There is a cop on the beat when it comes to “mystery charges” on your cell phone: the Federal Communications Commission (FCC).  Yes, the same FCC that after a year of dithering can’t bring itself to use its lawful authority over broadband, has decided to stick up for consumers who are tired of being nickel and dimed on their cell phone bills.

Thanks to the FCC’s 2005 extension of the Truth in Billing rules, customers who have been complaining for years about mysterious $1.99 data charges on their bills are going to get some relief.  The charges have largely shown up when customers accidentally press a button on their phone that takes them directly to a data application.  As soon as the application opens customers are automatically charged for a megabyte of data ($1.99), regardless of how much data is downloaded or how quickly the application is closed.

After receiving several hundred complaints, and seeing no action from Verizon, the FCC used its authority under the Truth in Billing rules and launched an investigation into the issue.  Now, after FCC action, Verizon has created a no-charge landing page to avoid accidentally charging for data use, and made plans to reimburse customers.

Verizon has announced that it will be issuing $90 million dollars worth of refunds next month.  Refunds will be given to some 15 million Verizon customers who were billed for unauthorized data charges.  Those numbers are impressive on their own, but they are more impressive when you consider that 15 million customers represents 16% (or one in every six) of Verizon’s total wireless customers – and an even larger percentage of Verizon customers without data plans.

Competition or at least not the level of competition we’ve got in wireless wouldn’t (or at least didn’t) solve this problem.  Leave aside the fact that when people are picking a wireless carrier they usually forge to ask, “will you randomly charge me $1.99 for nothing every so often?”  Now, as in the past, it’s clear that the telcos won’t give consumers understandable bills free of arbitrary charges unless someone makes them.

The Truth in Billing rules were first promulgated by the FCC in 1999.  They came about as a result of more than 60,000 complaints a year by telecom customers about the vague bills they were receiving.  Prior to the rules, bills often included vague charges like “monthly service charges.”  The lack of clarity in the bills made it impossible for customers to know how much they were being charged for the services they had requested and whether they were being charged for services that they had not signed up for.  Without that information, it was impossible for customers to make decisions about which plan and which company to use.  In other words, it was impossible for the market to work.

In 2005, the FCC extended the Truth in Billing rules to include cell phones.  The FCC, rightly, realized that the billing issues and the services provided (at least from the customer’s perspective) were the same regardless of whether they were provided by landline phones or cell phones.

Because the FCC used its authority in 1999 and again in 2005, consumers have more information and, resultantly, more power over their phone service and bills.  When customers are unable to protect themselves, as was the case with these Verizon data charges, the FCC has the ability to step in on their behalf.

The FCC, and Internet customers in the U.S., should view this investigation and refund as a lesson in the proper job of the FCC – to protect consumers of communication services.  At the moment, because of its dithering, the FCC doesn’t have any power to protect Internet access customers. 

So….

If an Internet access bill is unclear, misleading or flat out wrong, the FCC can’t do anything about it.  Customers will be left to find another access provider - if there is another one in their area - or go to small claims court to settle the issue.  That strategy didn’t work with cell phones and there’s no reason to believe it would work with Internet service providers.

If the Internet service provider starts automatically rerouting customers to Bing when they wanted to go to Google, the FCC can’t do anything about that either.  Good luck to the average customer who tries to figure out exactly how the rerouting works and how to argue to a court that rerouting shouldn’t be allowed.

If the Internet service provider stops transmitting emails about summer trips to Michigan (or political meetings, or pending law suits, or ideas for a new business) because a telco executive doesn’t think want to transmit such things over “his” Internet customers will find their lives irreparably damaged.  Without oversight by the FCC now, a great deal of damage can be done through perfectly legal means that it will be impossible to repair later.

It took three years, press coverage and hundreds of complaints for the FCC to investigate the data charges.  The FCC has already gotten massive press coverage, complaints about broadband in the U.S. and a year of inaction - let’s hope they don’t need another two years to get back on the beat for broadband.

