FCC survey confirms "bill shock" bigger problem than imagined

The US Federal Communications Commission (FCC) recently released the findings of an agency survey on the consumer mobile experience. The survey indicated that 30 million Americans, or one in six mobile users, have experienced "bill shock," a sudden increase in their monthly bill that is not caused by a change in service plan. It also showed that nearly half of mobile phone users who have plans with early termination fees (ETFs) and almost two-thirds of home broadband users with ETFs didn't know the amount of the fees they were accountable for.

The FCC has been proactively working to clear up consumer confusion surrounding bill shock, ETFs and other issues. Last August, the Commission launched a proceeding to examine ways to empower consumers to make smart, informed decisions when it comes to communications services.

In January 2010, the Chiefs of the FCC's Consumer and Governmental Affairs and Wireless Telecommunications Bureaus sent letters to the major wireless carriers to learn more about their early termination fees. And as one of the first initiatives undertaken by the FCC's Consumer Task Force, in early May the Consumer and Governmental Affairs Bureau released a Public Notice asking about possible solutions for bill shock.

The survey supported the agency's efforts by supplying essential data about the consumer experience. The survey noted that 83% of adults in the US have a mobile phone, and 80% have a personal mobile phone (one for which their employer does not pay the bill). It also asked about coverage with 58% of mobile users saying they were very satisfied with the number of places they could get a good signal.

The survey finds that of the 30 million Americans who have experienced bill shock:

  • 84% said their mobile carrier did not contact them when they were about to exceed their allowed minutes, text messages, or data downloads.

  • 88% said their carrier did not contact them after their bill suddenly increased.

The amount of bill shock varies widely but is often sizable. In the survey, more than a third of people who experienced bill shock said their bills jumped by at least $50, and 23 percent said the increase was $100 or more.

The survey also asked consumers about early termination fees for mobile phone and broadband service. One reason for the confusion is billing practices: Only 36% of mobile phone customers who are familiar with their bills said that they include "very clear" information on ETFs.

The results were best summed up by FCC Chairman, Julius Genachowski, who said, "The FCC's consumer survey provides an important snapshot of the real-world experiences of mobile customers. The wireless industry has achieved remarkable innovation – and mobile is increasingly essential to the daily lives of Americans.

But there is still more that can be done to help customers navigate what is sometimes a confusing marketplace. A simple and easy to understand mobile purchase and billing process will empower consumers to avoid bill shock and other unexpected fees."

The subject of "bill shock" continues to garner world press and regulator attention even though most cases are generated through consumer misuse, and the fact that they are not warned or prevented from generating excessive charges is squarely blamed on service providers. Whether that's fair does not matter, the question is what we, as an industry should do about managing it.

It is clear that simply informing customers that they will be charged a certain amount for service rendered and that they should be careful is not enough. Proactive action is necessary. Where customers choose not to apply their own voluntary usage limits the CSP should do so automatically as long as the method to override the limits instantly is offered at the same time.

The survey findings confirm the FCC's fears and failure by CSPs to respond voluntarily to these findings will almost certainly lead to increased regulation. This will not only be limited to the US market, and any FCC activity will almost certainly have a follow-on effect in other markets.

Tony Poulos is head of revenue management sector at TM Forum

This article originally appeared in TM Forum’s Inside Revenue Management newsletter