Network News

X My Profile
View More Activity

Cell users being hit with surprise charges, fees

The Federal Communications Commission said Wednesday that one in six cell phone users have been shocked to find increases in their monthly bills that aren’t part of their service plan, according to a survey by the agency.

Half of cell phone users and two-thirds of broadband Internet subscribers said they are unaware of early contract cancellation fees attached to their plans, the FCC said.

The findings, from a survey of 3,005 adults by Abt/SRBI and Princeton Survey Research Associates, indicate consumer confusion in the mobile marketplace – an exploding industry of 180 million users who are increasingly using text messaging and Internet services that can trigger extra charges.

“There is still more that can be done to help customers navigate what is sometimes a confusing marketplace,” FCC Chairman Julius Genachowski said in a statement. “A simple and easy to understand mobile purchase and billing process will empower consumers to avoid bill shock and other unexpected fees.”

The results could set the stage for new guidelines or rules to better protect consumers, analysts have said. The FCC earlier this month said it would explore ways to prevent bill shock for cell phone users. The agency pointed to mandatory text message alerts in the E.U. that warn customers when charges are exceeding monthly contract plans.

In a conference call with reporters, Joel Gurin, chief of the Consumer and Governmental Affairs bureau said they are in discussions with cell phone carriers and Internet service providers about bill shock and confusion over early cancellation feees.

Industry representatives, however, said the survey results and a recent report by the FCC that showed there isn't enough competition in the wireless industry could set the stage for unnecessary rules.

"“I am very troubled with the current direction the FCC is taking with respect to the wireless industry . . . it seems the Commission is going to attempt to micromanage what is an incredible array of choices for consumers," said Steve Largent, CEO of CTIA, a wireless industry trade group. "Contrary to the statements in the press release, the industry does provide 'simple and easy to understand’ plans for every type of American consumer."

FCC Consumer and Governmental Affairs bureau chief, Joel Gurin, said the agency is also reviewing the process and disclosure of early termination fees – the penalty a consumer pays for leaving a cell phone, cable or broadband contract early. Consumer groups have said such fees unfairly tie users to a contract, hindering competitors. And often, consumers find those charges buried in fine print or not clearly articulated by sales staff, the groups said.

Last week, AT&T joined Verizon Wireless in raising its early cancellation fees for some smart phones. Beginning June 1, new and renewing customers of phones like the iPhone and Blackberry bold will be charged $325 for ending their contract, up from $150.

By Washington Post Editors  |  May 26, 2010; 10:14 AM ET
Categories:  FCC  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Google tries its hand at influence in Washington
Next: Key lawmaker outlines list of conditions to Comcast-NBC merger

Comments

I don't have a cell phone or other portable communications device. I have a land line, since I'm not addicted to yakking on a phone endlessly. But almost every three months my phone bill increases due to federal and state taxes on my phone bill. And the reason stated for increasing these fees..."to make phone service more affordable". Oh the irony.

Posted by: clairevb | May 26, 2010 12:11 PM | Report abuse

I don't have a cell phone or other portable communications device. I have a land line, since I'm not addicted to yakking on a phone endlessly. But almost every three months my phone bill increases due to federal and state taxes on my phone bill. And the reason stated for increasing these fees..."to make phone service more affordable". Oh the irony.

Posted by: clairevb | May 26, 2010 12:12 PM | Report abuse

Half of cell phone users and two-thirds of broadband Internet subscribers said they are unaware of early contract cancellation fees attached to their plans, the FCC said...
FCC Consumer and Governmental Affairs bureau chief, Joel Gurin, said the agency is also reviewing the process and disclosure of early termination fees – the penalty a consumer pays for leaving a cell phone, cable or broadband contract early.
--------------------------
Has the US become a population of idiots and morons that they do not understand the purpose of a contract?

These whiners are those who want the latest and greatest toys, but get "buyer's remorse" 4-6 months down the road and rather than meet the T&C's of a contract, they cry to gvernment. How about getting back to teaching the "3 R's," instead of "Chicano Studies?"

We now have a nation of "fashionistas" who use the phone for 30 days and then return it. We also call these people, BUMS!!!

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | May 26, 2010 12:12 PM | Report abuse

Half of cell phone users and two-thirds of broadband Internet subscribers said they are unaware of early contract cancellation fees attached to their plans, the FCC said...
FCC Consumer and Governmental Affairs bureau chief, Joel Gurin, said the agency is also reviewing the process and disclosure of early termination fees – the penalty a consumer pays for leaving a cell phone, cable or broadband contract early.
--------------------------
Has the US become a population of idiots and morons that they do not understand the purpose of a contract?

