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Posted at 09:12 AM ET, 09/14/2011

Wireless data plans put spotlight on FCC billing protection


(Richard Drew - AP)
As wireless companies introduce new, and sometimes confusing, service plans, expect pressure on the Federal Communications Commission to better protect consumers from false and misleading billing practices, analysts say.

All major carriers — with the exception of Sprint Nextel — have revamped their smartphone wireless Internet plans and done away with all-you-can-eat flat rates.

Most have gone to tiered systems that ask consumers to pick plans based on how much data they consume each month. All carriers have systems to warn consumers through texts and phone calls they are about to go over their monthly limits, and users are charged penalties for exceeding their caps. AT&T, for example, charge $10 per gigabyte over a monthly allotment.

But the warnings aren’t mandatory and some lawmakers and consumer groups want the FCC to keep carriers accountable.

“These are populist, and less politicized issues that will get the attention of the FCC and lawmakers on the Hill,” said Jeffrey Silva, an analyst at Global Medley Advisors. He said as the FCC will struggle to move forward on more controversial regulatory overhauls — such as the transformation of the Universal Service Fund from phone subsidies to broadband subsidies and spectrum incentive auctions.

There’s been a slew of proposals tossed around at the FCC but none of those proposals have turned into wireless billing rules.

In July, FCC Chairman Julius Genachowski proposed a bill to prevent cramming — where third parties attach fees to phone and wireless bills.

Consumer groups have fought for a “bill shock” initiative that would force carriers to warn users about overages. One in six mobile users, according to the agency, have complained of bill shock. Genachowski has complained that the average cell phone user doesn’t know how many bits of data they are consuming when watching a video over their smartphone. But the agency hasn’t voted on a proposal introduced in October 2010.

In the fall of 2009, Genachowski’s broadband plan task force said 80 percent of consumers have no idea what speed broadband service they receive. Also, consumers were paying for broadband Internet service that lags advertised speeds by as much as 50 percent. The officials tossed around the idea of a broadband speed chart — like a nutritional label — provided by ISPs to customers. But that idea fizzled.

Some public interest advocates are expressing frustration that bill shock and broadband speed labels have been delayed.

“The move toward tiered models -- where prices are completely divorced from costs -- should certainly raise concerns at the FCC,” said Derek Turner, a policy research director at Free Press.

“But this commission’s track record suggests it doesn’t have the political will to do anything about it. All we’ve seen so far is a string of proposed rules, without any follow-through to actual protections,” Turner said.

He and other consumer advocates have argued for the FCC to redefine broadband services as telecom services in order to clarify its authority to create new rules.

“Until this FCC directly confronts the legal authority issues, we wouldn’t expect to see any meaningful consumer protections enacted in the wireless space,” he said.

The FCC may not be able to pass new rules in an political environment hostile toward new regulations, but it has announced cases of enforcement.

On Sept. 1, it announced $20 million in proposed penalties against companies believed to be involved in deceptive marketing of prepaid calling cards.

In October 2010, Verizon Wireless paid $25 million in a settlement with the FCC over an investigation into mystery fees.

Related:

FCC net neutrality rules expected to trigger lawsuits, Hill opposition

T-Mobile introduces new value, tiered mobile plans

Faster cell phones bring a new wave of services, charges

By  |  09:12 AM ET, 09/14/2011

 
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