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FCC to Propose Rules Regulating Cell Phone ‘Bill Shock’

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By Admin on October 15, 2010 12:57 PM

Watch out for "Bill Shock"

Whether or not you have heard of it by name, if you have a cell phone, you have probably had to deal with frustrating business practices such as early termination fees (ETFs). The chairman of the Federal Communications Commission, Julius Genachowski, gave a speech on Wednesday and promised that the FCC would work to put and end to bill shock, though he was short on details.

In general, the bill shock policy would require cell phone carriers to do a better job of keeping consumers informed. For example, carriers would have to warn users when they are nearing their maximum of voice, data and text limits. This would in turn lower many consumers monthly bills.

According to Genachowski, ETFs are sometimes reasonable because consumers are given a steep discount when they sign up for their phone plan. This is known in the industry as "phone subsidies." However Genachowski said that the fees are too confusing. In addition, The Washington Post noted that consumer advocates argue that ETFs prevent competition because consumer wind up locked into multi-year contracts.

"There’s no reason we shouldn’t have clear and simple disclosure around ETFs," Genachowski said. "The more consumers know, the more likely it is that the company offering the best product, or service, or price will come out on top – driving competition, which drives innovation, resulting in better and more useful products for the American people."

Not everyone thinks that the bill shock proposal is a good idea. For example, CTIA, the trade group for the wireless industry, thinks that it is unnecessary. CTIA cites the fact that all wireless providers already offer ways for consumers to check their accounts. "...we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends,” said Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, The Washington Post reports.

It's certainly something to keep an eye on. But until the proposal is actually enacted, keep a close eye on that cell phone bill, even if it pains you.

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