These whiners are those who want the latest and greatest toys, but get "buyer's remorse" 4-6 months down the road and rather than meet the T&C's of a contract, they cry to government. How about getting back to teaching the "3 R's," instead of "Chicano Studies?"

We now have a nation of "fashionistas" who use the phone for 30 days and then return it. We also call these people, BUMS!!!

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | May 26, 2010 12:14 PM | Report abuse

Both AT&T and Verizon should be broke up. They are the one's that made a mess out of the telecom industry to begin with and now their doing it again with the mobile phone industry.

Posted by: askgees | May 26, 2010 12:15 PM | Report abuse

Confusing article. Is this all about early cancellation fees or are there other new fees that providers are adding?

Posted by: thebuckguy | May 26, 2010 12:16 PM | Report abuse

Half of cell phone users and two-thirds of broadband Internet subscribers said they are unaware of early contract cancellation fees attached to their plans, the FCC said...
FCC Consumer and Governmental Affairs bureau chief, Joel Gurin, said the agency is also reviewing the process and disclosure of early termination fees – the penalty a consumer pays for leaving a cell phone, cable or broadband contract early.
--------------------------
Has the US become a population of idiots and morons that they do not understand the purpose of a contract?
These whiners are those who want the latest and greatest toys, but get "buyer's remorse" 4-6 months down the road and rather than meet the T&C's of a contract, they cry to gvernment. How about getting back to teaching the "3 R's," instead of "Chicano Studies?"
We now have a nation of "fashionistas" who use the phone for 30 days and then return it. We also call these people, BUMS!!!
Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | May 26, 2010 12:12 PM | Report abuse
Actually m0r0n the problem is the companies failing to keep or meet the terms. Horrible service horrible plans and they nickel and dime people to death. For someone that claims to be some sort of IT guru you sure are pretty f$%king dense. I guess when you are isolated and work in such a small scope the bigger picture gets fuzzy. How about you do some research on cell phones cost and plans in foreign countries simpet0n….

Posted by: askgees | May 26, 2010 12:20 PM | Report abuse

read before signing dopes.want to play with the latest and greatest then expect to pay. feds,state and local are more than happy to use BS taxes ,fees etc to collect $$$$.similar applies to alchol,cigs and any other reason to get into ur pocket. use prepaid cards for LD and other methods available. texting and spending hours on the phone saying nothing will reduce ur cost

Posted by: pofinpa | May 26, 2010 12:32 PM | Report abuse

The forensic computer expert doesn't seem to have a handle on how to submit a comment via computer.

Posted by: lolyla | May 26, 2010 1:08 PM | Report abuse

Half of cell phone users and two-thirds of broadband Internet subscribers said they are unaware of early contract cancellation fees attached to their plans, the FCC said...
FCC Consumer and Governmental Affairs bureau chief, Joel Gurin, said the agency is also reviewing the process and disclosure of early termination fees – the penalty a consumer pays for leaving a cell phone, cable or broadband contract early.
--------------------------
Has the US become a population of idiots and morons that they do not understand the purpose of a contract?
These whiners are those who want the latest and greatest toys, but get "buyer's remorse" 4-6 months down the road and rather than meet the T&C's of a contract, they cry to gvernment. How about getting back to teaching the "3 R's," instead of "Chicano Studies?"
We now have a nation of "fashionistas" who use the phone for 30 days and then return it. We also call these people, BUMS!!!
Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | May 26, 2010 12:12 PM | Report abuse


Posted by: askgees
Actually m0r0n the problem is the companies failing to keep or meet the terms. Horrible service horrible plans and they nickel and dime people to death. For someone that claims to be some sort of IT guru you sure are pretty f$%king dense. I guess when you are isolated and work in such a small scope the bigger picture gets fuzzy. How about you do some research on cell phones cost and plans in foreign countries simpet0n….

-------------------------
Another reason why the US is going down-hill fast- The ability to effectively communicate is erroding and people, failing to do their "due diligence" into various plans.

I have been an AT&T customer, since it was owned by LA Cellular (1988). Maybe some people ought to do their homework, but for losers like yourself, there is always a pay phone or CB Radio to fit your cheap and insignificant lifestyle.

In fact, I'll bet that you are what that free credit report commenrcial is based upon. Enjoy your "brick," loser.

Posted by: Computer_Forensics_Expert_Computer_Expert_Witness | May 26, 2010 1:19 PM | Report abuse

I don't agree that early termination fees "unfairly" tie consumers to a contract...

Lots of potential customers would be scared off by the true cost of a fancy new phone, so cell phone providers voluntarily offer steep subsidies to ease the pain.

