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A Regulatory Shock from the FCC

Posted By Diane Katz On October 28, 2010 @ 5:00 pm In Economics | Comments Disabled

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The Federal Communications Commission (FCC) has set its regulatory sights on wireless telephone providers for instigating a supposed epidemic of “bill shock” across the land. But a review of complaints [2] to the agency, as well as government survey data, casts considerable doubt on the agency’s claim that consumers are terrorized by their mobile phone charges.

As illustrated in the accompanying graph, complaints to the FCC related to billing and rates for wireless telephone service accounted for a mere 3 percent of complaints overall in 2009—a significant decline from 17 percent in 2002. (Radio and TV broadcasting drew the largest number of complaints, at 51 percent.) Among complaints related specifically to wireless services, the category of billing and rates comprised only 19.5 percent.

In fact, the vast majority of mobile phone subscribers are coping just fine. A 2009 survey [3] by the Government Accountability Office found 84 percent of adult wireless users to be “very” or “somewhat” satisfied with their wireless service compared to only 10 percent who were “very” or “somewhat” dissatisfied. Moreover, there was little difference in the proportion of subscribers who stated dissatisfaction with “billing” (12 percent) and the level of dissatisfaction with other elements of service, including call quality, contract terms, explanation of service, and customer handling.

FCC officials claim that few consumers file complaints because they don’t know whom to complain to. Even if true, there’s no reason to think more informed consumers would change the nature and distribution of complaints.

Regulatory overreach appears to have set in from the very start, as FCC officials modeled the proposed rules on “mechanisms” adopted by the European Union. No surprise, then, that the proposed requirements treat consumers as utterly incompetent to manage their own mobile phone use.

To wit, mobile service providers would be forced to:

  • Notify every subscriber whenever their voice, text, or data usage approaches the allotted limit of their plan;
  • Notify every subscriber whenever they actually reach the voice, text, or data usage limits of their plan and additional charges kick in;
  • Notify every subscriber whenever roaming charges go into effect; and
  • Provide subscribers with ongoing notice of any tools available to limit usage or monitor usage history.

Not all commissioners are following the lead of commission Chairman Julius Genachowski, who launched this regulatory foray. In comments appended to the rulemaking notice [4], Commissioner Robert McDowell expressed hope that the FCC “will avoid inadvertently interfering with the host of innovative applications and programs that already exist for the purpose of helping consumers manage their wireless usage.”

Commissioner Meredith Attwell Baker also wisely warned that notification requirements “may be expensive and burdensome for smaller providers and prepaid services and put them at a competitive disadvantage.”

None of which is to say that “bill shock” doesn’t exist. Undoubtedly there are an appreciable number of mobile phone subscribers who fail to track their usage or misunderstand the terms of their service. But a variety of tracking tools already exist to avoid the hefty charges imposed for exceeding service contract limits.

For example, several wireless service providers offer applications online and on handsets to review usage and balances. There also are tools for setting limits on voice, text or data use to avoid overage charges. And FCC officials are fully aware that these tools are offered by not only the four largest wireless service providers but smaller ones as well.

What troubles the agency, apparently, is the sheer variety of tracking methods. As noted in the agency’s notice of rulemaking, “We have found that usage alerts offered by mobile providers vary widely between service providers and by type of service covered.” So innovation and consumer choice is bad? There’s no surer way to kill advancements in service than to force wireless companies to march in lock-step.

Genachowski and allies apparently aren’t listening to Americans’ real complaint: the unchecked growth of big government and its incessant interference in our lives. To the extent a new Congress does get the message, it would be useful to pass it on to the FCC through legislative limits on its regulatory zeal.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/10/28/a-regulatory-shock-from-the-fcc/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/FCC-complaints.jpg

[2] complaints: http://www.fcc.gov/cgb/quarter/welcome.html

[3] 2009 survey: http://www.gao.gov/new.items/d1034.pdf

[4] rulemaking notice: http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1014/FCC-10-180A1.doc

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