Wireless Carriers Question Need for FCC to Impose Bill Shock Rules
Wireless “bill shock” is “not remotely as large” a problem as the FCC suggested in a rulemaking notice, CTIA said in a filing Monday at the commission. The rules proposed would cost carriers, and therefore consumers, “tens, if not hundreds, of millions of dollars to put into practice,” the association warned. CTIA also hinted that a legal challenge is likely if the FCC moves forward on rules. The FCC at its October meeting proposed rules to require carriers to provide usage alerts and related information to help consumers avoid unexpected charges.
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"Multiple studies, including some from the FCC and other Federal government agencies, have confirmed that the overwhelming majority of consumers are satisfied with their wireless service, their wireless service providers, and their providers’ responsiveness to billing inquiries,” CTIA said. The Better Business Bureau found that carriers resolved 97.4 percent of all complaints in 2009. “The NPRM disregards these successes, however, in search of a ‘bill shock’ problem,” CTIA said. The rules would be expensive to obey, requiring carriers to change their customer notification practices “and restructure (or even replace) their billing systems to match a specific regulatory proposal,” the association said.
CTIA questioned whether the rules would survive legal challenge. “Specifically, the Communications Act prohibits the Commission from requiring wireless carriers to provide usage alerts and other information disclosures related to SMS and wireless broadband data services,” the group said. “And such requirements would violate the First Amendment because they are unduly burdensome and are not justified by the record in this proceeding.”
Verizon Wireless noted in a filing that carriers are already supplying customers with large amounts of information about their usage. Verizon sends alerts to customers that are using more voice, data and messaging than their plans allow and offers online usage meters and controls. The carrier also alerts customers when their handsets register with cell sites in foreign countries and when they have met service thresholds. “Consumers can use all of this information to manage their accounts, thereby ensuring they do not inadvertently exceed their service plans’ voice, messaging, and data allowances or incur unintentional wireless service fees,” Verizon said.
Verizon Wireless hinted that a mandatory usage alerting requirement may not survive challenge in the courts. “The requirement would violate the Administrative Procedure Act as arbitrary and capricious because the NPRM fails to set forth data or other evidence proving that a rule is justified,” the carrier said. “Second, neither Title II nor Title III of the Communications Act provides the Commission with the statutory authority to mandate alerts. Third, the proposed rule compels particular speech and thus raises significant First Amendment concerns."
Evidence shows that voice and data overages “are less common than popularly believed, and that unanticipated overages -- the topic of this proceeding -- are rarer still,” AT&T said. “Wireless competition compels providers to offer consumers effective means of avoiding unexpected charges, and it will continue to generate more powerful and user-friendly tools than would result from one-size-fits-all regulation,” the carrier said. “The regulatory mandates proposed in the NPRM are therefore unnecessary -- and, in fact, would counterproductively inflict costs on consumers that far outweigh any potential benefits.”
AT&T also questioned whether the FCC is on sound legal footing in imposing bill shock rules. The FCC “proposes to inflict a battery of regulatory requirements not only on interconnected voice services subject to the Commission’s Title II authority (CMRS), but also on two service categories that fall outside the scope of Title II: broadband Internet access and SMS text messaging,” the carrier said. “The Commission has identified no provision of the Communications Act that empowers it to impose such requirements on those services."
"Such regulation … is not necessary in the fiercely competitive wireless retail market,” Sprint Nextel said in a filing. “Carriers are already well aware that ‘bill shock’ leads to unhappy customers, increased operational expense and ultimately increased churn."
Prepaid provider TracFone said the rules should not apply to pay-as-you-go service. “Prepaid wireless services are consumers’ ultimate weapon to prevent bill shock,” the company said. “There are no hidden or otherwise unexplained or unexpected charges or surcharges which reduce the amount of airtime available to consumers below that which was indicated to consumers at the time of purchase."
The FCC should encourage flexibility, not impose rules, the Wireless Communications Association said. “Mobile service offerings are evolving rapidly, with innovative pricing models, innovative devices, and innovative quality of service options,” the association said. “In this rapidly evolving market, the Commission should avoid specific, one-size-fits-all notification regulations."
The National Association of State Utility Consumer Advocates, meanwhile, said the rules are needed. “In an increasingly changing marketplace, in which providers constantly seek to find new ways to outperform one another financially, consumers quickly become lost in an increasingly complex maze of choices, requirements and restrictions,” the association said. “Other life pressures make it impossible for them reasonably to devote the necessary personal resources to tracking all of these choices, requirements and restrictions.”