Citing the challenges that many consumers face in monitoring wireless usage and the increasing trend of unexpected increases in monthly mobile bills - or "bill shock" - the Federal Communications Commission (the "FCC") has unanimously approved a Notice of Proposed Rulemaking ("NPRM") that would require all wireless service providers to provide customers with alerts both before and when they reach overage limits, or are about to incur international or other roaming charges. Depending upon the record developed from commenting parties, possible exemptions from these requirements may be granted by the FCC to prepaid carriers as well as smaller, regional or rural carriers. Interested parties should file initial comments by December 27, 2010; reply comments are due January 25, 2011.

Mandatory Usage Alerts

Drawing upon three recent wireless studies, the NPRM concludes that the prevalence of unexpected charges on consumer mobile bills, and the variation in usage alerts provided by service providers, requires the imposition of a mandatory industry customer alert standard. As proposed, mobile carriers would be required to provide customers with a text or voice alert when the customer's usage reaches 80% of the customer's monthly limit, again at 90% or 95%, and a final time when the usage limit is reached and begins to incur overage charges. A similar alert would be required to notify consumers when they are about to incur international or other roaming charges not covered by their monthly plans. These "baseline" requirements could be further supplemented by carriers at their option. The FCC seeks comment on the utility of providing multiple usage alerts to consumers against the potential burdens to wireless providers of implementing billing system upgrades and other automated customer notification systems, especially as these increased costs would impact smaller carriers.

Increased Disclosure of Usage Monitoring Tools

While many carriers currently offer tools that allow their customers to monitor their usage, to set pre-selected limits, and to check balances, the NPRM proposes that mobile providers be required to make "clear, conspicuous and ongoing disclosure" of any usage monitoring tools they offer, possibly directly on customer bills or in bill inserts. The FCC is also considering whether to require wireless carriers to offer users the means to set their own usage limits or opt-out of certain services at a given point.

Possible Exemption for Prepaid and Smaller Carriers

Noting the potential burden on smaller carriers of the required notifications, and the lack of any overage risk for pre-paid users, the FCC is considering exempting prepaid and small, regional or rural carriers from the bill shock rules. In particular, the FCC has expressed its desire to balance consumer protection against the costs and technical limitations that are associated with the new requirements, especially as they would apply to smaller carriers. Smaller carriers may also be eligible for an extended implementation timeframe should the new rules be applied to all carriers. Prepaid providers may be exempted from the general rules since, by definition, no unexpected overages are possible in a prepaid calling plan. However, consumer advocates are pressing the FCC to require prepaid carriers to provide similar usage alerts to users in order to assist consumers in managing their usage. Statements issued by Commissioners Baker and McDowell express concern that the potential costs imposed by this new rule might be out of proportion to consumer benefit. As such, smaller, rural and prepaid carriers may be able to successfully argue that a carve-out should be created to exempt them from these new requirements.