shocked by their bills, 84% said they got no notification when they were about to exceed their allowable minutes, messages or data downloads, and 88% said they got no follow-up message after the bill increased. The FCC said those increases varied, but that more than a third said they jumped by at least $50 and almost a quarter (23%) said by at least $100.

One of the things the FCC is considering is whether the U.S. can and should adopt the European Union practice of mandating that wireless carriers send text messages to consumers who are running up roaming charges or pushing the limit on data roaming. The latter could become an issue if the FCC is correct about the importance of wireless to the broadband future.
FCC Consumer and Government Affairs Bureau Chief Joel Gurin pointed out in announcing the survey results that a number of carriers are already taking steps to make those fees more transparent. "We would like this to become a universal practice," he said.

The survey was conducted by Abt/SRBI and Princeton Survey Research Associates between April 19 and May 2, and that 30 million figure was extrapolated from 3,005 adults in a random phone survey in English and Spanish, and, appropriately, both landline and cell phones.

Gurin could not say whether the result of the FCC's inquiry would be a rulemaking or prodding the industry to voluntary standards, but said the survey gives it a good baseline for conversations with industry and public access groups and the public, which have already begun.

In response to a question in a press conference following the announcement, Gurin said he could not say from the data which carriers were actually informing their customers about the fees.

The wireless industry association took strong issue with the survey and the direction of the FCC's wireless inquiries.
 
“I am very troubled with the current direction the FCC is taking with respect to the wireless industry – from the messaging sent last week in the Mobile Competition Report to today's survey release," asid CTIA: The Wireless Association President Steve Largent in a statement. "It seems the commission is going to attempt to micromanage what is an incredible array of choices for consumers. Contrary to the statements in the press release, the industry does provide 'simple and easy to understand’ plans for every type of American consumer...If the FCC is interested in controlling 'shock' on consumer bills, they should address the most egregious part of consumers' bills, which is the almost 16% rate of taxes and fees imposed by federal, state and local governments on wireless consumers.”


Gurin said that more information from the survey about consumers' use of broadband will be released starting next week.