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.
| October 14, 2010; 8:00 AM ET
Categories: Consumers, Early Termination Fees, FCC
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