One small step by cellcos, a giant leap for users

October 21st, 2011 by · Leave a Comment

This article was authored by Joseph Waring, and was originally posted on

Mobile operators in the US, after dragging their feet for years and resisting pressure from the FCC for 18 months, have finally agreed to send customers alerts when they near their limits on voice, SMS and data usage.US cellcos and the FCC announced the deal yesterday, but as is often the case is such matters, the agreement only goes into force “within the next year” to apparently give US carriers a bit more time to maximize their profits when their loyal customers use too many minutes or gigabytes.

The FCC reported last year the almost 17% of mobile subscribers faced bill shock and that 20% of the bill shock complaints in the first half of the year were for $1,000 or more in excess charges.

The move, which consumer advocates and users have been screaming for a decade, partially addresses the tricky issue of bill shock — consumers will soon receive a warning before and after they are charged more. They will also need to be alerted when they are roaming when overseas.

Presumably operators will send regular texts advising customers of monthly data usage. But the deal avoids imposing “burdensome” regulations, said a spokesman for the CTIA, the US wireless association. The proposed legislation will now be put off while the FCC monitors the industry’s voluntary compliance.

According to the New York Times, President Barack Obama said in a statement, without a hint of irony: “I appreciate the mobile phone companies’ willingness to work with my administration and join us in our ongoing efforts to protect American consumers by making sure financial transactions are fair, honest and transparent.”

While it’s a positive move for consumes, it’s long overdue and certainly doesn’t go far enough. At a time when operators are just starting to move away from unlimited, flat-rate plans, more consumers will no doubt inadvertently exceed their limits.

I’ve never understood why when customers use more of their services, arbitrarily exceeding their limits, cellcos have traditionally charged them at a higher per-unit rate than they do on their monthly plans. Certainly not an approach that encourages retention and loyalty.

When Hong Kong’s CSL launched full-scale consumer LTE a few months back, it moved to volume-based plans, which now account for about 60% of new users. With its “pay for what you need” philosophy, CSL bucked industry practices and a set reasonable cap for the tiered plans (i.e $24 monthly plan has a cap of $64), so if a customer goes over, there is a limit to what he or she will be billed regardless of the excess usage.

The mobile industry needs to embrace this type of transparency and be what Ovum’s Nicole McCormick called in the October issue of Telecom Asia “an honest broker” with customers. That’s something you’d think they would have been doing all along, instead of calculating exactly the percentage of customers who won’t realize they’ve been hit by overage charges (mostly business users) or those who don’t bother to follow up and complain.

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Categories: Government Regulations · Other Posts · Wireless

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