TOPICS > Economy

FCC’s Genachowski: New Alerts Aim to Limit ‘Bill Shock’ for Wireless Users

October 17, 2011 at 12:00 AM EST
Most cell phone users purchase a plan with limits on how long they can talk, text or browse the Web each month, but it can be tough to track usage. Ray Suarez discusses new consumer-friendly rules for wireless companies to send their customers over-usage alerts with Federal Communications Commission Chairman Julius Genachowski.
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JEFFREY BROWN: Next, new consumer protections for cell phone users.

Ray Suarez has the story.

RAY SUAREZ: Most people who own a cellphone purchase a plan with limits on how long they can talk on the phone, how much they can text or use the Web. But customers often go beyond those limits and end up with a higher-than-expected monthly bill.

Today, the wireless industry, under pressure from the Federal Communications Commission, announced new voluntary guidelines requiring companies to send customers alerts before they exceed their limits. The FCC proposed such rules last year, then held off on implementing them under the new agreement.

Julius Genachowski is the chair of the FCC, and he joins me now.

Mr. Chairman, what’s bill shock? And what was the FCC looking for in the way of customer protection?

JULIUS GENACHOWSKI, Federal Communications Commission: Well, bill shock is what happens when you open up your bill at the end of the month and you see a very, very large charge that comes from exceeding one of those limits that you just mentioned.

RAY SUAREZ: And do we have any reliable numbers on how often people do this over the course of a year?

JULIUS GENACHOWSKI: We have done a survey. Consumers Union did a survey last year. As many as one out of five Americans, so literally tens of millions of Americans, experience bill shock, charges of hundreds or even thousands of dollars that come from unknowingly exceeding data limits or traveling to a foreign country and incurring very high international roaming charges.

RAY SUAREZ: Well, your agency was about to announce new limits, then held off. Why?

JULIUS GENACHOWSKI: Well, our goal was to solve this consumer problem, and we said from the start that technology provided an easy solution. Send people alerts before they exceed their voice or data or text limits.

And what we received today was a commitment from the wireless industry to do just that, to provide consumers alerts to empower consumers so that we can all manage our monthly bills and not be shocked by very large charges.

RAY SUAREZ: Once the FCC had announced its intention to move ahead on this, did the industry see eye to eye with the commission on what needed to be done?

JULIUS GENACHOWSKI: Well, we had very healthy discussions. We were very clear about what we thought would be fair to consumers.

Our focus was on harnessing technology to empower consumers with information. We had discussions about issues. For example, should an alerting mechanism be opt in or opt out? And one of the victories today for consumers is that the new alerts will not require an opt-in. They will be automatic. And if you’re in danger, if you come close to hitting a limit, you will be alerted and you will have a chance to act.

RAY SUAREZ: Did the agency, did your commission have in mind certain baselines that the industry was going to have to hit in order to make this agreement without you having to move to regulation?

JULIUS GENACHOWSKI: Yes.

And those baselines were part of the announcement today, alerting people before and after they exceed limits for voice, for texts, for data, or when they’re traveling internationally on international roaming and are about to incur much higher international roaming charges.

RAY SUAREZ: And when is this going to start?

JULIUS GENACHOWSKI: And let me just mention a couple of other things.

The other pieces were the alerts should be free and, as I mentioned, they shouldn’t require an opt-in. They should be automatic.

RAY SUAREZ: And how long until people start getting a buzz in their pocket and look and see that, lo and behold, it’s their carrier telling them they’re about to hit one of their limits?

JULIUS GENACHOWSKI: Well, that will depend on the carrier. Some will start very soon. At the long end, it may be 12 to 18 months. Some of the carriers have systems to change and upgrade.

But what we’re going to do starting right away, together with Consumers Union, is put up a website where we will be tracking what the different carriers are doing so that consumers will know, and so that we will see some competition among the carriers to provide this kind of service to consumers as quickly as possible.

RAY SUAREZ: When you’re in a situation like this, when you have allowed industry to move ahead before the federal government does, do you have to keep that regulation in your hip pocket in case it doesn’t proceed as planned, in case one of the big players in the industry doesn’t move ahead as you understood?

JULIUS GENACHOWSKI: Well, that’s why we’re monitoring. And that’s why we said we would keep this proceeding on hold. If there — if we don’t see compliance with these commitments, we will act.

Now, we expect that there will be compliance. Consumers want it. It makes sense. Technology makes it easy to offer these up-front alerts. So we don’t anticipate problems, but we will be watching closely and we will act if we have to.

RAY SUAREZ: You know, when you look at these different kinds of communications, voice, text, data, it might be easy to keep track of your minutes, even of the number of times you text or the number of characters you text.

But, boy, data plans often have certain limited numbers of megabytes across a month. And if you watch a couple of YouTube videos or check your portfolio or something, it’s hard to know how much data you’re downloading into that little device in your pocket. Is it easy to keep track of that?

JULIUS GENACHOWSKI: Well, this is exactly why alerts are so important.

People have an intuitive sense of minutes. No one really knows how quickly you’re getting to a megabyte limit. And it’s one of the reasons why so many people have these charges and why these alerts made so much sense.

There’s no question about it. All of the stuff that is going on is very exciting. So all of the services, apps that we’re getting with data and data plans are providing enormous benefits to consumers, are helping our economy. We’re leading the world in mobile innovation. This is a big plus for our economy and will become only more so as time goes on.

What we’re seeing here is that this is an area where we can both have tremendous benefits and services for consumers, a plus for our economy and job creation, and treat consumers fairly at the same time.

RAY SUAREZ: Julius Genachowski is the chairman of the Federal Communications Commission.

Thanks for joining us.  

JULIUS GENACHOWSKI: Thanks, Ray.