GAO Tells FCC to Step Up its Game on Oversight of Wireless Phone Service
The Government Accounting Office (GAO), the Congressional “watchdog”, recently issued a report showing growing consumer dissatisfaction with wireless phone service. The survey of 1,143 wireless service users found that while the majority of wireless customers are satisfied with their service, a growing number of consumers experience problems with billing, fees and customer service. The report shows that 34 percent of wireless telephone consumers do not know where to go if they have a problem with their wireless provider.
The Federal Communications Commission (FCC) is the federal agency tasked with fostering a competitive wireless marketplace and protecting consumers. The GAO report recommends that the FCC improve its outreach to consumers about its complaint process and its coordination with states in providing oversight.
Congress is in on the act too. Last July, the Senate Commerce Committee held a hearing to examine some of the same issues that surfaced in the report. Committee Chairman John Rockefeller reacting the the report stated, “The FCC can–and must—do more to make sure consumer concerns are resolved by wireless carriers and oversee the wireless industry with a greater focus on consumer protection.”
Exclusivity Agreements Top the List of Concerns
One particularly thorny issue is the use of exclusivity agreements between the large service providers and mobile handset manufacturers. An exclusivity contract is the agreement that binds you to AT&T if you want an iphone or to Verizon if you like the Blackberry Storm. Even worse, if you live in a rural area where the phone companies have decided not to offer service, you are likely stuck with some outdated handset. The phone companies argue that exclusivity is commonplace in other industries. Walk into your local diner and you’ll likely get Coke or Pepsi, not both.
Early Termination Fees Rub Consumers the Wrong Way
Another sore spot for consumers are early termination fees. Smartphone consumers who are on Verizon’s network recently learned that their early termination fees have doubled to $350 with that fee reducing $10 every month the contract is in place. Senator Amy Klobuchar (D-MN) reacted by introducing the Cell Phone Early Termination Fee, Transparency and Fairness Act (S. 2825) a bill that would limit the amount a carrier can charge as an early termination fee.
It certainly seems as if a perfect storm may be brewing for the wireless industry. What impact do these or other wireless issues have on your business? Is it time for Washington to weigh in?
Mike
January 25, 2010 at 11:00 am
i wouldn’t call myself an expert, but my guess would that if the Cell Phone Early Termination Fee, Transparency and Fairness Act, or something like it, were to become law, we’d lose all forms of a discount on the actual phone itself. Isn’t the only reason we see smart phones for less than $400+ are because the wireless providers discount them to lock you into a long-term contract? If Congress prevents or limits them from penalizing someone who breaks their contract, what incentive will the service providers have to discount the phones?
Melanie Wyne
January 25, 2010 at 12:41 pm
Mike,
You are probably right that handset discounts would go away. But what about removing the subsidy, pay the true price of a handset and the true price of the service and let the wireless providers compete on the service they offer rather than locking you into a contract based on your choice of handset? Just a thought.
Benn Rosales
January 26, 2010 at 10:16 am
We shouldn’t be forced to suffer the bad service (or sub-par device) of a carrier and then be forced to reward a bad carrier with a fat fee to switch, there’s just something wrong with that logic even in a free market.
Melanie Wyne
January 26, 2010 at 5:57 pm
Looks like the FCC is listening. This story in a Capitol Hill paper talks about letters sent from the FCC to Google, AT&T, Spring, Nextel, T-Mobile and Verizon.
FCC digs deeper into cellphone fees
https://thehill.com/blogs/hillicon-valley/technology/78161-fcc-digs-deeper-into-cellphone-fees
This is the first I’ve heard that the contract for the new Nexus One charges two early termination fees, one to T-Mobile and one to Google. Seriously?
Lea
January 27, 2010 at 11:13 pm
Most of the problems of the consumers of wireless phones is the high bills, don’t know why it’s happening.