T-Mobile and Capitol Hill have recently interacted in two notable ways. First, in a proactive fashion more typical of the so-called “Un-carrier,” T-Mobile called on the Federal Communications Commission (FCC) to spell out exactly what qualifies as “commercially reasonable”—the FCC’s language in its Data Roaming Order—regarding data roaming agreements. And second, this time on the defensive, it responded to a Federal Trade Commission (FTC) complaint accusing it of making bogus charges on customers’ bills.
T-Mobile Petitions the FCC
T-Mobile petitioned the FCC in May, calling the roaming market “dysfunctional” and asking the FCC to “arm providers with the tools they need to obtain the data roaming agreements necessary to enable them to compete.”
AT&T and Verizon, which own the majority of the relevant spectrum, aren’t offering reasonable terms, which forces T-Mobile to throttle customers’ data use, it argued.
“Data roaming traffic carried by the substantial majority of roaming partners other than AT&T is generally offered at rates that do not require throttling or capping,” it wrote.
On July 10, the common-interest groups Public Knowledge, the Open Technology Institute at New America Foundation, the Benton Foundation and Common Cause filed comments with the FCC in support of T-Mobile’s petition.
AT&T and Verizon have the “incentive and the capability to raise data roaming rates (or deny data roaming entirely) and thus disadvantage its competitors,” they pointed out, noting that the Commission determined this in its 2011 Data Roaming Order.
In addition to imposing artificially high prices on their own customers, the filing continued, “AT&T and Verizon can maintain a highly aggressive cap on data usage, coupled with significant overage charges, by denying competitors such as T-Mobile the ability to offer truly unlimited data packages.”
Public Knowledge Senior Vice President Harold Feld, in a follow-up blog post July 11, wrote that AT&T and Verizon’s practices not only make it financially impossible for their competitors to offer uncapped data, but it allows them to keep their own broadband “capped and overpriced.”
Worse, he added, “with things like AT&T’s ‘1-800-Broadband’ initiative that lets third-party providers pick up the tab for these artificial overage fees, AT&T and Verizon can exploit their spectrum market power to make even more monopoly profits while shafting the competition and consumers.”
FTC Accuses T-Mobile of Cramming
In a complaint filed July 1, the FTC charged T-Mobile with “making hundreds of millions of dollars by placing charges on mobile phone bills for purported ‘premium’ SMS [Short Message Service] subscriptions that, in many cases, were bogus charges that were never authorized by its customers.”
T-Mobile Fights FTC Cramming Charges, Petitions FCC
The FTC believes that T-Mobile received 35 to 40 percent of the total amount of charges for things like “flirting tips … or celebrity gossip,” which typically came at a cost of $9.99 per month.
“It’s wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs that charges it was imposing were fraudulent,” FTC Chairwoman Edith Ramirez said in the complaint. She added that the FTC intends to make T-Mobile repay all of its customers for the charges.
T-Mobile called the complaint “without merit.”
“T-Mobile stopped billing for these Premium SMS services last year and launched a proactive program to provide full refunds for any customer that feels they were charged for something they did not want,” T-Mobile CEO John Legere said in a statement. “T-Mobile is fighting harder than any of the carriers to change the way the wireless industry operates.”
Not all of the third-party companies that the carriers used to handle billing “acted responsibly,” Legere said. Those providers should be held accountable, and “the FTC’s lawsuit seeking to hold T-Mobile responsible for their acts is not only factually and legally unfounded, but also misdirected,” he added.
Two days later, seemingly still fuming, Legere tapped out a follow-up, writing that the FTC sensationalized the story at the expense of T-Mobile’s reputation, as well as his own.
“T-Mobile and I stand for one thing: doing right by consumers,” he wrote. “It is fundamental to who I am, the type of company I run, and the industry changes we are forcing, and it’s at the core of our people.”
He went on to make three points. First, “T-Mobile is not participating in any form of cramming, stuffing charges for un-purchased services, or trying to be anything less than totally transparent with each of our customers.”
Second, he promised to keep T-Mobile’s pledge to bill customers only for what they want and what they have purchased. Third, T-Mobile has created a refund program and will “double down” on its outreach efforts to make sure all potentially affected customers are reached and refunded.
“It’s important to me that consumers know that T-Mobile can always be counted on to do the right thing,” Legere added.
The commission vote authorizing the filing of the complaint, the FTC added, was 5-0.