You have to hand it to Wisconsin Gov. Scott Walker.  He wants to push through his legislative agenda come hell or high water.  After creating a national controversy about his battles with the state’s public unions, Walker and his Republican colleagues are in a hurry to ram through their laundry list of legislative initiatives before Wisconsin voters have a chance to potentially recall a number of them.

Among Gov. Walker’s favorites — a telecommunications deregulation bill ghost-written by AT&T.  If such legislation seems familiar to you, it is.  It’s largely the same bill written by and for telecommunications companies that withered in the Democratic-controlled legislature last year.  Now the Republicans hold the majority, and they see measures to strip out rate protection for basic landline service, investigations of consumer complaints, and holding low-rated companies’ feet to the fire as “anti-business and anti-competitive.”

Somehow, bill proponents claim, all of this deregulation will inspire AT&T and other companies to wire rural Wisconsin for broadband service, which would be a remarkable feat considering they’ve not done so in other states where they’ve passed nearly-identical deregulation bills several years ago.  In fact, the bill eliminates any state oversight of broadband matters period, end of story.

Perhaps AT&T’s goodwill will bring broadband to the rural masses.  What are the chances?  Not good, considering the proposed legislation also allows AT&T the right to abandon providing basic telephone service in the same rural areas still waiting for broadband.  Your chances of getting DSL from AT&T are markedly diminished if the company decides to disconnect your phone line, permanently.

“What’s in it for the citizens of Wisconsin?” asked Rob Boelk, president of one Wisconsin chapter of the Communications Workers of America that represents AT&T workers. “If you want to give away the farm, what will you get in return?”

Why campaign contribution checks, of course.

AT&T and other telecommunications companies have donated heavily to legislators in the state, particularly those sponsoring their legislative wishlists.  Walker has made serving the interests of AT&T and the Wisconsin State Telecommunications Association one of his top priorities this spring.

AT&T is delighted.  In fact, they are so confident in their friendship with Walker and the Republican-controlled legislature, they are willing to throw their usual deregulation allies overboard in the bill.  Verizon and Sprint are fiercely opposing AT&T’s bill, despite promoting it in prior years.  At issue are new provisions requiring wireless and VoIP providers to pay higher government fees and also pay access charges for using other companies’ broadband networks (AT&T’s) to complete calls.

At a recent hearing, telecom company executives told members of the state Senate’s Information Technology Committee Senate Bill 13‘s deregulation would bring competitive balance in the industry, wider broadband access and create tens of thousands of jobs.

They didn’t bring any evidence to back up those claims, but bill sponsor Rich Zipperer, (R-Pewaukee) was ready to deliver AT&T’s talking points anyway.  He’s a helper.

“Today’s smart phone world is governed by rotary phone regulations,” Zipperer said. “We have to ensure our telecommunications infrastructure can keep up with market demands.”

Evidently that means upgrading wireless networks, something AT&T is preoccupied with these days judging from their television ads, while ignoring Wisconsin’s rural consumers.

In fact, when similar bills passed in other AT&T states, basic telephone service rates began increasing, sometimes repeatedly.  AT&T wants to push customers into pre-packaged bundles of services, so most of the savings go to those who take all of their telecommunications business to AT&T.  But if all you want (or can afford) is a basic telephone line, price increases are in your future.

Zipperer called copper wire landlines “ancient technology,” a relevant point if AT&T was delivering something better to every Wisconsin resident.  They are not.  Instead, while their landline network languishes in rural areas, the company is investing in U-verse upgrades in larger cities, setting up the potential for telecommunications have’s and have-no-longer’s.

Some of the accompanying documentation supporting the deregulation bill is also suspect.

We were particularly struck with broadband map data provided by bill proponents showing a bountiful supply of competitive choice for broadband service in Wisconsin. Ironically, their bill also bans the state from getting involved in broadband mapping in the future.  Those who control the maps control the debate over broadband availability.  As usual, provider-influenced maps promise service where none exists or comes with strings attached.

