Wireless carriers agree to customer alerts

Eager to avert new consumer-protection rules, U.S. wireless carriers have agreed to begin delivering free voice or text alerts by next October that will warn customers at risk of budget-busting charges for calls, texts, data, or international roaming.

FCC Chairman Julius Genachowski announced the deal at a news conference Monday, where he was joined by Steve Largent, president of CTIA-The Wireless Association, which represents most U.S. wireless carriers. Genachowski said the pact reflected the industry's "constructive engagement" in addressing a problem that has left some consumers facing hundreds or even thousands of dollars in unexpected charges.

The FCC calls the problem "wireless bill shock," and it announced a year ago that it was weighing whether to require such warnings, as European regulators have done.

On Monday, the FCC said it had agreed to the industry's plea to try a voluntary approach - a stance also welcomed by President Obama in a statement that accompanied the FCC's announcement.

"The president has given a number of executive orders and memos saying excessive regulation is costly for businesses," said CTIA spokeswoman Amy Storey. "The announcement today is a perfect example of how we were able to avoid those unnecessary regulations while still providing customers what they want."

Tammy Sun, an FCC spokeswoman, said the FCC agreed to the deal because the guidelines "meet the standards for consumer protection" that the agency outlined a year ago. If the voluntary approach fails, she said, the FCC "will move again down the path of rule-making." Genachowski called the FCC's approach "trust, but verify."

The new "Wireless Consumer Usage Notification Guidelines" will become part of CTIA's code of conduct. To comply, carriers will have to alert customers about four kinds of potential bill shocks: overruns in voice, texts, or data usage, and exposure to costly international roaming charges.

By Oct. 17, 2012, carriers are expected to alert customers about at least two of the categories of potential charges. By April 17, 2013, consumers should receive alerts about all four.

Although some carriers already offer similar alerts, Storey said the lead time was needed for carriers that have to develop new systems.

Storey said consumers would be warned before and after they reached their plans' limits for calls, texts, and data usage, and when they turn on their phones overseas and are subject to international roaming charges for voice and data - categories that have led to especially large bill shocks.

Anecdotes about bill shock have become fairly common. At Monday's news conference, Genachowski mentioned a woman billed $34,000 "for international data and texting charges incurred while visiting her sister in Haiti" after the 2010 earthquake, and a man billed for $18,000 "after his free data downloads expired without warning."

It is not clear whether the alerts will be sufficient to protect consumers who turn on their phones overseas without first disabling data roaming.

"As far as what kind of notice and when you receive the notice, that's up to the individual provider. That's another point where our providers are competing against each other," Storey said.

Genachowski said that according to a Consumers Union study last year, roughly one in five Americans with cellphone plans faced unexpected charges during the previous year. Other studies have found that as many as a third of all subscribers have been affected.

In a study of 764 complaints to the FCC during the first half of 2010, eight involved charges of $10,000 or more - including one in which a customer was charged $68,505. About 150 cases topped $1,000, and two-thirds involved unexpected charges of $100 or more.

Consumers Union has agreed to help implement the new guidelines by helping design a Web portal on the FCC's website to show which types of alerts are provided by each CTIA member. Genachowski said the portal "will also provide a public incentive for carriers to move quickly with implementation."

"We think this is a good step forward, and we're hoping that consumers will be getting these alerts sooner rather than later," said Parul Desai, telecommunications counsel for Consumers Union.