Wireless carriers agree on measures to curb “bill shock”

The major US wireless carriers this week announced that they would start issuing individual warnings before subscribers go over their monthly limits for calls, text messages, and data use. The move comes in response to pressure from the Federal Communications Commission, which wants to curb “bill shock” – large unforeseen cell phone charges that are said to affect as many as 1 in 6 customers.

The warnings will arrive automatically as text messages, which means that subscribers won’t have to opt-in to receive them. The carriers have also agreed to warn subscribers that they are paying roaming fees if they are traveling abroad.

Two of the major carriers – AT&T and Verizon Wireless – already provide text-message warnings  about data usage but not call minutes or text messages. Instead, customers have to monitor their own usage through tracking apps or by looking up their bills online.

The announcement allows the major carriers to avoid regulation – for now. The FCC will monitor implementation over the next 18 months to two years and will step in if the new system is delayed or is found to be inadequate.

“These alerts will give consumers the information they need to save money on their monthly wireless bills. Consistent with the FCC's ongoing efforts, these actions harness technology to empower consumers, and ensure consumers get a fair shake, not bill shock,” said FCC Chairman Julius Genachowski, in a joint statement issued Monday with the CTIA (Wireless Association) and Consumers Union.

The introduction of early warning messages is unlikely to have much of an impact on the profits of the phone companies. Subscribers have become more sophisticated in tracking their call minutes and there has been a marked shift towards unlimited texting plans as texting volume has skyrocketed. The carriers are also rolling out tiered data plans, with upper limits that are more than adequate for most users.

The biggest remaining problem for cell phone customers may be international charges, which can mount up in a hurry and which can be very hard to track when you are overseas. The early-warning messages will also apply to these roaming charges. The new system is similar to early warnings introduced last year by European carriers, which notify users when they get to 80 percent of their plan limits.

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