It’s good that wireless companies have agreed to warn customers when they are about to exceed monthly limits on voice, text or data usage or incur international roaming fees, which can result in thousands of dollars of extra charges. But consumers need more protection. The voluntary agreement announced between the main wireless industry group and the Federal Communications Commission only scratches the surface of troublesome pricing practices that have flourished in an industry that faces insufficient competition. The deal imposes no penalties on the wireless companies for violations. It might work, but the F. C. C. must convince carriers that violations will lead to real regulations with bite. Carriers often fail to respond to complaints without intervention from government regulators. For years,Verizon Wireless incorrectly billed millions of customers for data access that they did not use. Last year, the company publicly acknowledged the problem and agreed to pay $53 million in refunds and a $25 million settlement with the F. C. C. —after the agency opened an investigation. The wireless industry argues that it should remain as unregulated as possible because it is very competitive. But this is not true. Most customers, locked into their contracts by high early-termination penalties, have no easy way to switch providers. There are some unlocked plans, but they can be more expensive and offer more limited service. And two companies—Verizon and AT&T—now control 60 percent of the market nationwide. Wireless pricing policies reflect this uncompetitive landscape Take cellphone text messaging. Companies typically charge from $5 for 250 texts a month (2 cents per message) to $20 for an unlimited package. Pay-as-you-go rates can be as high as 20 cents a message. But the cost of sending a text message is about a third of a penny, according to Congressional testimony from Srinivasan Keshav, a professor at the University of Waterloo. The markup is enormous. Even the most expensive monthly wireless data plans, costing about $15 for 250 megabytes or 6 cents per megabyte, are orders of magnitude cheaper than cellphone text pricing. It is hugely profitable for companies to segregate voice, data and text into different plans and to force customers to buy a different plan for each device, like a phone or a tablet. But, on today’s networks, segregating services makes little sense technologically. This expensive segregation would be more difficult to maintain if the market were truly competitive and consumers could easily switch from one company to another that offers a better deal. The regulatory outlook is not promising. The F. C. C. has shied away from asserting that voice and data moving on wireless networks are the same thing,which would allow it to apply its greater authority over phones to broadband access services. But it could curtail high early-termination fees on phone contracts,which are subject to more intense regulation. This would increase competition by making it easier for customers to change carriers. If Congress allows the F. C. C. to reallocate television broadcasters’ unused spectrum and auction it for wireless broadband, the F. C. C. could set rules to ensure that the spectrum is available to more competitors. Perhaps the most effective path would be for the F. C. C. to declare broadband access to be a telecommunication service over which it has more control. Without action, consumers are stuck with a deregulated, less-than-competitive market. The example of Verizon Wireless shows that
A. customers’ complaints are too weak to be noticed. B. the F. C. C. decides to fine the misbehaviors of carriers. C. some carriers are criticized for overcharging customers. D. it is necessary to regulate carriers’ misdeeds with penalties.