Consumer Advocates Win Wireless Truth-In-Billing Suit

The 11th Circuit Court of Appeals released a decision Monday regarding a “Truth-in-Billing” lawsuit, saying that individual states do have the right to examine cell phone bills, with the intent of regulating the billing practices of this somewhat unregulated industry.

You may have noticed when you received your first cell phone bill that it was a bit larger—perhaps even quite a bit larger—than the rate you were promised in an advertisement or by a sales representative. This is because the base rate for cell phone service does not include so-called “line items” on your bill, which can raise the overall fees for wireless service by $5, $10, or potentially even more, per month. What is a line item? Well, just as on your land-line phone, cell phone bills include the FCC Universal Fee: “The FCC Universal Fee is mandated by the FCC and assessed against interstate and international long distance tolls, including calling card and Phone Me tolls. The fee is to reduce telephone costs for low-income persons, to subsidize the cost of connecting schools, libraries and rural hospitals to the Internet, and to lower the cost of rural telephone service.” (workingassets.com) Also, any local taxes levied on cell phone service would be included as line items. These specialized cell phone fee or tax line items are necessary, they should be listed, and are not the problem.

The problem is that some wireless companies have also been listing basic costs of doing business, such as their own property tax, in the form of a line item, thus making their advertised basic rate seem smaller. These normal costs should be included upfront in the rates, not hidden from customers in a line item. When companies include what should be normalized costs as add-on line items, consumers have a harder time making comparisons to determine which company has the better-priced service.

So NASUCA (the National Association of State Utility Consumer Advocates) filed a Petition asking the FCC (the Federal Communications Commission) to prohibit cell phone companies “from imposing any separate line item or surcharge on a customer’s bill that was not mandated or authorized by federal, state or local law.” But the FCC not only refused this Petition, they went one step further and said that states could not prohibit or regulate the usage of line items on wireless bills. NASUCA then filed suit against the FCC, claiming that the Agency had overstepped its authority (since the 1996 Telecommunications Act gave the FCC authority over “rates” but allowed states to regulate “other terms and conditions”), and that its actions improperly protected the industry over the interests of consumers.

This week’s ruling supports NASUCA’s analysis, and will allow states to examine cell phone companies’ billing practices, with an eye to regulating them and making the bills more easily understood by customers. This regulation will make comparison shopping among cell phone service companies more helpful, since companies will not be able to hide basic costs in line items.

Locally, this ruling means that, should the Oregon Legislature wish to pursue a Truth-In-Billing law that applies to wireless companies, they now have that option. Is cell phone billing a problem for you? If you have an issue with your cell phone company’s billing practices, shoot us an email, and let us know.

NASUCA (of which CUB is a member) represents utility consumers on a national level as we do on the state level here in Oregon. We congratulate them on their victory in this case. Somebody has to keep an eye on things at the national level, and we’re glad that NASUCA is doing such a good job of it. Keep it up!

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