Survey underscores simmering feud between FCC, wireless industry

Consumer survey over 'bill shock' is a new flash point

The growing friction between the wireless industry and the Federal Communications Commission grew today with the release of a survey showing widespread concern and confusion over sudden increases in monthly wireless bills for exceeding limits on data, voice or text, and for early termination fees.

FCC Chairman Julius Genachowski used the survey findings to call for a "simple and easy-to-understand mobile purchase and billing process," furthering a view he has held since being chosen to head the FCC by President Obama.

In quick response, Steve Largent, president of wireless industry association CTIA, said in a statement: "I am very troubled with the current direction the FCC is taking with respect to the wireless industry. ... It seems the commission is going to attempt to micromanage what is an incredible array of choices for consumers."

Largent said that contrary to statements from the FCC, "the industry does provide 'simple and easy to understand' plans for every type of American consumer." He then related examples of recent third-party surveys showing high wireless customer satisfaction.

If the FCC really wanted to address consumer "shock" on bills. Largent said, the agency should address the "most egregious part" of the nearly 16% rate in taxes and fees imposed by federal, state and local governments on wireless customers.

The growing battle between the FCC chairman and the CTIA stems from a few factors. One is a political climate change in Washington that is more pro-consumer with the 2008 election of Obama. The other is the colossal growth in new wireless technology and the number of people using smartphones, such as the iPhone.

"The years of laissez faire with the wireless industry have changed, so we'll see a lot more calls for regulation by government agencies, and not just the FCC," said Jack Gold, an analyst at J.Gold Associates. "The government will take a more positive stance with consumers."

But Gold said the tension between industry and the government has also stemmed from technology innovations. "Wireless, particularly, has become such a staple of modern life, and it gets more visibility than it ever did," Gold said. Problems with exceeding monthly limits have resulted in part from new technology and the time it takes for customers to understand it, he added. "People are shocked by that sometimes and haven't learned the limits," he said.

The carriers need to do more to instruct consumers, but, Gold added, "it's obviously not in their financial interest to do so."

AT&T, the exclusive U.S. wireless carrier for the iPhone, has faced criticism for network problems, which hasn't helped the cause of carriers in general, he contended. "AT&T has done such a crappy job with iPhones that people in general [with other carriers] are annoyed, which has to have raised worries elsewhere of 'Why are you charging me when I get lousy service?' "

The FCC survey of 3,005 adults, conducted in April and May, included 2,463 people who have a personal cell phone. Of those, 17% said they have experienced sudden bill increases even though they hadn't changed their calling or texting plans. (A 14-page PDF summary of the survey is available on the FCC's home page.)

Based on the survey, the sudden increases in monthly charges due to a user's exceeding voice minutes, text messages or data downloads translates into 30 million Americans who have experienced such "bill shock," the FCC said.

Of the 17% who experienced bill shock, 88% said the cellular carrier did not contact them after the bill increase to discuss a change in plans, while another 84% said the carrier did not contact them when they were about to exceed their limits. One-third of the group said their bill jumped by $50, while about 25% said the increase was more than $100.

The other major finding of the survey was that nearly half (47%) of consumers who know they must pay an early-termination fee (ETF) if they cancel their contracts before the expiration date didn't know how much the fee would be. The FCC said the survey shows that one reason for their confusion is weak billing practices by carriers. Only 36% of cell phone customers said they feel the ETF information is "very clear."

Genachowski has made clearer billing practices one of his goals since the FCC began developing the National Broadband Plan last year.

Joel Gurin, chief of the FCC's consumer bureau, said today that several carriers are taking steps to make fees and billing clearer, but he added, "We would like this to become a universal practice."

Largent of the CTIA, however, argued that information for consumers on ways to better manage their wireless usage is "readily available from every carrier. ... Carriers go to great lengths to keep their customers satisfied and informed."

The survey also found that 58% of cell phone users are very satisfied with the number of places where they can get a good signal, while 29% said they were somewhat satisfied. With 87% saying they were very satisfied or somewhat satisfied, concerns over signal coverage could be relatively low. The FCC's survey was conducted by Abt/SRBI and Princeton Survey Research Associates International.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is

Copyright © 2010 IDG Communications, Inc.

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