Consumer Watchdog: The FCC’s Proposed Rulemaking to Help Consumers Avoid Bill Shock

I. INTRODUCTION II. UNEXPECTED CHARGES AND THE NEED FOR CHANGE A. Specific Examples of Bill Shock B. European Union Legislation on Wireless Billing Practices C. Industry and Consumer Response to the FCC's Notice of Inquiry III. PROPOSED RULEMAKING: EMPOWERING CONSUMERS IV. INDUSTRY RESPONSE TO THE PROPOSED RULES V. CONSUMERS SPEAK OUT VI. ARGUMENT IN FAVOR OF THE PROPOSED RULEMAKING A. Similar Systems Currently in Operation B. Lack of Tools Currently Available to Consumers C. Arguments by the Wireless Industry Attempt to Preserve a Lucrative Business Model Based on Taking Advantage of Consumers VII. CONCLUSION I. INTRODUCTION Kerfye Pierre, a Maryland resident, was in Haiti visiting her sister when a massive earthquake struck and caused chaos in the small Caribbean country. (1) In the aftermath of the devastating earthquake, wireless communication became an integral part of contacting emergency crews and loved ones. Pierre had suspended her cell phone service before going on the trip, but due to the disaster she contacted her mobile service provider, T-Mobile, and asked if there was a way she could use her phone at a reasonable cost in order to have contact with family back home and assure them of her safety. (2) The representative from T-Mobile told Pierre of a courtesy plan that would allow her to use her phone to communicate with her family back home; however, Pierre did not realize and was not thoroughly informed that this plan included only voice minutes, not data and texting. (3) Due to the devastation from the earthquake, the cellular voice network was unreliable, forcing Pierre to use texts, email, and Facebook to communicate with the outside world. (4) Luckily, these systems worked and she was able to contact her family and assure them of her safety. Upon returning to Maryland, the joy of being united with her family was short-lived when Pierre opened a wireless bill from T-Mobile and was shocked to find her bill had skyrocketed from a normally low amount to a huge sum: $30,000. (5) After contacting T-Mobile and pleading with them to waive the charges due to her extenuating circumstances, she was able to get a $25,000 credit added to her account; however, Pierre still owes T-Mobile $5,000 for her overage charges. (6) As one can imagine, this scenario would come as quite a shock to any consumer and could lead to severe consequences for many households. The situation involving abnormally large wireless bills has come to the attention of the Chairman of the FCC, Julius Genachowski, who stated, "[s]omething is clearly wrong with a system that makes it possible for consumers to run up big bills without knowing it." (7) Apparently, Genachowski is not the only one who feels this way, and that is why the FCC has decided to tackle the problem now known as "bill shock." This Note discusses the proposed regulation by the FCC and both industry and consumer reaction to the issue of bill shock. In Part II, this Note will discuss the background of bill shock and the Notice of Inquiry released by the FCC. Part II, Subsection A will discuss the background of bill shock and will highlight certain extreme examples of bill shock to show the damage it can produce. Next, a discussion of the current system in place in the European Union ("EU") will be covered in Part II, Subsection B. Part III of this Note will discuss the proposed rulemaking by the FCC titled: "Empowering Consumers to Avoid Bill Shock." In Part IV, this Note will highlight the industry response from mobile phone providers and will review the arguments from CTIA-The Wireless Association ("CTIA") in favor of the current system. Part V will discuss the reaction from consumer groups and major media outlets to the proposed rulemaking, including some groups' arguments that the proposed rulemaking does not go far enough for consumer protection. Lastly, Part VI of this Note will argue in favor of the proposed rulemaking by the FCC. …