FCC Unveils New Rules for 'Mobile Phone Bill Shock'

If regulators have their way, cellphone companies will have to warn customers before they incur unusually high charges. It's a new program designed to prevent situations where a customer unexpectedly receives a bill for $68,505, as was the case for one customer in the first quarter of 2010.

The Federal Communications Commission (FCC), which oversees the mobile industry, is proposing three new rules regarding how and when companies should tell users about potential charges beyond their normal fees.

Cell Phone Bill Shock: Shocking Statistics

In May, the FCC released a report suggesting that approximately 30 million Americans have experienced bill shock in one form or another. Among them:

• 764 people complained to the FCC about wireless bill shock in the first half of 2010.
   
• 67 percent of those complained about amounts of $100 or more.
   
• 20 percent had complaints of $1000 or more.
   
• The largest complaint received during this time was for a whopping $68,505. (Source: arstechnica.com)

Cell Phone Billing: a Two-Stage Alert Process

The first rule, "Over-the-Limit Alerts", would require mobile phone companies to send a text or voice alert to a customer as they are approaching their monthly limit for a particular type of usage (voice calls, texts or data use) and again when they hit that limit. Customers would then be aware that they will incur overage charges if they use the service again before the end of the billing period. (Source: fcc.gov)

The proposals don't say exactly at what point the "approaching" alert would go out. A similar scheme in Europe that deals with data use only requires an alert when 80% of the allowance has been used.

The second rule, "Out-of-the-Country Alerts", would require companies to warn customers when they are about to pay higher-than-usual charges because they are being served by a different provider. Despite the name, the rules could apply to domestic cases where a customer is in a region not covered by their own provider. It's not clear if the alert would come the moment a customer was in such a "roaming area" or only when they attempt to use their phone.

Allowances Clear, Controlled

The final rule would require companies to make clear how customers can check how much of their allowances they have already used. The FCC is also looking into the idea of forcing companies to allow customers to set their own monthly allowance limit beyond which they simply wouldn't be able to use the services and incur additional costs. (Source: pcworld.com)

That's the system used in the European data allowance rules. In that system, there's a default limit that customers can either adjust or opt out-of. There seems to be a good chance that if such rules do get approved in the US, it would be as an opt-in scheme, meaning that such limits only apply where customers explicitly ask for them.