Providers equate wireless broadband as identical to DSL, fiber, and cable Internet service.  Because of that, customers even in “one-bar” towns can “enjoy” wireless broadband from AT&T and Verizon (as long as they keep it under 2-5GB a month with AT&T or under 10GB on Verizon’s mobile broadband plans.)  Sprint, which barely covers rural and suburban Wisconsin, is also considered a player.  So is T-Mobile, despite the fact AT&T wants to buy it.  For most of Wisconsin, the broadband reality is far different.  AT&T is the dominant provider of DSL and U-verse service, Time Warner Cable delivers most of the cable broadband.  In rural areas, a handful of Wireless ISPs deliver service to some areas, but many others have no access at all.

Robust competition?  No.  Will this bill change that?  No.

Deregulation only enhances the trend of landline providers like AT&T allowing their aging landline networks to go to pot.  Providing DSL or wireless broadband to rural Wisconsin requires the same return on investment with this bill as it does without, and these companies have refused to deliver either, using that reasoning, for years.

Despite common sense reality, the dollar-a-holler groups are working overtime with AT&T to push this bill.  Take “Wired Wisconsin,” a group particularly ‘burdened’ with its corporate sponsors (namely AT&T).  Wired Wisconsin is all for the deregulation bill, which they like to call “modernized telecom rules.”  The group’s leader Thad Nation, is a lobbyist who has run several campaigns promoting AT&T’s agenda, including the ironically-named Midwest Consumers for Choice and Competition, TV4Us and Technology for Ohio’s Tomorrow, all creatures of AT&T.

Nation’s lobbying firm explains how it works:

Getting government officials or bodies to do what you want isn’t easy. Government is inherently a slow, bureaucratic entity. When you want elected or appointed officials to change policy, you need a comprehensive plan – and the resources, relationships and quick-thinking to implement that plan.

We come to you with decades of experience in advocacy, moving legislators and engaging state agency leaders to action. Let us help you build and drive an aggressive advocacy agenda.

It’s a tough job, and Nation can be glad he isn’t doing it alone.  The Discovery Institute, which has turned pay-for-play research into an art form, was linked by Wired Wisconsin to “negate the myths and false assumptions” deregulation will bring.  They quote from Connected Nation, another industry connected group.  The only false assumption is that these people do this work for free and their results represent actual independent analysis.

Even if one were to believe AT&T’s claims, fact-checking them is just a few states away, in places like Arkansas, Kansas, or Texas.  None of them are bastions of rural broadband.  They weren’t before AT&T’s lobbying circus came to town and they still aren’t after they left.

Boston Mayor Thomas Menino has problems with Comcast.  The cable operator, long a dominant player in the city of Boston, has been raising basic cable prices for the last several years, and the mayor’s office has had enough.  This week Menino filed a petition asking the Federal Communications Commission to give the city “emergency control” over the price of basic cable service in Boston — the only control permitted in the largely deregulated cable television marketplace.

Menino waved a study done at the behest of the city showing residents were paying substantially higher prices for the lowest level of service from Comcast.  Basic Service, which includes 37 local over the air stations and a handful of shopping and public access channels costs $15.80 inside city limits — up from $9.05 in 2009.  In nearby Cambridge, the same service costs $7.30 a month.  What’s the difference?  Cable rates are completely deregulated in the city, but smaller communities around Boston lack sufficient meaningful competition, so they are permitted by law to continue regulating rates for the lowest tier: Basic Service.

Now Menino wants those rates brought back under control for the benefit of seniors and low income residents, among the 10,000-15,000 local homes that subscribe to the economy service.

It’s just the latest challenge for Boston, which is among a few cities along the coast of the northeastern United States not benefiting from aggressive broadband and video competition between the phone and cable company.  Just over 200 miles away, metropolitan New York and the bedroom communities in that state, as well as New Jersey and Connecticut, have access to super fast broadband from Verizon FiOS, Time Warner Cable, Cablevision, and Comcast — the latter predominately serving greater Philadelphia.

Boston has been bypassed for Verizon FiOS, is ignored by other potential cable competitors, and is stuck with poor-performing cable overbuilder – RCN, which has focused most of its efforts on multi-dwelling apartment and condo units in the city.  The rest of Boston gets ‘take it or leave it’ service from Comcast or DSL from Verizon.

Comcast was quick to respond to Menino’s call for reregulation, noting they provide $5 senior discounts for their cable customers and offer cheaper service than the alternatives — $17.50 a month from RCN or between $30-35 for promotions from DirecTV and DISH Satellite.

