An estimated 30 million Americans have been hit with “bill shock”—the unexpected, unpleasant scenario in which a consumer unknowingly exceeds his cell phone plan limits and incurs extra charges. Sometimes, these charges are beyond shocking: The poor soul with a $68,505 bill for a single month’s cell phone usage comes to mind. Today, though, the FCC is announcing new guidelines that should make the sneaky fees associated with bill shock a thing of the past.
The Federal Communications Commission has been investigating bill shock and warning consumers about unexpected cell phone bill charges for well over a year. The threat of new federal regulations to ward off bill shock has existed for about that long as well.
Today, however, a press conference is being held to unveil a new set of guidelines aiming to make more regulation unnecessary. The Wireless Consumer Usage Notification Guidelines, to be introduced today by FCC Chairman Julius Genachowski, will mandate that wireless users be alerted via text and/or voice when they are about to incur fees due to roaming or exceeding limits on voice, text, or data. All four major wireless carriers in the U.S. (AT&T, Verizon, Sprint Nextel, T-Mobile) have agreed to abide by the guidelines. The non-profit advocacy group Consumers Union has given its blessing to the new guidelines, as has President Obama, who released a statement of approval:
“Far too many Americans know what it’s like to open up their cellphone bill and be shocked by hundreds or even thousands of dollars in unexpected fees and charges … Our phones shouldn’t cost us more than the monthly rent or mortgage.”
It could be another 12 to 18 months from now before the guidelines are fully in place, so until then it is possible for cell phone owners to incur hefty extra charges if they’re not diligently monitoring usage.
Also, keep in mind that the forthcoming guidelines don’t eliminate overage charges; the new standard simply mandate wireless phone owners will get a head’s up when overages are about to happen. After the alert is sent, it will still be up to the wireless user to stop texting or turn off the phone in order to avoid those extra charges.
And these are extra charges you’ll want to make pains to avoid. If overage fees were nominal—incremental amounts when compared to the typical wireless user’s plan—the bills that follow wouldn’t be so shocking. There might be some surprise, but there would be no bill shock.
But overage charges are designed to be shocking, and not necessarily just to pull in extra revenues during that one month the wireless user went overboard. Instead, the goal of excessive overage fees is to make them so painful that the cell phone owner switches to a higher-priced plan in order to avoid suffering from bill shock ever again. When that happens, the wireless carrier is less likely to collect those over-the-top overage charges, but it is guaranteed to collect a higher minimum amount from the customer each and every month.