THE BLOG
05/06/2013 04:55 pm ET Updated Jul 06, 2013

Tom Wheeler Should Not Be the Next FCC Chairman: Do You Like Your Wireless Bills?

Sen. Jay Rockefeller (D-W.Va.) on Tom Wheeler: "A lobbyist is a lobbyist."

"Tom Wheeler, Former Lobbyist and Obama Loyalist..." April 16, 2013 | TIME Magazine

The FCC oversees and makes regulations for most communications in America today, including our wireline, wireless, broadband, Internet, cable, and satellite services, not to mention the media you see.

Thomas E. Wheeler is the heir apparent to the departing FCC Chairman Julius Genachowski.

Do You Like Your Wireless Charges?

From 1992 through 2004 -- 12 years -- Tom Wheeler was president and CEO of the Cellular Telecom and Internet Association -- commonly known as "CTIA, the Wireless Association."

This brings up the issue -- what did he do for your wireless services today that started during these 14 years and what will he do if he becomes the new FCC chairman?

The CTIA works for its clients, AT&T Wireless, Verizon Wireless and the other wireless companies; their position was Wheeler's position during his 14-year tenure. The wireless companies fought to keep phone bills unreadable, add dubious made-up charges on your bills, and even lobbied to not be held accountable if their customer representative misleads you, among other items. From excessive early termination fees to not being able to take the companies to court if they harm you, Tom Wheeler's CTIA is on record with filings at the FCC to protect the interests of the wireless companies -- not your interests.

If Wheeler is nominated to be FCC chairman he would have to take on his previous clients, but the likelihood of this is that you have a better chance of winning the lottery -- twice.

Today, there are lots of problems with wireless services. The FCC claims that one in six have been hit with "Phone Bill Shock."

The FCC writes:

A recent FCC Survey indicated that 30 million Americans -- or one in six mobile users -- have experienced "bill shock," a sudden and unexpected increase in monthly bills that is not caused by a change in service plans. Bill shock can occur for a number of reasons including unclear or misunderstood advertising, unanticipated roaming or data charges, and other problems.

Meanwhile, in March 2013, Senator Rockefeller wrote a letter to the large wireless carriers about billions being lost to 'cramming', i.e.;, placing unauthorized charges on customers bills. His press release states:

Consumers have already lost billions of dollars to cramming on their wireline telephone bills. Chairman Rockefeller wrote the same wireless companies -- AT&T, Verizon Wireless, Sprint, and T-Mobile -- in June 2012 about the growing incidence of cramming on wireless telephone bills.

The CTIA will always take out stats about how many people have wireless phones, and we can debate whether there is competition or whether wireless services are replacing wired services. But when you ask people about their wireless service, many times they start with -- 'You won't be believe what they did to me!'.

In fact, a recent study claims that over 50 percent of America is paying over $100.00 a month -- and almost ¼ of households pay more for wireless than for groceries.

Let's explore some facts about the current wireless markets and as told by the CTIA during the tenure of Tom Wheeler as president & CEO of the association.

Your Friendly Wireless Association Is Out to Get You.

Wireless Phone Bills Are Accurate and Readable -- Trust the CTIA.

In 2004, the CTIA was on a "Truth in Billing" panel at a meeting of the FCC Consumer Advisory Committee. Michael Altschul, Senior Vice President and General Counsel, Cellular Telecom and Internet Association (CTIA):

We believe that the guidelines and competition have ensured that consumers have the information they need, both to make informed choices and to understand the elements of their bill. Specifically, as the commission had hoped in the 1999 truth in billing order, the wireless carriers have adopted and implemented a voluntary consumer code that goes beyond the truth in billing rules adopted by the commission.

What do you think about your wireless bills?

Adding Made-Up Wireless Charges on the Bill is OK.

In March 2004, The National Association of Regulatory Utility Consumer Advocates (NASUCA) filed a complaint about "concocted charges" on the bill.

In the last few years, wireline and wireless carriers have concocted line item charges, fees, and surcharges, purporting to recover all manner of "regulatory," "administrative," or "government-mandated" costs, but which do nothing more than soak consumers for the carriers' ordinary operating costs. The number of carriers imposing such charges, the number of charges being imposed, and the amount of revenue recovered through such line items suffices to demonstrate the magnitude of the problem. Though the carriers' monthly line items differ in terms of what they are called and what the carriers claim to recover through the charges, they are alike in many respects. All are misleading; some are downright deceptive.

Just go to your current wireless bill and examine it closely. You'll see something like the "Cost Recovery Fee" or an "Administrative Fee." (You'll also find the same types of charges on your long-distance bill or your cable bill.) Instead of including the cost of basic business expenses into the cost of the service, they hide additional revenues in an additional fee in the taxes, fees and surcharges section. These fees are not included in the advertised price for the service but add 20-50 percent to the bill when you get it. It's part of that 'fine print.'

AT&T Wireless currently adds additional fees (which were increased as of May 2013), as two different fees -- a "Regulatory Cost Recovery Charge" at $0.45 and an Administrative Fee of $0.61 (for New York).

AT&T had 107 million wireless customers at the end of 2012, which means that they are collecting, from just these two additional fees, $113 million extra a month -- $1.4 billion dollars annually. Ironically, in some states many additional fees are even taxed state, local and other taxes.

The CTIA response was:

"NASUCA's petition would unlawfully censor truthful non-misleading speech. Carriers simply have no better way of communicating with their customers about the true regulatory costs of their services than through bills. NASUCA's petition would entirely foreclose that avenue of communication.