Menino’s dealings with telecommunications companies in Boston have run hot and cold for years.  In February, Menino appeared with Comcast senior vice president Steve Hackley to celebrate the opening of a Digital Connectors program for up to 2,800 low income households, paid for by federal stimulus grant money.  Under the program, students who complete computer training courses receive discounted Comcast Internet service for $10.95 a month for the first year and $15.95 for the second year.

Menino’s office has often been a watchdog when it comes to Comcast fulfilling its franchise obligations, and the city had high hopes competition from RCN would extend a choice of cable providers to most city residents.  That has not happened.

The city’s other telecommunications provider, Verizon, has been in contention with the city for several years.  The trouble began in 2007 when Menino declared war on property tax exemptions for utility poles dating back to 1915, granted to telecom companies like Verizon.  Four years later, that battle has culminated in Verizon literally wiring its fiber optic FiOS service around the city of Boston, refusing to deliver service inside it.

The promise of Verizon fiber has often gone unfulfilled or delayed in many larger cities, subject to bureaucratic delays not experienced in smaller communities.  Some towns and villages in Massachusetts signed franchise agreements just a few months after the company came knocking.

One local official, not authorized to speak publicly on the matter, told Stop the Cap! many communities welcomed Verizon’s fiber optic initiative with open arms.

“You have to understand there is a different mentality among government officials in smaller towns than there is among larger cities,” the official tells us. “In our town of 35,000 when Verizon offered to wire competitive service in our area, we wanted to know where to sign and when they could get started.”

The official says the local government was concerned about making sure Verizon repaired any damage to local infrastructure, abided by local zoning rules, and guaranteed they would not bypass parts of the town.  Negotiators also fought for funding to upgrade equipment for the community’s public access channels, but never went into the negotiations thinking about how much they could extract from the phone company.

“In larger cities in this state, there is a definite mentality that Verizon represents a golden goose ready and willing to lay golden eggs in return for franchise agreements,” the official told us.  “Maybe that is true, but when you are in a smaller town, you recognize the degree of willingness to invest capital to tear out old wires and replace them with fiber is far less here than a city like Boston, which has the potential of many more customers.”

Boston, like other large cities, prepared for protracted negotiations with the phone company over the new fiber service.  At the same time, Mayor Menino infuriated Verizon when he won his property tax lawsuit against the company, collecting $5 million in tax payments that one city official rubbed in.

• Comcast may be forced to reduce their Basic Service rate, but nothing prevents them from increasing Digital Service cable rates to make up the difference;
• RCN’s network has languished, providing competitive choice to just 15,000 local residents.  Comcast serves at least 170,000;
• Verizon has no plans to offer FiOS in the city indefinitely;
• Menino’s victory claim that Verizon should pay its fair share in property taxes seems less victorious today as the phone company began passing on the new taxes to ratepayers as a “Massachusetts Property Tax Recovery Surcharge” in March, 2010.
• No other competitor has appeared on the horizon willing to take on Comcast in the city of Boston.

In response to one of our pieces today about AT&T, I replied to a reader’s question about why providers are not subject to oversight when it comes to their traffic meters.  The answer is, providers want all of the benefits their monopoly/duopoly status deliver, with none of the oversight and regulation that is supposed to come along with the deal.

When I am asked by reporters if our group would support the concept of usage-based billing if prices were lower, I know some education is in order before answering.

Frankly, what providers define as “usage-based billing” isn’t really usage-based at all.  It’s simply a double-tiered pricing scheme.  Consumers already pay for broadband service based on speed, which informally includes a usage limit of sorts — your maximum amount of consumption is governed by the speed of the connection you purchase.  Not satisfied with the enormous profits already earned selling broadband that way, some companies want to monetize Internet use by inserting usage limits or inserting a new tier of service based on usage allowances, which generally increase with higher-priced levels of service.

When broadband providers attempt to use the argument consumers already pay for usage of essential services like water, gas, and electricity, they are trying to conflate broadband traffic much the same way.  But apart from the fact broadband carries no generation costs and represents a limitless resource, the “fairness” argument falls apart when you consider the provider is effectively double-charging customers by implementing a use-based pricing scheme on top of a speed-based pricing model.

