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FCC's consumer protection measures short on details, public interest groups say

The chairman of the Federal Communications Commission on Wednesday promised to tackle some of consumers' biggest frustrations with their communications services -- cell phone bill surprises and early termination fees.

But just how far FCC Chairman Julius Genachowski will go on consumer protection measures is unclear. His bill shock plan is aimed at alerting users to overage charges and roaming fees. He said early termination fees (ETFs) make sense for mobile services because carriers incur costs for subsidizing phones. But Genachowski said he would push for more transparency about those fees, from the point of sale to cancellation of contracts.

In a white paper released Wednesday, the FCC said it receives about 1,500 complaints a year about bill shock and 1,900 about early termination fees.

Consumer advocates such as Free Press say the agency is only scratching the surface. Genachowski, they say, hasn't taken on the issues that would spur competition in the wireless industry and ensure greater safeguards for consumers.

Exclusive handset arrangements between carriers and device makers -- such as the iPhone deal between AT&T and Apple -- keep users strapped into contracts they may not want. And smaller carriers such as Cellular South say that they struggle to compete against giants such as AT&T and Verizon Wireless because they can't strike similar deals for the newest and hottest wireless gadgets. Senator John F. Kerry (D-Mass.) urged Genachowski more than a year ago to look into exclusive handset deals.

"Consumers of communications services need a watchdog -- and they can rest assured knowing the FCC is looking out for them," Genachowski said in a speech Wednesday. "We are doing so, while also driving policies to unleash innovation and promote economic growth and job creation in this vibrant sector."

Cautious of "prescriptive rules," Genachowski stressed how changes in behavior can be made without regulation. He pointed to examples where using the agency's bully pulpit, through letters inquiring about early termination fees, caused some carriers to narrow the range of phones subject to higher ETFs. A letter late last year to AT&T asking why it was blocking Internet voice service Skype on the iPhone led the carrier and Apple to announce it would permit Skype on the iPhone and AT&T's network.

"We're glad the chairman is taking on bill shock but it's important to remember this isn't a rule yet and there are many other consumer protection measures that need to be addressed by bringing in more competition into the market," said Joel Kelsey, a policy analyst at Free Press.

Verizon Wireless revealed late last year that some of the money from its ETFs went to operational costs such as marketing and sales, not only the cost of subsidizing handsets. That prompted lawmakers and consumer groups to call on the FCC to clamp down on the penalties to ensure consumers weren't picking up costs of operating their carrier's business. Senator Amy Klobuchar (D-Minn.) has introduced a bill on ETFs that would limit the amounts for penalities and require better disclosure. Verizon and AT&T in the last year raised ETFs for some smart phones to $350.

By Cecilia Kang  | October 14, 2010; 8:00 AM ET
Categories:  Consumers, Early Termination Fees, FCC  
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Next: Verizon to sell Apple iPad, but iPhone still in question

Comments

Now we know what the 'F' in FCC means! Quit coddling these egregious perps, Commish; get in there and REGULATE. Set the cellphone rates, as the European Union does. Folks in Europe pay a fraction of the outrageous U.S. rates for cellphone usage and broadband Web access. Yet overseas providers are still reaping huge profits. Get real! Join the 21st Century!

Posted by: JONWINDY | October 14, 2010 11:13 AM | Report abuse

Please be serious! Do you believe for one moment that Julius Gen will take up and defend the general public against these RBOC'S!! He has allowed them as well as the FCC overall to just do as they please. Julius is addressing the waiver order which the RBOC coalition request a 45 day chance to get their house in order or issue refunds. Well they never did the only one who stood up to them was Mignon Clyburn while she was with a PUC. Tell me how do you keep control by enforcing the rules!! Julius become the big brother on the block and enforce make them pay or find another job.

Posted by: rmaro2 | October 14, 2010 3:28 PM | Report abuse

In Europe, similar regulation protects consumers from unexpected mobile data roaming charges, leading mobile service providers implement technology that gives consumers real time alerts. Essentially the legislation forces carriers to modernize their billing system into something more real-time, which also provides other benefits for detecting fraud or identifying patterns that indicate a customer turnover.

- Bob Lento, Convergys

Posted by: boblento4 | October 20, 2010 12:38 PM | Report abuse

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