October 13, 2010 / 8:05 PM / in 7 years

FCC eyes an end to shocking mobile phone bills

<p>A man uses a cell phone while driving in Burbank, California June 25, 2008. California has a new law which goes into effect July 1 that requires drivers to use a hands-free device while talking on cell phones while driving or face a fine.Fred Prouser</p>

WASHINGTON (Reuters) - Mobile phone companies would have to warn customers before they rack up eye-popping extra fees on their bills under rules that the U.S. Federal Communications Commission will propose on Thursday.

The FCC wants to curb so-called bill shock by making mobile phone companies send text or voice alerts to customers before charging them for services not covered by their plans.

"Our core goal is to make it easy for consumers to determine their destiny when it comes to their services and their monthly bills," said FCC Chairman Julius Genachowski.

Alerts would be sent when customers near and reach their monthly limits on voice, text and data services, and before they incur international or roaming charges priced above their normal rates.

The rules would ensure that cell phone companies also disclose tools that they provide to make it easier for customers to track and control their usage.

"We can tackle this problem without adopting detailed, prescriptive rules," Genachowski said on Wednesday at the Center for American Progress, a Washington think tank.

The FCC released a survey in May that showed 30 million Americans, or one in six mobile phone users, have experienced bill shock.

"Two thirds of the complaints we received are disputing amounts of $100 or more," Genachowski said of findings in a FCC white paper released on Wednesday. "Twenty percent involve $1,000 or more."

The rules could still hit the profits of cell phone companies such as AT&T Inc, Sprint Nextel Corp, T-Mobile, the U.S. unit of Deutsche Telekom AG and Verizon Wireless, a joint venture between Verizon Communications Inc and Vodafone Group Plc.

CTIA, the trade association for the wireless industry, pointed to statistics that show fewer wireless complaints and lower average monthly bills and said it would do more to continue to keep customers happy and informed.

"But we are concerned that prescriptive and costly rules that limit the creative offerings and competitive nature of the industry may threaten to offset these positive trends," Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, said in a statement.

Genachowski said some companies might not like the regulations, but said he did not think large companies would "oppose providing consumers basic information and the tools to control their services and their bills."

Reporting by Jasmin Melvin; editing by Andre Grenon

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