In exchange, they require the subscriber to do business with them for a sufficient period of time to recoup the cost of that subsidy.

If a customer wants to get out of that contract early, they need to repay the subsidy that they were originally given, otherwise the wireless providers are out a lot of money. After all, AT&T still has to pay the manufacturer for their phones.

In the case of the iPhone, AT&T offers a subsidy of $400 to new subscribers. That's two-thirds of the no-contract price.

So to me, an ETF of $375 on an iPhone is only fair. Keep in mind also that this ETF decreases for every month that you stay on your contract. Consumer groups typically tend to leave that bit out... Wouldn't want AT&T to sound like a business that's trying to be fair and reasonable, now would we?

Posted by: HydroxCookies | May 26, 2010 1:45 PM | Report abuse

The study reflects 17% of respondents said that they had at least one month in which their bills increased suddenly.

Really, it should be 100%. The FCC has been increasing fees such as USF (which is now above 15%) for years. These fees change every few months.

But the FCC just washes its hands of any responsibility here.

Posted by: ghokee | May 26, 2010 1:47 PM | Report abuse

Confusing article. Is this all about early cancellation fees or are there other new fees that providers are adding?

Posted by: thebuckguy | May 26, 2010 12:16 PM | Report abuse
______________________________________

I agree. I know they're talking about additional fees but the purpose is besides me. Who doesn't expect for these companies to continue monopolizing the market until it's nothing left? That's one issue being addressed and the other...who doesn't understand how to read contracts? If it's too much for the cell phone owner, there's always Magic Jack.

Post, get a more defined story together or one we knew nothing about previously. Thanks.

Posted by: cbmuzik | May 26, 2010 2:04 PM | Report abuse

And no mention of Verizon's mandatory $9.99 data plan?

Posted by: kitchendragon50 | May 26, 2010 2:05 PM | Report abuse

Most, if not all, cell phone carriers provide customers with a free or heavily discounted device in return for signing a contract with an early-out penalty. However you don’t have to sign a long-term contract, you can go with month-to-month service without a cancellation penalty, but you will just have to pay full price for the phone. Most providers also let you change the level of service within the contract term. There are certain limits, but they almost always let you increase service without a penalty. Therefore, don’t start off with the whole enchilada when you first buy your phone and set up service. Start off with a low level of service and work your way up if you like the service and can afford an upgrade.

Most of the other “surprise” fees heaped onto cell phone service are governmental fees or costs, such as “universal service,” handicapped access, or other sorts of fees. Even more insidious are franchise and so-called “I-Net” fees – costs incurred when local governments extort money, goods, or services from providers in return for the right to establish service in a particular jurisdiction.

There are the more traditional forms of taxes on cell phone service, but some localities place special taxes on cell phone service, much like they do with hotels. I remember that Montgomery County taxed each cell line at least $3 per month. You paid the tax even if you moved out of the county as the line was permanently associated with the Montgomery County; the only thing to do was change your phone number, which presents its own problems. Of course, the providers pass these costs directly to the consumers.

If the FCC wants to make cell phone service pricing more transparent, then maybe they could require providers to show potential customers the estimated costs of all of the fees and taxes before signing the contract and an out provision if increases in these fees and taxes raise the costs of these items over a certain percentage of the bill.

Posted by: braunt | May 26, 2010 2:10 PM | Report abuse

I went back to paper billing for my cell phone bill to make it easier when I call Verizon about the latest mystery charge. I have been charged for software and applications that cannot be downloaded or run on my crappy phone. After waiting on hold for hours, I usually can get the charges removed from my bill.

Thank goodness I moved out of DC so that I have a real U.S. Representative. His office is very effective in getting results from Verizon and I have been very satisfied with his service (Van Hollen's, not Verizon).

Posted by: priv05242010 | May 26, 2010 2:12 PM | Report abuse

I want to know why they charge so much for texting when texting is CHEAPER than carrying voice??? Total scam and the government lets them get away with it!

Posted by: GenuineRisk | May 26, 2010 2:14 PM | Report abuse

I have direct payment from the checking account to pay my Comcast bill, and to my SURPRISE, the amount changed without telling me, so If I write a check and I thought I would have one amount, what Comcast did without telling me is taking more out of my account then what they were to do,Is this legal, FCC HELP !!!!!

Posted by: onesugar | May 26, 2010 2:22 PM | Report abuse

Someone explain this charge on my wireless bill:

Administrative Charge .92

"Surcharges - Includes charges to recover or help defray costs of taxes and of governmental charges and fees imposed on us by the government."