The equivalent would be charging you today’s prices for gas, electric, or water service, but then adding a surcharge or tax based on how fast or when you are using the service. Here’s the kicker: they are not lowering the price of their speed-based tiers, they are simply layering a use tax on top.  In short, it extra-bills customers for what they already paid for.

A true usage-based billing scheme would carry a monthly minimum charge for infrastructure costs (maintenance of the delivery system, meter measurements, etc.) and a traffic cost.  In a regulated utility environment, most providers are required to sell service at a price verified by regulators to cover costs and a small profit.  No gouging.  No provider dares sell service under these terms because it would dramatically slash the cost most consumers pay for the service.  Instead, they sell “usage tiers” that include arbitrary “allowances” that provide no rollover or discount for unused traffic.

Imagine what would happen if AT&T or Comcast sold broadband like electricity?

CartelCountry Broadband & TV

From coast to coast, we put the cartel in cable!

• Monthly Minimum Charge: $9.95
• Broadband traffic delivery $0.05/GB
• Amount consumed 20GB = $1.00

• Payment Due: $10.95

Thank you for your prior payment of $9.95. We hope you enjoyed your vacation. No broadband traffic consumed equals no broadband traffic charges.

That is why there is no such thing as true usage-based billing. Providers wouldn’t dare because they would lose the enormous income they earn from those “98 percent” of “light users” they keep suggesting are in the majority.

Even “heavy users” probably would not object to this kind of pricing. A 500GB per month user would pay $34.95 at these prices, and providers would STILL be making a profit.

This morning’s announced deal of a merger between AT&T and T-Mobile is what antitrust rules were made to prevent.  This bold merger would not have even been attempted had the two companies believed they could not get it past supine regulators and members of Congress who receive substantial contributions from AT&T.

Ordinary consumers can see right through AT&T’s business plans, so why can’t our regulators and policymakers?  In a word, money.

The FCC’s own National Broadband Plan delivers clear warnings that the growing concentration in the wireless industry will hamper better broadband in the United States, not enhance it.  Reduced consumer choice and competition takes the pressure off carriers to innovate, expand, and keep wireless costs under control.

Reducing the number of players on the field delivers countless benefits to carriers and their shareholders.  But for consumers, there is nothing but a few promised spoonfuls of sugar to help the industry’s agenda go down — with vague promises of better rural service, faster wireless data, and new handsets.

In a truly-competitive marketplace, Washington regulators need not exact promises of better service from mega-sized carriers: the much-vaunted “free market” would deliver them naturally, as competitors invest and innovate to succeed.  But that kind of market is increasingly disappearing with every merger.

Nowadays, officials at the FCC and Justice Department are willing to accept deals if they promise some token bone-throwing, at least until the company lobbyists inevitably manage to get those conditions discarded during the next round of deregulation — cutting away rules that “tie the hands” of companies picking your pockets.

Money makes the impossible very possible, and AT&T intends to spend plenty to earn plenty more down the road.  Let’s review how the game will be played, and what you can do to stop it.

The “Free Market” Crowd Sells Out

When the chorus of capitalism capitulates on the most important formula for success in a deregulated marketplace — robust competition on a level-playing field, we know there is a problem.  Take Randolph May.  He works for the free market think tank Free State Foundation.  Watch what happens when even the most ardent supporter of ‘letting the marketplace sort things out’ twists and turns around admitting America is facing a future duopoly in wireless:

“In an ‘idealized’ marketplace, the more competitors the better. But the telecom marketplace is not an idealized market. It is one that requires huge ongoing capital investments to build broadband networks that deliver ever more bandwidth for the ever more bandwidth-intensive, innovative services consumers are demanding,” he says.  “My preliminary sense is that the benefits from the proposed merger, with the promise of enhanced 4G network capabilities implemented more quickly than otherwise would be the case, outweigh the costs. Even after the merger, the wireless market should remain effectively competitive with the companies that remain.”

That’s a remarkable admission for someone who normally argues that marketplace fundamentals are more important than individual players.

