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Posted at 11:40 AM ET, 10/17/2011

FCC holds off on ‘bill shock’ rule as industry plans alerts for reaching monthly limits


“We expect compliance. If not, will take appropriate action,” FCC Chairman Julius Genachowski said Monday. (Phelan M. Ebenhack - BLOOMBERG)
The chairman of the Federal Communications Commission on Monday said he will put a pending “bill shock” regulation on hold after the wireless industry promised to create its own program to alert consumers when they are about to be charged overage fees.

The move sparked new questions about how the FCC will monitor cellphone billing problems — one of the most pressing pocketbook concerns for households relying on cellphones but facing increasing fees.

During an announcement of the industry-led effort, which was first reported Friday in The Washington Post, Genachowski touted the agreement by wireless companies to warn users when they are about to go over monthly limits for voice, data and texting, or incur international roaming fees.

That was the case for Nilofer Merchant, an author and business strategist who racked up more than $10,000 in international roaming and overage fees while visiting Toronto. Her carrier, AT&T, sent notifications of the charges later, but she still had to pay $2,000 in fees.

Genachowski pointed to several examples of just how bad the problem can be. He mentioned a woman he had met who was charged $34,000 for international data and texting charges when visiting her sister in Haiti after the 2010 earthquake. He also mentioned meeting a man who was charged $18,000 when his free data downloads expired without warning.

One year ago, Genachowski brought people who had suffered from bill shock to Washington to give testimonials as he introduced a regulation to force carriers to provide text and voice alerts.

Under the industry-led effort, the alerts will be free and automatically available to the nation’s 300 million wireless customers, according to the trade group CTIA. Customers will be able to get notifications for two types of overages by Oct. 17, 2012, and all service alerts by April 17, 2013.

The announcement is considered a win for the wireless industry, which has moved toward voluntary warnings of overage charges and has fought government policies that would police its practices.

“Today’s initiative is a perfect example of how government agencies and industries they regulate can work together under President Obama’s recent executive order directing federal agencies to consider whether new rules are necessary or would unnecessarily burden businesses and the economy,” CTIA President Steve Largent said.

Genachowski said he will put his own proposal — introduced last October — on hold. When asked during a question-and-answer period how the FCC would monitor the industry’s efforts, Genachowski didn’t offer details but said: “We expect compliance. If not, will take appropriate action . . . but neither of us think that will happen.”

Consumers Union, the author of Consumer Reports, hailed the announcement. The advocacy group is working with the FCC on a Web site that monitors the billing alert plan by the wireless industry.

Others were critical, saying the FCC’s bill-shock proposal was among the most important rules the agency could have pursued for consumers. During stubbornly difficult economic times, and with carriers ending unlimited-service plans, consumers are vulnerable to shocking monthly bills.

Joel Kelsey, a policy analyst at public interest group Free Press, said he needed to see more details about the industry effort. But he was skeptical that voluntary standards would fully protect consumers.

“Wireless carriers are not charities — they will make the most revenue they can from their user base,” Kelsey said. “And since competition is weak in this industry, there aren’t natural incentives for companies to be on their best behavior.”

By and  |  11:40 AM ET, 10/17/2011

 
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