FCC Targets Wireless 'Bill Shock,' Proposes New Mobility Fund
The Federal Communications Commission voted on Thursday to begin the process of setting new rules that would require wireless carriers to alert subscribers when they are approaching their usage limits for voice, text or data services.
The notice of proposed rulemaking takes aim at what the FCC has dubbed "bill shock," the arrival of a monthly wireless bill with unexpected overage charges, which in some instances have been reported to run into the thousands of dollars.
Additionally, the commission voted to begin the process of setting up a mobility fund to bankroll 3G and next-generation wireless services in rural and remote areas unserved by carriers' current network footprints.
The FCC's proposed mobility fund would draw on an initial transfer of between $100 million and $300 million of reserve money from the Universal Service Fund, the federal telecom subsidy set up for wireline phone service. But since that money comes from a reserve, foregone by separate agreements between Verizon and Sprint-Nextel with the FCC, the commission claims that it will not add to the total cost of the USF, itself the subject of a long-standing drive for reform.
Unlike the larger USF, the mobility fund would not be set up to repeat annually, though language in the notice approved today holds open the possibility of renewing the monetary allotment with FCC approval. Chairman Julius Genachowski described the mobility fund as a "one-time injection of seed capital" that would jumpstart new advanced wireless deployments.
Both votes were unanimous, though the two Republican commissioners on the five-person panel expressed reservations about the wireless items.
Commissioner Meredith Attwell Baker pointed out that the studies the FCC has cited in its bill-shock inquiry, including one released yesterday, identify only a small portion of wireless subscribers who have complained about the issue. Moreover, she warned against heavy-handed measures that would place burdensome requirements on wireless carriers.
"I think this issue is well-suited to an industry-led solution," Baker said, despite voting to approve the rulemaking notice. "Consumers have the ultimate power to manage their 'shock,'" she said, adding that "it is incumbent on the wireless industry to redouble their efforts to educate consumers."
But Genachowski, who on the eve of today's meeting announced a broader consumer agenda he hopes to enact at the FCC, said that the abuses the commission had documented made it plain that carriers need to do more to alert consumers when they are about to incur overage charges.
"There's more than ample evidence to confirm the existence of a problem here," he said. "The existence of a problem is quite clear."
The proposed rules would require carriers to provide automatic notices warning subscribers when they are approaching their usage caps, and offer easy-to-use tools to monitor their minutes, text messages and data consumption.
The rules are "designed to be practical [and] nonburdensome," Genachowski said.
But that might not sit well with CTIA, the wireless trade association. Responding to today's meeting, the association urged Genachowski to take up what it said were bigger consumer issues, including the heavy wireless tax subscribers pay on their service.
Responding to Genachowski's announcement yesterday about his consumer agenda in the wireless space, CTIA President and CEO Steve Largent argued that the industry he represents, if anything, is becoming more consumer-friendly under its own devices, noting increasing mobile usage rates and high satisfaction percentages reported in the FCC's own surveys.
"This is an equation that works for consumers," Largent said in a statement. "We agree with the FCC that the goal is to keep all customers happy, but we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends."
As for the mobility fund, there is broad agreement among the commissioners that the Universal Service Fund is in sore need of reform. But Baker and Robert McDowell, the other Republican on the panel, expressed concern that the smaller mobility fund would delay and distract from the larger goal of USF reform.
Baker also raised doubts about the sustainability of projects bankrolled by the new fund.