May is willing to sell a robust competitive marketplace down the river in return for 4G — a standard AT&T is hurrying to bring to its customers threatening to depart for better service elsewhere.  With this deal, disgruntled customers will have one fewer choice to turn to for service.

Make no mistake: a free, unregulated wireless marketplace requires more than two national carriers and a much-smaller third (Sprint) to deliver real competition.

The Dollar-A-Holler Phoney Baloney Astroturf Groups

AT&T will waste no time trotting out comments from non-profit groups essentially on their payroll who will peddle filings with regulators promoting AT&T’s business agenda in return for substantial sized donation checks to their causes.  The usual suspects, which include groups serving minority communities, will tout the “wonderful things” the deal will bring to their constituencies.

Already out this morning is this curious remark picked up by Broadcasting & Cable from Debra Berlyn, who claims to represent consumers as part of a group called the Consumer Awareness Project:

“Wireless acquisitions over the course of the past decade have not led to price increases for consumers and, in fact, the statistics show that prices have declined during this period. While some consumer voices have focused on the loss of a wireless competitor in relation to AT&T’s recently announced plans to acquire T-Mobile USA, the news for consumers should be seen in another light with a focus on the benefits that this merger can bring to consumers across the U.S.”

Perhaps the first goal of any group trying to make consumers aware of anything is to actually have a website associated with your group.  The “Consumer Awareness Project” forgot this important first step, but we eventually found the “group” using a re-purposed web address, “consumerprivacyawareness.org,” and note they have only recently become significantly active on this issue, now peddling AT&T’s agenda with gobbledygook.

When Berlyn isn’t pounding out prose to benefit AT&T, she is making guest appearances in Comcast’s corporate blog or being a favorite source of industry-connected groups like the nation’s largest broadband astroturf effort, Broadband for America.

In fact, after some digging, one learns there are no actual consumers involved with the “Consumer Awareness Project.”  The entire affair is actually a project of a Washington, D.C., lobbying-consultancy firm — Consumer Policy Solutions, which counts among its services:

• Federal advocacy: Legislative and regulatory advocacy work before Congress, federal agencies and the administration.
• State and local advocacy: Policy development and implementation and grassroots mobilization.

That is the very definition of interest group “astroturf.”  But my favorite section of this company’s website is the promise paying clients will get Berlyn’s experience “in communicating complex language and issues into easily understandable, applicable messages for consumers.”

Such as: AT&T’s merger with T-Mobile is good for consumers, even if it raises prices and reduces competition.

I’m sold.

The Cowardly Lion & A Myopic Justice Department

The first hurdle this deal will need to overcome is among Washington regulators, most of whom are either way over their heads understanding the implications of super-sized mergers like this or are simply terrified of going out on a limb with a multi-billion dollar company that can create headaches for your agency in Congress.

AT&T will sell this deal within a very limited context of the deal itself, and urge regulators to ignore “emotional” issues about the increasingly concentrated wireless marketplace.  Verizon did much the same with its acquisition of Alltel — urging regulators to ignore the fact they were removing a player in the market and focus instead on the benefits Verizon’s size and scope could bring to existing Alltel customers.  Of course, in many areas Alltel served, customers were free to do that themselves simply by signing up for Verizon service.

Dan Frommer, a senior staff writer at Business Insider, delivers a TripTik outlining AT&T’s roadmap to deal approval:

“AT&T believes its experience with regulatory review has given it a good picture of what’s realistic and what isn’t from an approval standpoint, and believes it can frame the deal in a way that won’t be rejected,” he writes.  “AT&T says the Feds are looking at “the facts” — hinting that they aren’t acting based on emotions or politics. Though, no doubt, there will be plenty of jockeying in the press and among lobbyists from those on both sides of the deal.”

But Frommer wades in too deep and drowns his credibility claiming the combination of some of the largest wireless carriers in the country still leave plenty of competitors.  Besides Verizon, there is just a single national player of consequence remaining – Sprint.  MetroPCS and Cricket deliver service in urban areas in selected cities. US Cellular, Cellular South, and several others deliver service to an even smaller number of communities, entirely dependent on large carriers for roaming coverage.

