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Say goodbye to cellphone bill shock

Wireless companies will begin implementing a system to alert customers who are close to exceeding the limits of their plan.

By MSN Money Partner Oct 17, 2011 6:06PM

This post comes from Giselle Smith at MSN Money.

 

Accustomed to a $180 monthly bill for her wireless family plan, my friend Elsa got a rude surprise this summer while her college student son was traveling in Japan: a $1,100 cellphone bill.

 

They had spoken with a wireless company representative before he left and were assured that if he turned off his smartphone's roaming capability, he could use the device with Wi-Fi for email. Unfortunately, when he accepted incoming calls, the roaming kicked back in -- racking up charges at $1.99 a minute. Post continues after video.

Elsa's story of cellphone "bill shock" is mild compared with that of other wireless users, some of whom have received five-digit phone bills. According to a New York Times story, the Federal Communications Commission received -- and verified -- a complaint in 2010 from a user whose bill topped $68,000. And, according to the FCC, Elsa is just one of tens of millions of people who are hit by unexpected cellphone overage charges every year.

 

There's hope in sight -- as wireless carriers pledged today to send warnings to users before they incur excess charges -- but unfortunately those changes might not be fully in effect for up to 18 months.

 

The FCC today announced that wireless carriers have agreed to voluntary industry guidelines that include sending free alerts to users as they near their voice, text and data limits. The warnings, sent by voice or text, will also alert users who are at risk of incurring roaming fees while traveling abroad.

 

The plan is the industry's response to rules proposed by the FCC last October. FCC Chairman Julius Genachowski said government regulations are on hold pending the companies' adherence to the plan, but suggested that if the industry fails to meet its self-imposed 18-month deadline, the FCC may step in after all.

 

In the meantime, the FCC and the Consumers Union, which has pushed for regulations, will set up a website to monitor industry compliance.

 

As the LA Times Blog reported today:

"The carriers have committed to moving as expeditiously as possible to change their systems and implement these alerts," Genachowski said. "Now moving forward, the FCC will take a trust-but-verify approach."

A 2010 FCC study found that one in six mobile phone users have experienced bill shock --unexpected fees on their monthly bill -- and 23% of those users incurred fees of $100 or more. The commission has been investigating the issue for the past 18 months, with user estimates based on FCC studies and work by the Government Accountability Office and private research firms, according to The New York Times.

 

Most wireless contracts charge customers a flat monthly fee for a specific number of minutes of talk time, and/or a specific number of text messages. Plans for smartphones and tablets such as the iPad include a set monthly amount of data use. When customers exceed those limits, they begin incurring charges on a per-unit basis that is generally higher than that within the monthly allotment.

 

For example, Sprint offers an economical-sounding plan with 200 minutes of talk time for just $29.99 a month, but each additional minute costs 45 cents, which means that using the phone for just 10 minutes per day (or 300 minutes per month) will set you back an additional $45 -- before taxes -- and even more if you send or receive text messages at 20 cents a pop.

 

Though the cellphone companies have fought the proposed FCC regulations on the grounds that it could cost "tens, if not hundreds, of millions of dollars to implement," according to The New York Times, Steve Largent -- president of CTIA, the largest wireless industry trade group -- now says the companies are making this change voluntarily and will not pass on the cost to consumers.

 

As the LA Times reported:

Some companies, such as Verizon, already provide some of the alerts, and Largent said he anticipated companies would comply with the new guidelines ahead of schedule. But he noted there were technical issues with setting up the alerts.
He also said companies would not charge customers more to offset any decrease in income from lost overage charges.
"Our companies are biting the bullet and we're going to get this done," he said.

Participating providers will offer their customers at least two of the four notifications by Oct. 17, 2012, and all of the alerts by April 17, 2013, according to the CTIA blog. That timeline is quicker than it would take to adopt and phase in new government regulations, which probably would require at least two years, FCC officials said.

 

In the meantime, here's how you can protect yourself:

  • Register your wireless account with your carrier online and regularly check your usage to see if you are on track for your current billing cycle.
  • If you're halfway through the billing cycle and have used more than half of your allotted text, data or voice minutes, stop sending messages or turn off your phone when you don't absolutely need it. (Remember, carriers charge you for text messages received as well as sent, and even turning off your phone won't stop messages from coming in.)
  • Take advantage of your carrier's family-plan features by limiting your children's phone usage.
  • Make sure you have the the right cellphone plan for you and your family.

More on MSN Money:

9Comments
Oct 17, 2011 10:21PM
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Cell phone companys sell what they can't deliver. If you don't believe me come to Wyoming.
Oct 18, 2011 7:18AM
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My daughter had a cell phone through Sprint and was always going over her minutes. She never knew what her phone bill was going to be. She tried her best to stay on top of her minute usages however, like the story said she was charged for roaming when they said she would not be etc. She had been with them for years and claimed she liked them even though she was always calling the billing dept. to straighten out her bill every other month.

I hated when we would talk because at the beginning of the conversation she would always say "Mom I can only talk X amount of minutes today". It drove me crazy and her of course, so finally she decided to do something about it. 

She heard about the No Contract One Talk Plan at Wal-Mart for $45 a month. So she switched to it, and sure enough it is as advertised  She gets unlimited minutes to talk, surf, text, & email with no worries ever again about going over. The only catch was she had to buy her phone through them, but you have to do that anyway where ever you go for service. She tried the $30/1000mins plan but I guess she talks to much-LOL so she went back to the $45plan. Did not have to buy new phone just buy monthly phone cards.

I believe this is the future of the industry and that is why they are so willing to comply ahead of schedule with the FCC. We saw the same type of plans in other stores now being offered through companies like AT&T, T-Mobile just to name a few, there were more.