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And the CTIA believes there are plenty of other groups and media who will explain the charges on the bills to customers. They write:

However, consumers have the tools they need to make appropriate comparisons about the costs of different carriers' services. The media regularly reports on wireless carrier service plans and includes these line item costs in their comparisons... Ultimately, so long as carriers provide information about surcharges and fees -- as do all the carriers who subscribe to CTIA's Consumer Code -- consumers have the tools they need to make appropriate comparisons about the costs of different service offerings.

CTIA: Let the Wireless Company Staff Say What They Want Without Holding the Companies Accountable.

Over the last decade and during Wheeler's tenure, the CTIA filed a comments that the wireless carriers should not be held accountable if their staff or sales organizations misled or made inaccurate statements, which is the law on the wireline side.

CTIA opposes the Commission's proposal to regulate carriers' customer service representatives ("CSRs") under the billing regulations it adopts in accordance with Title II. Specifically, CTIA opposes the Commission's proposal to hold carriers liable for a Section 201(b) violation if CSRs provide inaccurate and/or misleading information concerning Universal Service and other line item charges.

*(Title II and Section 201(b) are part of the telecommunications regulation, as opposed to wireless regulations.)

Wireless Complaints Should Be Handled by the FCC or 'Arbitrated' -- Not Taken to Court.

The CTIA has continuously pushed to have the wireless company contract protect the wireless companies from any customer legal actions and as of today a customer cannot take the wireless companies to court, even if the problem impacts tens of millions of customers. Their approach -- let it be arbitrated or let the overworked FCC do this:

Such complaints could be pursued via the formal complaint procedures found in Section 208 of the Communications Act, or through alternative dispute resolution mechanisms such as the CTIA-sponsored wireless industry arbitration rules administered by the American Arbitration Association. By handling all consumer complaints under its billing rules, the Commission will also ensure that consumers have access to an efficient, uniform complaint resolution process.

Care About the Very Small Wireless Companies? -- Nah.

In 2006, Teletruth filed a complaint with the FCC, outlining how the very large wireless companies, including AT&T and Verizon, were able to receive about $8 billion dollars in wireless spectrum that was supposed to be reserved for 'very small businesses.' And it appears this practice has been going on over the entire history of the U.S. wireless spectrum auctions, it appears.

By the end of 2012, we had tracked an additional $12 billion in very small business spectrum that had ended in the large wireless companies' control, bringing the total of what we found to $20 billion, though we expect there is more spectrum we didn't count.

There are multiple harms to the public. First, the government lost billions as the large companies gamed the regulatory system to get heavily discounted very small wireless spectrum. Moreover, this is a way to remove the small competitive wireless companies' ability to win spectrum as the 'designated entities' as they are known, have the large companies as deep pockets.

The FCC attempted to close down this practice. Then-Commissioner Adelstein on April 25, 2006 wrote: "We missed a real opportunity to shut down what almost everyone recognizes has the potential for the largest abuse of our Designated Entity program: giant wireless companies using false fronts to get spectrum on the cheap."

The CTIA has never seriously questioned this manipulation of the 'very small business' wireless spectrum and, in fact, endorsed the large companies' maneuvering.

In 2006, the CTIA filed comments at the FCC:

CTIA opposes the tentative conclusion in the that the Commission should restrict award of designated entity ("DE") benefits to otherwise qualified entities with a "material relationship" with a "large in-region incumbent wireless service provider." The Commission's proposal discriminates against large, in-market incumbent wireless providers and the designated entities that would partner with those carriers; while favoring their wireless, wireline, and non-communications competitors.

Terminate This -- Excessive Early Termination Fees Are Important, Says the CTIA.

Probably the thing that annoys the majority of wireless customers are the early termination fees, which can be $175.00-$350.00. While some of this is justified when the cost of the phone has been added to the cost of the service, it is clear that with two-year contracts and where the companies write the contracts, the customers can get seriously hosed -- especially when the FCC has found that the majority don't know about or read their bills, much less the fine print.

The FCC examined customer awareness and writes:

To better understand consumer experience with early termination fees, ETFs, the FCC did a survey that queried consumers about (ETFs) for cell phone and home broadband service. Only 36 percent of cell phone customers who are familiar with their bills said that the service providers' bills included "very clear" information on ETFs. Even when consumers knew they would incur a fee if they tried to terminate service, many did not know what the fee would be.

So much for 'accurate bills." What did the FCC do about this? They wrote letters to the carriers... whoopee. And we should point out that early termination fees have been on bills during the time of Wheeler's stint at the CTIA. A legal action in California went after "improperly assessed early termination fees," starting in 2000, during Wheeler's CTIA days, so this practice is not something recent.

Here is a list of what the wireless carriers charge today -- per phone or device.

Wheeler Should Not Become the Next FCC Chairman.

What can we make of all of this? There are those who will argue that Wheeler was just doing his job and that the CTIA is not Wheeler. Others will argue that this was a long time ago. But, the reality is, he chose to work with the carriers and defend them and there's no public statement we found that he opposed the CTIA's position on any of this.

More importantly, what would he do as FCC Chairman, where he is not supposed to favor the industry over customers? Will he:

  • Demand readable phone bills?
  • Help to remove the made-up fees that litter wireline and wireless bills?
  • Defend the rights of the very small businesses and make sure that the large players are not involved?
  • Fight to give back customers' rights to take the wireless companies to court over overcharging and malfeasance?
  • And what's his plan to stop bill shock, cramming and solve early termination fees?

While broadband and the Internet may be important -- with a few hundred million wireless accounts, do we really want to see how the former president and CEO of the wireless association is going to handle these issues and others, like putting an end to excessive 'termination fees' or unlocking wireless phones or...