The Justice Department’s typical solution to antitrust concerns is to force limited concessions like divestiture of assets in particularly concentrated markets.  In most cases, companies agree because those assets are often redundant and would be sold anyway, or cover such a limited area as to be inconsequential to the greater deal.  Former Alltel customers found themselves traded first to Verizon and then divested away to AT&T.

Most of the customers divested away from T-Mobile’s future with AT&T will likely end up switched to Verizon, hardly a success story for increased competition.

FCC lawyers will likely review this transaction with a narrow scope, too.  Instead of contemplating the implications of the inevitable duopoly that could result, the FCC will likely find itself negotiating over individual details of the deal without considering an outright rejection of it.

At the FCC, Julius Genachowski’s performance as a regulator has been nothing short of a disaster, pleasing almost nobody in the process.  His “cowardly lion” approach to regulation has delivered rhetoric without substance and a whole lot of broken promises.  Genachowski has proven to be unable to stand up to the companies he is tasked with regulating.  With two Republican commissioners likely to favor the deal and Michael Copps almost certainly in opposition, it will be up to Julius Genachowski and Mignon Clyburn to vote this deal up or down.

But regulators are also responsive to Congressional pressure and dramatic backlash by consumers, such as what happened just a few years ago when big media companies lobbied to relax media ownership rules.  When consumers (and voters) revolt, regulators will change their tune… and fast.

What You Can Do

Consumers can make a difference in what comes next for T-Mobile and AT&T.  The first step is to make this an issue with your member of Congress and two senators.  Let them know you have profound concerns about another huge wireless merger.

There is simply no tangible benefit that can outweigh the loss of another important competitor in the American wireless marketplace.

AT&T’s bottom-rated service will not become any better acquiring the second-to-last rated service.  The company must invest in its network to compete, not simply pick off competitors to save money.  The loss of T-Mobile would mean only three national carriers, and it is highly unlikely Sprint would be able to withstand pressures on Wall Street to merge themselves away, probably to Verizon.

Tell your elected officials the AT&T/T-Mobile deal is a consumer nightmare and should not be approved under any circumstances.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Glenchur Says Regulatory Risk Substantial for ATT 3-21-11.mp4[/flv]

The always optimistic Bloomberg News says AT&T’s deal could still get past regulators, but there is a substantial risk as well.  Consumers can help make that risk unsustainable by telling the Obama Administration and Congress better broadband does not come from a duopoly, no matter how well-intentioned.  (4 minutes)

Although more than 30 million Americans have experienced getting bill shocked with a cell phone bill loaded with overlimit fees and penalties, a wireless industry group says 19 out of 20 of these customers are economically better off getting those high bills, and any plan to notify customers in advance when their usage limits are reached would “harm innovation, limit consumer choice, and impair the potential for competitive differentiation.”

These incredible conclusions come in a filing from the Wireless Communications Association International, an industry group funded by AT&T, Sprint, Clearwire, and Time Warner Cable.

The WCAI just released a new white paper claiming Americans facing Internet Overcharging from usage-capped wireless data plans are actually saving money when carriers impose overlimit fees.  Their reasoning for this new math?  You might overpay for a usage plan that delivers a higher usage allowance than you need.

The wireless industry is heavily lobbying the Federal Communications Commission to stop the agency from imposing new rules to deal with the bill shock problem.  The FCC favors an advance warning system, which would force providers to notify customers by e-mail or text message when they near their usage allowance.  Letting customers know when they are about to pay enormous penalty usage rates before they are reflected on a future bill could save Americans millions annually.

The WCAI-funded study says consumers don’t need the agency’s help, going as far as to claim the majority of Americans are already well aware they are exceeding their plan limits, and are better off paying short-term penalties.

“The FCC is weighing new regulations that it says will eliminate so-called ‘bill shock,’ but this analysis makes plain that consumers don’t need regulators’ help,” WCAI President Fred Campbell said. “If you give them the right information, they know how to pick the best deal.”

But critics charge providers fighting this provision want to hide the most basic information of all — when consumers are on the verge of running up huge bills.

“The FCC’s effort on bill shock is long overdue in a wireless environment where today’s heavy user is tomorrow’s average user, and where the wireless Web is more and more important to commerce and to society,” Free Press Policy Counsel M. Chris Riley said. “It is vital that consumers are empowered with the information and the tools needed to make decisions about their own wireless usage so they can avoid outrageous charges.”