Soon folks will start doing the Math and figure that $400 phone for $40 if I will just sign a 2 year contract- ends up costing $600-$1000. So you never get a $40 phone in the 1st place.

Oct 18, 2011 11:18AM
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The cell phone companies are well known to manipulate and rip off consumers. What part of this do we not understand? Lock into a 2 year contract enticed by a cheap phone that only works on their network? Nickel & dime you to death with small print which is never discussed when you buy your service. Pay for outgoing and incoming calls? Texting service costs less than a cent to provide and you are paying how much? hello.

 

So my solution to this corrupt game was to buy an unlocked quad band international phone ($135 Samsung Andriod 2.2 / WIFI), paid the $100 ‘use anytime minutes’ good for a year + $25 connect charge, immediately registered number with the do not call list; after some tussle I had the provider turn off all incoming text message if you don't then the cell phone companies through their affiliates which they sell your information too will send you text spam and ding you 20 cents until you catch on (if you catch on). It took numerous calls to stop this once I figured it out. I asked the cell company ATT to block all text messages - I was told by the customer service they did it but that was a lie because I found out they didn't. It took another angry call to get that money back and make sure they put the block on. I get free message updates letting me know how much the last call cost and how much is left in the account. I can use my phone anywhere in the world (and when I am in another country I just buy a chip for that country and no roaming). I can switch carriers anytime; I don’t get any unwanted calls; I don’t get any spam text messages; I limit incoming callers to get to the point and vise versa on outgoing. Talking is cheaper and way more productive than text messaging anyway and safer while driving and I can still send emails/ use web, and IM free via Wi-Fi regardless of where I am in the world. Maybe not for everyone perhaps but my US cell costs for the last 6 months = $90 and the best thing is I am totally in control of my costs not the company and no hidden fees. No regulations needed; No government involvement needed; Just free markets and a willingness to find alternatives.

 

Oct 18, 2011 11:35AM
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That's what happens without somebody, like the govt, to step in and establish regulations on corporations. Unregulated, they're gonna take advantage of citizens every and any way they can get away with. Regulations are bad for bu$iness, but necessary for cu$tomer protection. Listen and believe what those Tpubs're screaming about over-regulation? This is the kind of thing we're all going to be forced to live with, - getting gouged on every angle of every service affected. That's just the way big corporations roll, right over the top of us all...
Oct 18, 2011 12:14PM
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I can call India from US for 4 cents a minute from landline. 4 dollars for 100 minutes, 16 dollars for 400 minutes.

 

So why do these comanies charge so much for cell phone calling within the country. All companies charge somewhere to the tune of 40 dollars - 60 dolllars for 400 minutes. (And both caller and called are paying for that one same call if on cellphone) That is ridiculouusly high.

 

People wake up, we need to be demonstrating against cell phone companies as well.

 

Any why the calling minute tiers...why cant they charge for the minutes used on per minute basis. If on 400 minutes plan, I use only 40, why should i pay for the rest. and why s hould these companies chrge me if i go over the next month when they are not paying me back when i didnt use the mi nutes. I like At&t on this feature of unused minutes, but still doesnt address why i should not be just charged for the actual minutes used.

Oct 18, 2011 12:04PM
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Free incoming calls and free incoming text messages.....The whole World does that but not the US. I don't understand why. It should be done here as well. That is the only way we can control the usage. as I cannot control incoming messages and i cannot control oncoming calls. I can however control outgoing.

 

Also, all services should be able to turn off/on. LIke Data, Text message, etc. I should be able to turn off these settings and nothing, except my specific command should be able to turn these on. These companies actually have built in these specific situations of settings coming on by themselves to make money off the unsuspecting customers. They expect some customers will pay up or settle to pay up more than they should should have. They need to be sued and government is required to make legislation to control these companies and watch out of the citizens.

Oct 18, 2011 10:13AM
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so what wrong with regulation?

So let the cell phone regulate themselves.   

But the feds should do their job too and put into place "formal" regulations to ensure the carriers don't back peddle, and the feds won't waste time in the future whining and bitching that billion dollar companies decided to change the rules.

Oct 24, 2011 12:12AM
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I've read so often in the commenting how people say it's your responsibility to know your usage, and why should we be spoon fed,  and to a certain degree I agree; surely you don't get a $68 000 bill without knowing you are using your phone extensively and probably outside of the States? My concern is that too much is hidden in legal jargon, and how a senior citizen is supposed to have the energy and understanding to read through one of those contracts, as well as understand the technology that goes hand in hand with data and data usage, is beyond me. It is these unsuspecting folk that are being taken advantage of, and most often they are on the tightest budget. My advice to senior citizens is to do what my mom did and go prepaid. With prepaid (for example Tracfone's SVC phone, Doro, etc) you buy your minutes upfront, knowing how many you will have and how much you will be spending. No contract, no bill and no hidden fees. The bonus is that your phone is designed with seniors in mind. I will add that you should just investigate a couple of options wrt your personal needs-coverage and cost-SVC is around $7, whereas some of the other's are over $30 or $40. Say goodbye to any form of bill shock by going prepaid!
Oct 17, 2011 7:24PM
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I had a friend who, after dropping out of college in Canada and moving back home to the United States, found herself with a cell phone bill that had sky-rocketed over $1,000. The next day she took her own life. She didn't realize that she was making international calls and was destitute. The cell phone bill pushed her over the edge. She had no way to pay it.
The reason I am posting this story is that cell phone companies need to realize that they have the power to ruin people with ridiculous overcharges and fees.
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