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FCC: 1 in 6 cell phone users have had ‘bill shock’

One in six cell phone users has experienced "bill shock," a "sudden" and unexpected increase in their monthly bills, according to a survey released today by the Federal Communications Commission.

One in six cell phone users has experienced "bill shock," a "sudden" and unexpected increase in their monthly bills, according to a survey released today by the Federal Communications Commission. The agency is pushing to create rules requiring wireless phone companies to alert consumers before they reach roaming or data usage limits on their wireless plans.

"Among those who have experienced bill shock, few were alerted by carriers that it was coming — before or after the bill arrived," the FCC said.

The survey results are the second jab in a week at the wireless industry by the FCC. Last week, in its annual report, the FCC said that the wireless industry does not have "effective competition," largely because of consolidation of carriers in recent years.

“I am very troubled with the current direction the FCC is taking with respect to the wireless industry," said Steve Largent, president of CTIA-The Wireless Association, the industry's trade group.

"It seems the commission is going to attempt to micromanage what is an incredible array of choices for consumers," he said, adding that the "industry does provide 'simple and easy to understand’ plans for every type of American consumer."

Sudden increases
But the FCC, which surveyed 3,005 people during April and May, said that 17 percent said that they have seen their cell phone bills have sudden increases "from one month to the next —even when they have not changed their calling or texting plan. This translates into approximately 30 million Americans who have experienced bill shock."

Such surprises are more likely to happen to "young people and parents with minor children living at home," the agency said, and the difference from the regular bill is "often sizeable. In the survey, more than a third of people who experienced bill shock said their bills jumped by at least $50, and 23 percent said the increase was $100 or more."

Eighty-eight percent of those who had "bill shock" said their cell phone companies did not contact them after their bills suddenly increased, the FCC said. And 84 percent said "their cell carrier did not contact them when they were about to exceed their allowed minutes, text messages, or data downloads.

Cell phone users can always check their balances using their phones or by going online, carriers contend.

“The FCC’s consumer survey provides an important snapshot of the real-world experiences of mobile customers,” said FCC Chairman Julius Genachowski in a press release. "The wireless industry has achieved remarkable innovation — and mobile is increasingly essential to the daily lives of Americans. But there is still more that can be done to help customers navigate what is sometimes a confusing marketplace." 

With 83 percent of adult Americans having a cell phone, "a simple and easy to understand mobile purchase and billing process will empower consumers to avoid bill shock and other unexpected fees.”

Early termination fees
Early termination fees —the amount a customer is charged if they want out of a contract with a wireless carrier before the contract is up — also have been scrutinized by the FCC.

The agency's survey found that nearly half of cell phone users who have wireless contracts and plans with early termination fees "don’t know the amount of the fees they’re accountable for."

Nearly one in five cell phone customers said they didn't know whether they would be liable for early termination fees if they switched carriers before their contracts were up, and 47 percent said they didn't know the amount of the early termination fee.

"Only 36 percent of cell phone customers who are familiar with their bills said that they include 'very clear' information on ETFs," the FCC said.

"The survey shows that ETFs are one factor that can keep cell phone customers from switching carriers even when their service is not ideal. Forty-three percent of these customers said ETFs were a major reason they would stay with their current service, almost exactly the same number who said they would be deterred from switching by the cost of setting up a new service or by paying a deposit on a new service."

Verizon Wireless doubled its smartphone termination fees in November, from $175 to $350. Sprint Nextel and T-Mobile still charge the same termination fees for all types of phones: $200. All three also pro-rate the fees for customers who leave later in their contracts.

Last week, AT&T announced starting June 1, it is raising the fees it charges buyers of the iPhone and other smartphones if customers end their two-year contracts early. Smartphone customers will have to pay $325 to break their contract, up from $175 now. But buyers of regular feature phones will see fees decreased $25, to $150.

The early termination fee goes down every month during the contract.