The FCC's 'win-win' deal on cell phone 'bill shock'

The Federal Communications Commission and the top U.S. wireless-carrier trade group, the Cellular Telecommunications and Internet Association (CTIA), agreed Monday to voluntary new rules intended to help cell phone customers avoid "bill shock" after unknowingly exceeding their service plans. The deal includes the four dominant U.S. carriers — Verizon, AT&T, T-Mobile, and Sprint — plus Clearwire and U.S. Cellular. The FCC and CTIA hailed the pact as a "win-win." But is it a good deal for consumers? Here's what you should know?

What is "bill shock"?

Pretty much what it sounds like. FCC Chairman Julius Genachowski defines it as "a sudden, unexpected increase in a monthly bill." Perhaps a better description comes from Wired's Christina Bonnington: The "sinking feeling of dread we experience when reading through a monstrous, completely unexpected wireless bill," realizing we've been "hoodwinked by unanticipated service fees and roaming charges."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Is it a real problem?

Yes, according to the FCC. A study the agency conducted in 2010 found that one in six cell phone users has experienced bill shock, and 84 percent of them weren't warned beforehand by their wireless company. The overage charges can add up, too. Of the complaints lodged to the FCC last year, 67 percent involved $100 or more, 20 percent were for at least $1,000, and one person was billed an incredible $68,505 extra.

Will the new rules prevent these charges?

They should certainly help. The wireless companies agreed to immediately send free text messages when customers are approaching their monthly limits on voice, text messaging, and data, and when they are about to get hit with international roaming charges. At least two of those alerts will be in place within a year, and all four will be up and running by April 13, 2013. The new deal won't necessarily stop you from incurring extra charges. But now "you won't be able to say you didn't have fair warning," says David Markiewicz in The Atlanta Journal-Constitution.

Why did wireless carriers agree to this?

The "voluntary" aspect of this "is a little misleading," says Kyle Wagner at Gizmodo. The FCC was already working on stricter regulations that would tie the carriers' hands, and the industry decided that reaching a deal with Genachowski was the better option.

Is this an unambiguous win for consumers?

New enforceable regulation would have been better, says Joel Kelsey at media-reform group Free Press, quoted in The Christian Science Monitor. With voluntary rules, there's no accountability. "When a consumer faces a $5,000 bill six months from now when the cameras aren't watching, where do they go for relief based on this voluntary agreement?" C'mon, says Paul Waldman at The American Prospect. This really should do the trick. Assuming you don't want to give Verizon free money, just "pay attention when you get one of those alerts."

Sources: CNN Money, TIME, Gizmodo, Wired, American Prospect, Atlanta Journal-Constitution, Christian Science Monitor