The WCAI white paper suggests that if providers are forced to issue advance warnings, companies may have to raise rates to compensate.  The paper’s author suggests consumers would find that worse than just paying the bills with overlimit fees:

The Nielsen Study indicates that many consumers incurring overages do so willfully and repeatedly. Their behavior suggests it is unlikely that usage notifications or usage controls would change their behavior because they are either indifferent to the overage charges or have determined that the occasional overage charge is more economical for them than choosing a more expensive plan. Notwithstanding that these overage-incurring consumers may not want or need additional notifications or controls, the adoption of the FCC‘s regulatory proposals would impose on all consumers the financial burden of ―protecting this one small group.

The WCAI dismisses the huge number of complaints that arrive at the FCC each year over this issue as simply “opinions” from consumers, not nearly as credible as their own analysis of actual customer bills.

The paper even argues with the definition of ” bill shock,” suggesting that the nearly 7 percent of wireless customers who blow past their voice allowances only face an average penalty of around $18.  That is “surprising or inconvenient; but it is unlikely to be shocking.”

The WCAI study admits the dollar amounts for data-usage bill shock can be considerably higher, sometimes $100 or more.  The charges occur more frequently, too — impacting nearly 18 percent of customers.  But the group dismisses it as a rare occurrence anyway and that carriers will issue credits for astronomical surprise bills.  Besides, the paper concludes, when it was written most consumers were enrolled in increasingly-rare “unlimited use” plans.  Since the raw data was collected largely before AT&T abandoned its flat rate data pricing in 2010, statistics regarding bill shock for AT&T’s new limited use plans were not available.  The white paper inaccurately dismisses that major rate change, claiming it “had no impact on the data analyzed.”  That leaves readers believing the rate changes made no difference.

But the group’s logic completely derails when it concludes there are “consumer benefits to overages.”  Namely, providers “simplified” rate plans to reduce choice which was causing “customer confusion.”  The paper concludes “there is substantial evidence that consumers make deliberate choices to incur overages rather than upgrading to a more expensive monthly rate plan, and that they overwhelmingly benefit from such choices.”

The white paper ignores several important factors:

1. The diminishing number of unlimited access plans which give consumers a way to avoid overlimit fees, especially for data;
2. Carriers themselves arbitrarily set the arbitrary rules for the playing field – calling plan allowances, data allowances, limits, overlimit fees and penalties, and roaming rates;
3. The study ignores the record number of consumers complaining about surprising bills and the true economic impact providing simple text message or e-mailed notifications would have, and doesn’t give any reason why a consumer can’t simply shut off services once limits are reached, to prevent excess charges.

The white paper notes that 736,000 Americans annually are getting surprisingly high bills.  Assuming they are an average of $20 higher than anticipated, that represents nearly $15 million dollars in extra revenue for carriers — ample reason to hire dollar-a-holler groups to produce nonsensical reports that conclude a system to notify consumers they are about to be one of those 736,000 customers is actually bad for them and their wallets.

The FCC’s Consumer Task Force recommends these strategies to avoid bill shock:

•    Understand your calling pattern for making voice calls, and ask your carrier for a plan that would be best for your kind of use.
•    If you are an infrequent phone user, consider a pre-paid plan. Because you “pre-pay” for all your minutes, these plans make it impossible to go over your set limit.
•    Understand what your roaming charges are and where you will incur them.
•    Understand your options for data and text plans.
•    If you are going to use your mobile phone outside the U.S. for voice, email, and other services, make certain to find out beforehand what charges may apply. (Visit Wireless World Travel for more information about using a wireless phone in other countries.)
•    Ask how your carrier can help you avoid bill shock – with phone or text alerts, by letting you monitor your account online, or by giving you other information.
•    If you have tried to resolve a billing issue with your carrier and can not reach an acceptable resolution, complain to the FCC. You can call our Consumer Center, toll-free, at 1-888-CALL FCC (1-888-225-5322), or file a complaint here.

To learn more, read the FCC’s White Paper on Bill Shock.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/FCC Bill Shock.flv[/flv]

The Federal Communications Commission discusses the problem of “bill shock.”  (1 minute)