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Approaching cellphone plan limits? Now you'll be warned

Cellphone companies are pledging to warn subscribers before they go over their monthly limits for calling minutes, text messages and data use.
/ Source: Reuters

The U.S. wireless industry is rolling out more consumer-friendly billing practices, fending off a plan by communications regulators to impose new rules against unexpected charges.

Guidelines unveiled on Monday by the wireless trade association, CTIA, will see companies send alerts to customers when they near or reach monthly limits on voice, text and data services, and before they incur international roaming charges.

The guidelines are similar to rules the Federal Communications Commission was contemplating, and the regulator is backing off its plan for now.

"Consistent with the FCC's ongoing efforts, these actions harness technology to empower consumers, and ensure consumers get a fair shake, not bill shock," FCC Chairman Julius Genachowski said.

The FCC has found that one in six mobile phone users have experienced bill shock, or unexpected fees tacked onto their monthly bills, and 23 percent of those users have faced unexpected charges of $100 or more.

The FCC proposed rules last October that would make mobile phone companies send text or voice alerts to customers before charging them for services not covered by their plans.

Consumers should begin receiving warnings about their bills faster under the industry initiative than the FCC would have been able to require through the rulemaking process.

CTIA, representing companies serving 97 percent of wireless customers, and the FCC announced the voluntary guidelines, including disclosure of tools that make it easier for customers to track and control their service usage.

But public interest group Free Press criticized the FCC for failing to establish rules, opting instead for "industry platitudes."

"The FCC is charged by Congress to protect consumers and it should fulfill this mandate to write a rule that puts an end to outrageous monthly cell phone bills that rival the price of a new car," said Joel Kelsey, the Free Press political adviser.

CTIA expressed concern last October that prescriptive and costly rules could threaten practices in the industry that have already led to fewer wireless complaints and lower average monthly bills.

The FCC intends to leave its bill-shock proceeding open. If wireless carriers failed to comply with the industry guidelines, the agency could still move ahead with enforceable rules, an FCC official said.

"Our phones shouldn't cost us more than the monthly rent or mortgage," said President Barack Obama in a statement, applauding the wireless industry's efforts to work with the administration.

CTIA Chief Executive Steve Largent called the initiative an example of how federal agencies and the industries they regulate can work together to avoid burdensome rulemaking, as directed by a recent executive order from Obama.

Wireless carriers are to provide at least two of the four alerts -- voice, text, data or roaming -- within 12 months and the rest within 18 months, under the industry initiative.

The FCC said the alerts will require substantial investment from wireless companies as they must make upgrades to their billing systems.

The majority of Americans get their wireless service through major providers such as AT&T Inc ; Sprint Nextel Corp ; Deutsche Telekom AG's T-Mobile; and Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc .

"We hope that in the future this industry effort serves as a model for the communications space," said Kathleen Grillo, Verizon senior vice president for federal regulatory affairs, commending the FCC for allowing a non-regulatory solution to bill shock.