Wireless carriers agree to end 'bill shock'

@CNNMoneyTech October 17, 2011: 1:56 PM ET

NEW YORK (CNNMoney) -- Those surprise overage charges on your wireless bill will soon be a thing of the past.

The vast majority of America's wireless carriers came to terms with the Federal Communications Commission on Monday, agreeing to alert consumers when they are approaching their monthly limits for voice, data and text messages, or when they are about to incur international roaming charges. Mobile providers will send a second alert when customers reach those limits.

The news comes after a nearly two-year FCC probe into "bill shock" -- the sudden, unexpected increase in monthly wireless charges without a change to a customer's plan. The regulator estimates about 30 million Americans have experienced some form of bill shock.

A study that the FCC conducted last year found that 84% of Americans who experienced bill shock said they were not tipped off by their wireless company when they were about to exceed their limits, and 88% said they heard nothing from their provider after they went over.

The overage charges aren't cheap: 67% of the complaints the FCC received last year involved fees of $100 or more, and 20% were for $1,000 or more. The largest: $68,505.

At an announcement of the new agreement in Washington on Monday, FCC Chairman Julius Genachowski said that practice was a "real problem that needed to be fixed." As a result, he called Monday's announcement, "A victory for more than 200 million wireless consumers."

"Every consumer deserves to be treated fairly," he said. "These actions harness technology to empower consumers, to ensure consumers get a fair shake and not bill shock."

Genachowski said the FCC had been considering enacting new regulations that would have forced carriers to send free voice or text messages when customers approach and reach monthly limits that would incur overage charges. The regulator was also going to mandate a similar approach for international roaming charges, and it would require carriers to clearly disclose any tools that they offer to help customers monitor balances.

But the wireless carriers -- though CTIA, the industry's largest trade group -- decided to voluntarily take up the FCC's guidelines. As a result, the FCC said it would tentatively hold off on its regulations with a "trust but verify approach." The regulator will post a public portal on its website to allow consumers to report whether carriers are complying with the rules.

"If we see non-compliance, we'll take action," Genachowski said.

CTIA president Steve Largent said at least two of the four notifications for data, voice, texting and international roaming will into effect by Oct. 17, 2012, and all will be in place by April 17, 2013.

That's a long time for what Genachowski called "an easy technological solution."

Still, the agency said coming to terms with the FCC was a better way forward than what it believes is unnecessary regulation. Tom Udall, a Democratic senator from New Mexico, had also introduced "bill shock" legislation to the Senate that would have obligated carriers to abide my many of the same rules that they agreed to on Monday.

"Today's announcement shows there's a different way to get things done in this city," Largent said on Monday. "We are proud to provide our customers with these free alerts to help manage usage and avoid unnecessary charges."

About 97% of America's wireless consumers have cell phone plans with carriers that are represented by CTIA, including national carriers Verizon (VZ, Fortune 500), AT&T (T, Fortune 500), Sprint (S, Fortune 500) and T-Mobile. Subscribers will be covered by the new plan unless they opt out. To top of page

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