Posted by: Dave415 | May 26, 2010 2:41 PM | Report abuse

At my advanced age(92)I have a cell phone for which I pay $10 per month to use only when I am out in my auto and would need it in any emergency. At home I still use my old wired rotary phone. I have stock in both AT&T and Verizon. They are good money machines and pay good dividends.

Posted by: boardman31 | May 26, 2010 2:51 PM | Report abuse

If you don't like the price of something, do without it. I don't have a mobile device and seem to lead a fairly normal life. I always see people yakking on phones in their cars, while shopping for groceries, walking the dog, etc., and wonder who they're finding to talk to. Must be either someone lovesick or terminally bored.

Posted by: brewstercounty | May 26, 2010 2:56 PM | Report abuse

More and more people are moving to pre paid cellphones because they are sick of being overcharged on contract. I moved to Net 10 because they have a simple offering that I can understand. You pay 10 c a minute for calls and that is it. Nothing else to understand. They have no way of overcharging you. It works for me.

Posted by: allhew70 | May 26, 2010 3:16 PM | Report abuse

Spare me the smug moralizing in all these posts. Cell phone companies are not honest businessmen trying to construct a transparent business model. They are predatory businesses trying to create a business models that counts on portioning out ever smaller pieces of new technology for ever larger fees. Most of your comments betray a naviety or an ignorance of the way the cell phone industry parses things.

Cell companies make their money on fees for the tecnology they rent to you. So it is to their advantage to have you rent as much technology as possible. This means creating new shiny phones and apps that force you to hook up to billing options that they can charge to you automatically. That is why when I go to Verizon now, I can't get a touch screen smart phone now without upgrading my service for email and web access. They want you to have a touch screen only if they are reasonably sure you will end up using their higher fee options.

Take cell phones. If a unadorned generic phone costs $20-30 (and likely a fraction of that to build), then why does sticking in a crude digital camera ($50 at WalMart) drive the off the shelf cost to $200? Why does Verizon RENT me the VZ Navigator software for $120 a year when I can BUY a Garmin for $200? Why does a Blackberry cost me $600 when a laptop costs me $500? Why does my insurance cost per month add up to the cost of a phone by the end of the service contract? Why do I pay the cost of a phone to early out? Greed. Greed. Greed. Plus a compliant Congress that is willing to let cell companies do what they will. Unlike land lines where state and federal requirements force telecoms to provide a minimum level of service, Congress looks the other way as cell companies slowly increase the average cost of a phone and contract while they making it harder and harder to avoid additional sevices and fees. The power of the marketplace? Let consumers read contracts? We don't need government intererence? All these arguements were made on the behalf of land line companies as well as utilities. Then people started freezing to death or cooking in their air-conditionless apartments because they couldn't afford to hire a lawyer to read their monthly utility bill. Congress stepped in. They will have to do so again, despite the cell companies telling us "trust me! We won't scr*w you" Isn't that what BP said in the Gulf of Mexico?

Posted by: chuck2 | May 26, 2010 3:17 PM | Report abuse

CHUCK2 FOR PRESIDENT!!! haha...so true!

Posted by: cbmuzik | May 26, 2010 3:33 PM | Report abuse

i do not believe that either laziness or stupidity should be fostered in our society.

let people learn the hard way if they're too lazy or too stupid to know their responsibility when they enter into a contract.

we have far, far too many laws and regulations that have been designed SOLELY for the purpose of protecting an infinitesimal number of morons. most of the people who claim they didn't understand the cost of early cancellation are flat-out lying. they simply had buyer's remorse and wanted to dump the responsibility for their poor decision on the vendors.

that goes double for "victims of predatory lending," the group of people who, through their fraudulent representations to loan officers, brought down the housing industry. sure, there were unscrupulous lenders and appraisers and realtors contributing to the debacle, but most of these people knew they didn't have the money to pay for a mortgage when they signed the loan agreement.

i'm sick and tired of cleaning up after people whose mission in life is to TAKE, TAKE, and TAKE.

Posted by: SufferNoFool | May 26, 2010 4:03 PM | Report abuse

Thanks, I'll settle for Secretary of Cell Phones...:-)

I forgot to mention that cell contracts are a tecnological anachronism. Europeans tossed them years ago. Consider this quote from Menshealth.com

"Cellphone Contracts
There's good reason Europeans have abandoned these vestigial entanglements. Electronics evolve faster than a frog at Chernobyl, and committing 2 years to anything with a battery is like marrying a woman who ages twice as fast as you do."

