FCC Wants Wireless Carriers to Warn Consumers of Jacked-Up Bills

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The Federal Communications Commission wants wireless carriers to notify their customers before they reach roaming or data usage limits under their wireless service plans, a move to staunch the "bill shock" syndrome that is plaguing the nation.

Bill shock is, quite simply, the unfortunate experience of getting a wireless phone bill that was higher than expected.

Joel Gurin, chief of the FCC's Consumer and Governmental Affairs Bureau set up by FCC Chairman Julius Genachowski in January, told media on a conference call May 11 that the FCC has fielded hundreds of complaints about bill shock.

While Gurin stressed that his group is not "cracking down" on bill shock, the FCC is raising questions about the issue.

"We are hearing from consumers about unpleasant surprises on their bills," Gurin said, citing unclear or misunderstood advertising, unanticipated roaming or data charges, and other problems as causes for bill shock. "But this is an avoidable problem. Avoiding bill shock is good for consumers and ultimately good business for wireless carriers as well."

One remedy for bill shock is to ask wireless carriers such as Verizon Wireless, AT&T, Sprint and T-Mobile to send their customers a short text message warning them that they are approaching their roaming and data usage limits.

This approach takes a page from the playbook of the European Union, which requires carriers such as Vodafone to text subscribers who are racking up roaming charges or getting close to a set limit for data roaming.

"Our sense is that this has not been a particularly difficult thing to implement in the EU ... and that the same principle seems to us like it could be applied very well in the U.S," Gurin said.

public notice to determine whether or not wireless carriers in the United States can follow Europe's lead.

Gurin said he and his team want to find out from carriers if U.S. providers are already offering such usage alerts, as well as how much they cost to the consumer or the provider.

They also want to know whether technological or other differences exist that would prevent U.S. wireless providers from employing usage alerts similar to those now required by the EU.

The FCC further wants to learn how consumers can now monitor their wireless usage and know when they are exceeding their predetermined allocations of voice minutes, text messages or data usage.

"We really think that consumers should have the same kind of transparency of information when it comes to all kinds of communications services, including broadcast, cable, broadband and other services they may buy, not just wireless and wireline," Gurin said on the call May 11.

The inquiry into bill shock is just the start.   

Verizon Rings Up 9.8% Increase in Profit

Wireless Unit Helps Compensate for Decline In Land -Line Business

Verizon Communications Inc.'s profit climbed 9.8% as the telecommunications carrier took the biggest share of the industry's best wireless customers.

As with rival AT&T Inc., Verizon's results suggest the industry is largely shrugging off the effects of a slowing economy.

"We're really not seeing a change in trends," Chief Financial Officer Doreen Toben said in an interview. "How many people are really going to drop their wireless phone?"

In March, Ms. Toben reassured Wall Street that the New York telecom giant was on track to duplicate its solid performance from last year but hinted that an economic slowdown was making a small dent in its wireless business. In the past several months, telecom operators have signaled to varying degrees that they were being affected by broader economic problems as consumers pulled back on spending. Cable operators and satellite operators have also partly blamed lackluster results on the souring economy.

In focus has been the rate of customers who have canceled their services because they could no longer afford to pay their bills. Ms. Toben said during a conference call Monday the rate in the landline side had improved, while the wireless side had stabilized.

Like AT&T, which has posted more rapid profit growth than Verizon in the past two quarters, wireless business drove Verizon's total results. Revenue rose 13% at Verizon Wireless, a joint venture with Vodafone Group PLC. The turnover rate rose to 1.18% from 1.08% a year earlier. Average monthly revenue per customer rose 1.3%.

New-subscriber growth slipped 12% to 1.5 million, putting total subscribers at 67.2 million. More important, 1.3 million of the new customers were ones who signed long-term contracts, or nearly twice as many as AT&T had in the first quarter.

The $99 unlimited-calling plans, which all the major carriers unveiled in February, were driving growth in high-end consumers and' helped results, said Dennis Strigl, chief operating officer of Verizon.

The wireless unit's performance is compensating for the deteriorating land-line business. The 13% increase in revenue at Verizon Wireless helped offset the 1.4% decline in wire-line revenue Verizon's total base of phone fell 8.2%.

"Wire line is losing the battle, but wireless is winning the war," said Moffett, an analyst at Sanford C. stein & Co. LLC.

Broadband connections stood at 8.5 million as of March 31, up 15%. Sales of wireless and Internet services have helped phone companies such as Verizon and AT&T ease the impact of declining sales of fixed lines.

Verizon added 263,000 FiOS TV customers, taking the total to 1.2 million on March 31. Verizon is using FiOS as its weapon to beat back cable television operators that offer all-in-one packages of video, phone and internet services.

Shares of Verizon were up 91 or 2.5%, to $37.95 in 4 p.m. New York Stock Exchange composite trading.

By: Roger Cheng
Wall Street Journal; April 29, 2008