In a slickly named “Bill Shock” proceeding, the Federal Communications Commission proposed requiring wireless carriers to send customers alerts before they incur hefty overage fees. But the proceeding ignores how expertly and successfully customers use the wireless plans in the marketplace to manage their expected costs. It also ignores existing tools that provide to consumers by all of the wireless providers, as well as other application providers. Now a new study by Roger Entner of Recon Analytics shows that the incidence of bill shock is quite small and that consumers save money from these overages because they avoid paying for higher cost plans.
Wireless consumers choose prepaid or postpaid plans based on the use they expect. Prepaid customers pay per minute so there’s no allotment to stay within. Postpaid customers are very good at estimating prospective use. But calculations by Recon Analytics, which relies on a review of more than 78,000 consumer bills, shows that almost all customers buy the plan that’s best for their actual use, even when they incur overage charges. Recon’s analysis concludes that “99.7% of post-paid consumers are better off with their current price plans than they would have been had they chosen plans that would have eliminated their overages.” Entner writes:
Clearly, some consumers are engaging in an express trade-off between paying the occasional overage charge and upgrading to a plan that would eliminate the overage but cost them more over the long run.
This hard data show that only 3 customers out of every 1,000 should recalibrate their choice of plan. The other 997 customers chose very well and the plan worked for them. That’s a huge success. The Federal Communications Commission must be unaware that customers are so effective with their forecasts, and probably most customers don’t know they choose so well on their own behalf.
What customers know about the detail inside their monthly bill will shape their emotional response. Indeed, until customers inspect the bill to see what they didn’t know and what they forgot, some can be anxious. When they are reminded of downloads and apps they bought – that helps calm them. When they see the volume of data, texts, and e-mails they actually used – they begin to take accountability for the deviation from the size of bill they expected. But when they know they chose the right plan – that’s a big positive. Carriers should educate consumers on Recon Analytics’ work.
Many of us conduct a careful review of the monthly bill. It recaps the choices we made and the prices we agreed to at the time. If we want information fresher than month end, there are “apps for that.” Consumer Reports suggests using tools such as “check your use midway through the billing cycle via Settings on your phone” and Pageonce.com sells smart-phone apps that monitor usage and send you a text or e-mail warning about overages”
In summary, before new regulations are adopted, it’s important to identify costs that will show up in consumer prices and impact on competitive choices – but most of all, whether the proposed functionality is truly needed and/or already available. Consumer’s actual needs and experiences trump the slick naming of a proceeding.
Beyond parading a poetically “shocking” caption, what motivates the Federal Communications Commission to move this proceeding? The experience of wireless consumers and the tools already available to them undermine its legitimacy.
Alan Daley is a retired businessman living in South Carolina. He follows information technology from the consumer’s perspective.