There is a cop on the beat when it comes to “mystery charges” on your cell phone: the Federal Communications Commission (FCC).  Yes, the same FCC that after a year of dithering can’t bring itself to use its lawful authority over broadband, has decided to stick up for consumers who are tired of being nickel and dimed on their cell phone bills.

Thanks to the FCC’s 2005 extension of the Truth in Billing rules, customers who have been complaining for years about mysterious $1.99 data charges on their bills are going to get some relief.  The charges have largely shown up when customers accidentally press a button on their phone that takes them directly to a data application.  As soon as the application opens customers are automatically charged for a megabyte of data ($1.99), regardless of how much data is downloaded or how quickly the application is closed.

After receiving several hundred complaints, and seeing no action from Verizon, the FCC used its authority under the Truth in Billing rules and launched an investigation into the issue.  Now, after FCC action, Verizon has created a no-charge landing page to avoid accidentally charging for data use, and made plans to reimburse customers.

Verizon has announced that it will be issuing $90 million dollars worth of refunds next month.  Refunds will be given to some 15 million Verizon customers who were billed for unauthorized data charges.  Those numbers are impressive on their own, but they are more impressive when you consider that 15 million customers represents 16% (or one in every six) of Verizon’s total wireless customers – and an even larger percentage of Verizon customers without data plans.

Competition or at least not the level of competition we’ve got in wireless wouldn’t (or at least didn’t) solve this problem.  Leave aside the fact that when people are picking a wireless carrier they usually forge to ask, “will you randomly charge me $1.99 for nothing every so often?”  Now, as in the past, it’s clear that the telcos won’t give consumers understandable bills free of arbitrary charges unless someone makes them.

The Truth in Billing rules were first promulgated by the FCC in 1999.  They came about as a result of more than 60,000 complaints a year by telecom customers about the vague bills they were receiving.  Prior to the rules, bills often included vague charges like “monthly service charges.”  The lack of clarity in the bills made it impossible for customers to know how much they were being charged for the services they had requested and whether they were being charged for services that they had not signed up for.  Without that information, it was impossible for customers to make decisions about which plan and which company to use.  In other words, it was impossible for the market to work.

In 2005, the FCC extended the Truth in Billing rules to include cell phones.  The FCC, rightly, realized that the billing issues and the services provided (at least from the customer’s perspective) were the same regardless of whether they were provided by landline phones or cell phones.

Because the FCC used its authority in 1999 and again in 2005, consumers have more information and, resultantly, more power over their phone service and bills.  When customers are unable to protect themselves, as was the case with these Verizon data charges, the FCC has the ability to step in on their behalf.

The FCC, and Internet customers in the U.S., should view this investigation and refund as a lesson in the proper job of the FCC – to protect consumers of communication services.  At the moment, because of its dithering, the FCC doesn’t have any power to protect Internet access customers. 

So….

If an Internet access bill is unclear, misleading or flat out wrong, the FCC can’t do anything about it.  Customers will be left to find another access provider - if there is another one in their area - or go to small claims court to settle the issue.  That strategy didn’t work with cell phones and there’s no reason to believe it would work with Internet service providers.

If the Internet service provider starts automatically rerouting customers to Bing when they wanted to go to Google, the FCC can’t do anything about that either.  Good luck to the average customer who tries to figure out exactly how the rerouting works and how to argue to a court that rerouting shouldn’t be allowed.

If the Internet service provider stops transmitting emails about summer trips to Michigan (or political meetings, or pending law suits, or ideas for a new business) because a telco executive doesn’t think want to transmit such things over “his” Internet customers will find their lives irreparably damaged.  Without oversight by the FCC now, a great deal of damage can be done through perfectly legal means that it will be impossible to repair later.

It took three years, press coverage and hundreds of complaints for the FCC to investigate the data charges.  The FCC has already gotten massive press coverage, complaints about broadband in the U.S. and a year of inaction - let’s hope they don’t need another two years to get back on the beat for broadband.