Mobile-telephone customers are being surprised by extra fees and contract terms, a U.S. regulator said, touching off a fight with the wireless industry that said the agency is about to micromanage the companies, Bloomberg reports in CTIA SmartBrief.
One in six customers has faced unexpected fees and is unaware of costs to switch carriers, according to a survey released today by the Federal Communications Commission, which is seeking clearer information for consumers.
“There is still more that can be done to help customers navigate what is sometimes a confusing marketplace,” FCC Chairman Julius Genachowski said in an e-mailed statement.
Genachowski, a Democrat, has broadened the agency’s scrutiny of the wireless industry, investigating billing, exclusive contracts for handsets including Apple Inc.’s iPhone, and how companies carry rivals’ calls. Last week the agency said wireless industry concentration is rising.
“I am very troubled with the current direction the FCC is taking,” Steve Largent, president of the Washington-based CTIA - The Wireless Association, said in an e-mailed statement today. “It seems the commission is going to attempt to micromanage what is an incredible array of choices for consumers.”
AT&T Inc., the second-biggest mobile-phone company and a CTIA member, said the FCC’s conclusion about concentration could lead to new regulations. Other CTIA members include leader Verizon Wireless, Sprint Nextel Corp. and Deutsche-Telekom AG’s T-Mobile.
Almost 9 in 10 customers whose bills suddenly increased weren’t warned in advance by their carriers, the FCC said, citing the April survey. “Overwhelmingly, these Americans were not contacted,” the agency said. The FCC said the survey suggested 30 million Americans faced surprises in their bills.
Consumers would be helped by “simple and easy to understand” purchase and billing procedures, Genachowski said.
Largent said the wireless industry “does provide ‘simple and easy to understand’ plans for every type of American consumer.”
Verizon Wireless, AT&T and other service providers may face rules like those in Europe, where carriers must send text messages to subscribers who are closing in on plan limits, the FCC said May 11. The agency said it is talking with wireless industry groups about steps to improve bills.
“We really can’t say at this point whether this all will result in a rulemaking or voluntary standards,” Joel Gurin, chief of the FCC Consumer and Governmental Affairs Bureau, said on a conference call with reporters today.
Of customers who said they were surprised by their bills, 88 percent weren’t contacted when charges increased, the agency said. About 84 percent weren’t contacted when they were about to exceed their allowed minutes, text messages, or data downloads, the agency said.
The FCC said only 36 percent of subscribers familiar with their bills reported finding “very clear” information on early termination fees charged when subscribers leave a service before the contract expires.
More than a third of people surprised by a bill said their charges jumped by at least $50, and 23 percent said the increase was $100 or more, the FCC said.
The telephone survey of 3,005 adults was conducted April 19 to May 2 by Abt/SRBI and Princeton Survey Research Associates International, the FCC said. For those with personal cell phones, or 82 percent of all respondents, the margin of error was plus or minus two percentage points, the agency said.
Almost half of consumers subscribing to plans with fees for dropping service before the end of a contract didn’t know the amount they would be charged, the agency said.
Termination fee increases are “just not an area we’re getting into, at least at this point,” Gurin said. “We’re focused on clarity, disclosure, consumer information.”
AT&T on May 21 said that starting June 1, it will raise early termination fees to $325 from $175 for customers of the Apple iPhone and devices used for computing on the go.
Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group Plc, told the FCC Dec. 18 that consumers are protected by “detailed disclosure practices” about early termination fees, which doubled in November to $350 for advanced phones.
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