FCC Survey Finds Shock and Confusion over Mobile Billing
By Tony Bradley, PCWorld
A survey conducted for the FCC from April 19 to May 2, 2010, interviewed 3,005 American adults to explore how customers feel about mobile service and broadband billing practices. The results of the study illustrate that a large percentage of mobile phone customers have experienced sticker shock from a mobile service bill at some point, and are utterly confused by the carrier early termination fees (ETFs).
Many business professionals rely on smartphones to conduct business more than their traditional desk phone. In fact, a recent survey found that more than 80 percent of those surveyed would give up coffee before considering parting with their smartphone.
The predominant role of smartphones and mobile devices in business make spikes in billing and exorbitant ETFs a serious concern for IT administrators and business professionals. So, what jewels of wisdom can we glean from the FCC survey results?
• 83 percent of adult Americans have a mobile phone
• 17 percent of those with mobile phones report at one time their bill increased suddenly from one month to the next, even though they had not changed their calling or texting plans.
• 37 percent of those who have noted an unexpected spike in their bill experienced an increase of $50 or more. Nearly a quarter claim the increase was over $100
These numbers translate to one in six, or nearly 30 million Americans who claim to have experienced “bill shock”. The survey also notes that–of those who have had unexpected billing increases:
• 84 percent said their carrier did not contact them when they were about to exceed their allowed minutes, text messages, or data downloads.
• 88 percent said their phone company did not contact them even after their bill suddenly increased.
The point that the FCC wants to drive home with these results is that mobile carriers and broadband providers need to be more transparent about billing practices, explain billing practices more clearly to customers, and communicate proactively with customers when unexpected billing spikes occur. I am not sure I agree that it is the carrier’s responsibility.
If the carrier has in any way changed its rates, or its billing methods from what the customer agreed to when engaging in the contract to begin with, then absolutely the carrier has an obligation to communicate that and warn customers rather than blindsiding them with bill shock after the fact. However, if nothing has changed, but the customer exceeds established and agreed upon limits for data consumption, text messaging, or other services, that burden is on the customer.
The carrier can’t be expected to babysit every customer and act as the fiscal responsibility police. It seems to me that carriers may want to provide usage and limit alerts as a matter of customer service and a perk to differentiate themselves from the competition, but there shouldn’t be any imposition on carriers by the FCC to deliver such services. The increased availability of unlimited plans should also alleviate any bill shock since the monthly fee is already all-inclusive.
The FCC survey found similar confusion and surprise over early termination fee practices. While there are other factors considered in determining the ETF, it is generally accepted as a prorated fee representing the amount subsidized by the carrier for the cost of a new smartphone or mobile handset in exchange for a contractual obligation.
In other words, a brand new 32Gb Apple iPhone 3GS costs $499, but AT&T will subsidize $200 of that cost and sell you the smartphone for $299 with a two-year contract. AT&T expects that it will make up that difference and then some through the mobile service, data, and texting fees you will incur over the two year period, and if you break the contract early AT&T will want its $200 (and then some) back.
AT&T just recently followed in Verizon’s footsteps by announcing an increase of its ETF for smartphones from $175 to $325 effective June 1. Verizon’s smartphone ETF is actually even higher, coming in at $350. Both ETFs exceed the actual amount subsidized by the carriers, but Verizon and AT&T (and other carriers) also claim the right to recover some portion of lost potential revenue they had expected to receive over the life of the contract.
A statement from the FCC announcing the survey results explains “The survey shows that ETFs are one factor that can keep cell phone customers from switching carriers even when their service is not ideal. Forty-three percent of these customers said ETFs were a major reason they would stay with their current service, almost exactly the same number who said they would be deterred from switching by the cost of setting up a new service or by paying a deposit on a new service.”
That has an ominous tone to it, as if the carriers are somehow extorting customers to force them to remain locked in. The reality, though, is that the customers willingly accepted the subsidy from the carrier, and willingly engaged in the contract in order to receive the subsidy. Customers that are not comfortable with those terms are welcome to pay full price for their smartphone and pay for monthly service without the contractual obligation.
The FCC statement includes this quote: “These findings support our ongoing efforts to help consumers get better information on these charges and fees,” said Joel Gurin, Chief of the FCC’s Consumer and Governmental Affairs Bureau. “As we know from our consumer complaint center, even an unexpected charge of $20 or $30 can make a difference to many people. Several carriers are taking steps to make their fees and billing more transparent, and we would like this to become a universal practice. We’re confident that we will be able to work with both wireless carriers and public interest groups to help consumers avoid these unwelcome surprises.”
Fair enough. Nobody likes an unwelcome surprise. But, IT administrators and business professionals should accept responsibility for understanding the billing and early termination fees they have committed to rather than expecting the carrier to hold their hand and manage the billing for them.