Combating Wireless Bill Shock

I don’t imagine that anything will ever beat the story of the call from the panicked consumer who called me several years ago after receiving a (…wait for it…) $45,000 wireless phone bill after a 5 day trip overseas.  The problem was that the device owner’s son had spent the 5 days watching videos on the wireless device.  Getting a signal wasn’t the problem. Paying for using it—and understanding the costs associated with Junior’s video streaming from overseas for 5 solid days—was!  Talk about being in the proverbial “dog house” for an extended stay….  Ultimately, the consumer still paid a whopping $9,000 bill (her abusive call to the provider’s call center did NOT help her cause—particularly since the provider’s billing was precisely in line with its published rates and contract terms).  The experience of  the client, which unfortunately is not unusual (although certainly at a much larger scale than normal), is what’s known as “bill shock.”

The FCC defines bill shock as what happens “when wireless customers experience a sudden, unexpected increase in their monthly bill[s] as a result of unknowingly exceeding plan limits for data, voice, or text, or incur[ring] significant international charges.”  Particularly those parents of middle school and older children who have unwittingly opened wireless bills and expected amount due and discovered a MUCH larger one, understand the concept of bill shock.  Those same bill payers should be pleased that they’ll have access to at least some of this information before it’s too late to do something about it.  As Nanki-Poo famously said in Gilbert & Sullivan’s Mikado, “modified rapture.”

Some action north of the border may have prompted the carriers to move more quickly than they were required.  With implementation of the current voluntary guidelines CTIA, the wireless industry trade association, sensing consumer dissatisfaction in the air, and anticipating a national regulatory leash which is in the final planning stages in Canada, encouraged its members to jump on the bandwagon and create its own guidelines with the goal of a) assisting consumers and b) managing the problem before it was managed for them.

In October of last year, the FCC undertook an effort to eliminate—or at least minimize bill shock experienced by way too many unwitting wireless consumers (and parents and bill payers of wireless consumers).  However, before the FCC could define and implement its own approach, CTIA, the wireless industry trade group has come up with its own recommendations that the largest providers have taken to heart.  In fact, 12 months later after the FCC’s formal notice to the industry that rules were going to change, 97% of wireless consumers in the U.S. are provided with timely alerts regarding at least some of their usage relative to the terms of their respective contracts.  By April, 2013, those same 97% will be receiving complete notifications tracking usage.

From now until April, the 97% of us who are likely to receive notification will only receive such notification on some services that the wireless device provides.  That is, notice/alerts will only be provided in 2 of 4 areas of usage before limits are reached. The four are limited to data, voice, text and international roaming charges.  So, while you may be notified about your device’s usage relative to contract with respect to texting, you may have no idea where you stand on voice or international roaming.  Which two of a possible four areas of usage will trigger a notification in any individual case is unknown. Hmmm.  Certainly, this information is always available by checking with the provider, but for those 97% of us who are eligible for notice, there’s no way of knowing which services will trigger notification.  By April, for the 97% of us who receive notifications, notice will be available for all four usage areas.  Which is all well and good, but not terribly interesting.

What is interesting—and probably more frustrating than anything else—is identifying where queries about wireless device issues can be directed and, more importantly, answered.  This is a question without an easy answer.  While the New York Public Service Commission does a wonderful job of monitoring and securing responses from traditional land line service providers, issues related to wireless devices are beyond the PSC’s jurisdiction and control.  A good rule of thumb is that contractual problems should be directed to the New York State Attorney General’s Office, while billing problems should be directed to the New York State Department of State Division of Consumer Protection.  If the problem is strictly service related, the FCC may be the best place to call, but there’s no guarantee that you’ll see any response in this lifetime.

Consumers generally get in trouble by failing to understand what’s hidden in the incredibly small print that accompanies either new equipment purchases or extended wireless service agreements.  Aside from committing the consumer to a multi-year agreement in exchange for a discounted device price, there are other limits that are often imposed on consumers, particularly related to the amount of service that will be consumed monthly.  As capacity on the network for wireless service is stretched to the absolute max (remember, spectrum is a limited commodity and there is only so much wireless traffic that it can support at a given moment), providers have looked for ways to effectively manage demand. Pricing is surely one way to accomplish this task.

As someone who reads wireless and wireline contracts as a routine part of my workday, I’m well aware of the small print, but it’s always a contract of adhesion, and the consumer—even the largest corporate consumer--has virtually no opportunity to negotiate terms.  As of last year, wireless device consumers are largely prevented from even forming a class to sue, as a consequence of a California court decision (See Journal of BAEC, April 2012).  But what the consumer can do is move its business elsewhere.  Assuming that the choice of provider is limited to the major players, it’s reasonable to assume that as limits of used services are approached, there’s at least a 50% chance that consumers (individual or corporate) will be able to manage usage before only seeing red once the bill arrives.

And on that happy note, please accept my warmest wishes for a happy holiday season!