Why to American cellulars keep contracts? Because they are cash cows. They can rent for exorbitant fees all the bits of technology Euroean cell companies throw in for the cost of the phone. American cellulars LIKE their business model and they are willing to use Congress to freeze the domestic market into this anachronistic model because the profit margin is so high and most Americans don't know an alternative system. Keep the customers dumb and keep the milk coming...

Posted by: chuck2 | May 26, 2010 4:03 PM | Report abuse

Thanks, I'll settle for Secretary of Cell Phones...:-)

I forgot to mention that cell contracts are a tecnological anachronism. Europeans tossed them years ago. Consider this quote from Menshealth.com

"Cellphone Contracts
There's good reason Europeans have abandoned these vestigial entanglements. Electronics evolve faster than a frog at Chernobyl, and committing 2 years to anything with a battery is like marrying a woman who ages twice as fast as you do."

Why to American cellulars keep contracts? Because they are cash cows. They can rent for exorbitant fees all the bits of technology Euroean cell companies throw in for the cost of the phone. American cellulars LIKE their business model and they are willing to use Congress to freeze the domestic market into this anachronistic model because the profit margin is so high and most Americans don't know an alternative system. Keep the customers dumb and keep the milk coming...

Posted by: chuck2 | May 26, 2010 4:10 PM | Report abuse

I just added a line this month to my Verizon plan and the bill I received last week has an arbitrary $30 charge no explanation other than it's for them to recoup fees and Government charges.

Mr Genachowski it's time to put the brakes on Verizon.

Posted by: macdaddybill | May 26, 2010 4:11 PM | Report abuse

I just added a line this month to my Verizon plan and the bill I received last week has an arbitrary $30 charge no explanation other than it's for them to recoup fees and Government charges.

Mr Genachowski it's time to put the brakes on Verizon.

Posted by: macdaddybill | May 26, 2010 4:12 PM | Report abuse

Thanks, I'll settle for Secretary of Cell Phones...:-)

I forgot to mention that cell contracts are a tecnological anachronism. Europeans tossed them years ago. Consider this quote from Menshealth.com

"Cellphone Contracts
There's good reason Europeans have abandoned these vestigial entanglements. Electronics evolve faster than a frog at Chernobyl, and committing 2 years to anything with a battery is like marrying a woman who ages twice as fast as you do."

Why to American cellulars keep contracts? Because they are cash cows. They can rent for exorbitant fees all the bits of technology Euroean cell companies throw in for the cost of the phone. American cellulars LIKE their business model and they are willing to use Congress to freeze the domestic market into this anachronistic model because the profit margin is so high and most Americans don't know an alternative system. Keep the customers dumb and keep the milk coming...

Posted by: chuck2 | May 26, 2010 4:14 PM | Report abuse

Posted by: clairevb | May 26, 2010 12:11 PM:

I don't have a cell phone or other portable communications device. I have a land line, since I'm not addicted to yakking on a phone endlessly. But almost every three months my phone bill increases due to federal and state taxes on my phone bill. And the reason stated for increasing these fees..."to make phone service more affordable". Oh the irony.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

GLAD TO KNOW I'm not the only one who has nothing but a land line! People look at me like I have 3 heads when I say "I don't carry a cell".

And I'm an I.T. administrator, which just makes it worse for people to understand how I can somehow manage to live my life without people constantly yammering at me.


My privacy is important to me.


I LOVE the fact that, when I leave my home, that phone is securely attached to the wall!

Posted by: lquarton | May 26, 2010 10:27 PM | Report abuse

@chuck2, you are a legend. Very thoughtful commentary.

I agree wholeheartedly, especially about the contracts themselves. For this reason I refuse to sign a cell contract and am currently very happy with my humble little NET10 prepaid phone. When I hear people complain about cell bills, etc I tell 'em: Vote with your wallet! Don't give your money to a corporation that take advantage of you, it's just common sense!

Posted by: Wayne765 | May 27, 2010 6:43 AM | Report abuse

I have yet to have a positive experience with a "wireless" company. The million dollar question is, are they extremely corrupt or extremely inept? I would say, both.

Contracts are not explained thoroughly. I've taken notes a number of times when changing the details on my plan and yet, the "facts" are almost never the same on the bill as they were during the conversation...but generally it's what they DON'T say that becomes the issue.

My intention is to decrease my cell phone usage as much as possible and not support their unethical practices.

I don't like the dependency that has been created with electronics and I don't desire to be constantly pulled out of what I'm doing or who I'm engaging with "in person" to focus on something else. Screw that.

Whoever wants to talk to me can leave a message and wait. I'm worth it.

Posted by: dondileea | May 27, 2010 4:29 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company