Wireless 'Bill Shock' Deal Will Help Businesses as Well as Consumers

By Wayne Rash  |  Posted 2011-10-17

Wireless 'Bill Shock' Deal Will Help Businesses as Well as Consumers

The agreement that the CTIA and Consumers Union put together with the Federal Communications Commission to alert customers when they're about to run up a huge bill will help protect against what the groups call "bill shock." This phenomenon occurs when you exceed the limits on calling minutes, text messages or data use, and as a result, rack up huge bills for the overage.

Not only are some of these overages huge, but in many cases, they're also completely unexpected and can cause hardship for consumers. In reports to the FCC, consumers have told about situations in which their children have exceeded the limits without their knowledge. In another instance, a woman traveling on a Caribbean cruise left her phone turned on, and that resulted in huge data charges as her Android phone polled repeatedly for new email and received text messages.

The CTIA is making new rules in the organization's "Wireless Consumer Usage Notification Guidelines," which will become part of the CTIA's Consumer Code for Wireless Service. CTIA members must agree to the consumer code. All four of the major U.S. carriers are members and have already agreed to implement the notifications.

The way this would work is that as consumers approach their plan limits, they'd receive a message from their carrier letting them know that they were about start incurring extra wireless charges. The same kind of notification would take place when wireless customers used their phones outside the U.S. and would get charged for international roaming.

A similar notification would also be sent out by the carriers after the limits were exceeded to warn that higher charges were being added to the customer's wireless bill. The wireless companies have until April 17, 2013, to implement the notification, although all the companies have at least some similar notification plan in operation already. Of course, none of this will actually prevent wireless customers from running up huge bills anyway, but at least they'll be warned.

This is important for your business for a couple of reasons. First, many companies are moving to a system that allows employees to use their personal wireless devices for work. The companies that allow this presumably either pay the wireless bills directly or they reimburse their employees for their business-related wireless expenses. But what happens when an employee exceeds their plan minutes and gets a whopping bill? In some cases, the company gets the bill and is faced with budget-busting phone charges. In others, the employee will want reimbursement, especially if the overages were incurred as a part of company activities, such as international business travel.

Carriers Avoid FCC Regulation With the Bill Shock Deal

But if alerts are being sent out, the company has a way to prevent these huge charges. The accounting department can either allow the employee to change plans to keep the overage in check or at least be prepared to pay the larger bills. In situations where the company is sending employees on international travel, the company may want to provide phones that are set up with accounts for international roaming, or even pay for SIM cards to provide their employees with a phone number local to the area where the travel is taking place.

Of course, there are still questions about whether the wireless companies will allow customers to switch plans reasonably and whether the companies will find a way for customers to prevent such overages (perhaps preventing calls that would exceed plan minutes, for example). Like anything else, the details matter, and they'll probably differ from one carrier to another.

What's also important about the agreement between the CTIA, Consumers Union and the FCC is that it allows the wireless industry to self-regulate and avoid a long, expensive regulatory process. However, the Consumer Federation of America worries that this might encourage the wireless industry to adopt rules that are weak and have little teeth, while also preventing the FCC from stepping in with new regulations.

For its part, the FCC has had a docket open on this topic for quite a while, and says it plans to keep it open to make sure that the "bill shock" issue is handled appropriately. Considering that Consumers Union is part of the agreement, I think there's little chance that the CTIA would be able to pull a fast one if only because the group would make sure that any effort to water down the rules was well publicized and would take it up with the FCC.

Of course, there is another reason why the industry will probably play it straight on the bill shock issue. The carriers will all need the FCC to issue licenses as their businesses grow, and if the wireless carriers have a history of anti-consumer activity, that will make it a lot harder to get those licenses.

In addition, the companies don't need any more negative publicity like the news stories that appear telling about five-figure cell phone bills. Such bills probably don't represent a significant amount of revenue, but the negative publicity can affect overall revenue growth if consumers feel that they are being abused by a particular carrier or by all carriers. Thus, the carriers have every reason to look as pro-consumer as they can. 


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