WASHINGTON » Users of cellphones and other wireless devices who are nearing their monthly limit for voice, text or data services will receive alerts when they are in danger of being charged extra, under an agreement reached by carriers and the Federal Communications Commission.
The agreement, which is to be announced Monday, brings together an industry and a regulator that have fought bitterly this year over the FCC’s attempts to police Internet service providers and over the commission’s review of wireless company mergers. The agreement will begin within a year.
Wireless companies have generally opposed the commission’s recent efforts to dictate how they communicate with customers. But the carriers have also been losing good will with people bitter about the sometimes exorbitant charges resulting from overuse of what has become a consumer staple — the cellphone.
Tens of millions of wireless phone users are hit with overage charges each year, the FCC estimates, based on its own studies and work by the Government Accountability Office and private research firms. The new agreement binds all of the members of the industry’s largest trade group, and therefore covers virtually all of the country’s more than 300 million wireless accounts, according to the FCC chairman, Julius Genachowski.
President Barack Obama, Genachowski and Steve Largent, president of CTIA — the Wireless Association, the trade group that negotiated for the carriers, hailed the agreement. Largent, a former congressman and NFL player, said the deal fulfilled a government pledge without imposing burdensome regulations.
Obama, in a statement, said: "I appreciate the mobile phone companies’ willingness to work with my administration and join us in our overall and ongoing efforts to protect American consumers by making sure financial transactions are fair, honest and transparent."
For 18 months, the FCC has been investigating what it calls bill shock, what consumers experience when they receive their monthly wireless bill to find unexpected charges of hundreds or thousands of dollars for roaming or overuse of voice and data services. In October, it proposed a regulation that will now be delayed while the commission monitors the industry’s voluntary compliance.
Most wireless contracts call for a customer to pay a flat monthly fee for a fixed number of minutes of talk time. Some plans include a set number of text messages, and others, most often for smartphones, tablets like the iPad, or laptop computer air cards, include a certain amount of data use each month.
A customer exceeding those limits will begin incurring charges that are often far more expensive on a per-unit basis than under the monthly allotments. While many carriers offer several ways for consumers to check their usage, those struck by large bills usually had not regularly done so.
Alerting consumers to data limits is particularly relevant with the explosive growth of the iPad and other tablets, which can consume immense amounts of data in downloading music and books, and streaming movies. The FCC has said that the popularity of tablets and the accompanying growth in data use is contributing to overcrowding of the airwaves, with wireless companies finding that they may eventually not be able to accommodate the demand for downloading.
A 2010 study by the FCC found that 1 in 6 mobile device users had experienced bill shock, with 23 percent of those users facing unexpected charges of $100 or more. A separate FCC report noted that 20 percent of the bill shock complaints it received during the first half of 2010 were for $1,000 or more in overage charges. Expensive charges can also be incurred for roaming, when a user travels out of a company’s defined area of coverage or, as often occurs, when traveling overseas.
Even so-called unlimited data plans often have a cap limiting downloads each month to a certain number of megabytes — a technical measure that, unlike a number of calls or minutes, cannot easily be tracked by the uninitiated. Last October, the FCC highlighted the case of a 66-year-old retiree in Dover, Mass., who received an $18,000 bill after a promotional no-limit data plan expired without warning.
Alexander Cullison found out the hard way what can happen when a family member is unaware of usage limits and accounting. Cullison, a retired resident of Fairfax, Va., received a $400 bill one month recently after his son, whose plan had a monthly limit of 250 text messages, sent and received about 2,000 in one billing period. It was then that Cullison learned that his wireless company counted each message sent and received as separate items, causing them to build up at least twice as fast as expected.
"This is a good resolution," Cullison said, "as long as they advise you that you are going to go over your limit before it actually happens."
Under the agreement, carriers will provide alerts when consumers approach and then exceed their limits on voice, data or texting. In addition, users will receive an alert when their phone links to a cellular system in a foreign country. Some carriers already provide similar alerts.
Companies have the option to deliver alerts by text or voice, but they must be free and automatic. Consumers can opt out of the service if they choose. At least two of the four types of alerts must be started by carriers within 12 months, and all alerts must begin within 18 months.
The companies also agreed to publicize tools for consumers to monitor their own usage. The FCC has teamed with the nonprofit Consumers Union to track companies’ compliance.
"Consumers have been telling us about ‘bill shock’ for a long time, and we’ve been pushing for reforms to crack down on the problem," said Parul P. Desai, policy counsel for Consumers Union. "Ultimately, this is about helping people protect their pocketbooks, so we applaud the FCC and the industry for this effort to do right by consumers."