July 2014

Senate Commerce Committee Chairman Jay Rockefeller (D-WV) released a majority staff report on the findings of the Committee’s investigation into wireless cramming – where consumers get charged on their phone bills for goods and services they never agreed to purchase.

The report describes a billion dollar industry that has cost consumers hundreds of millions of dollars in unauthorized charges on their wireless bill while at the same time yielding tremendous revenues for the major wireless carriers. Cramming became a problem several decades ago when phone companies opened their billing platforms to allow third-party vendors to charge consumers for goods and services unrelated to their phone service such as photo storage, voicemail, and faxes.

Key findings:

• Third-party billing on wireless phone bills has been a billion dollar industry that has yielded tremendous revenues for carriers. AT&T, Sprint, T-Mobile, and Verizon generally retained 30-40 percent of each vendor charge placed.
• Despite industry assertions that fraudulent third-party wireless billing was a “de minimis” problem, wireless cramming has been widespread and has likely cost consumers hundreds of millions of dollars.
• The wireless industry was on notice at least as early as 2008 about significant wireless cramming concerns and problems with third-party vendor marketing tactics, yet carriers’ anti-cramming policies and sometimes lax oversight left wide gaps in consumer protection.

The Federal Communications Commission appointed Elin Swanson Katz, Connecticut Consumer Counsel, on behalf of the National Association of State Utility Consumer Advocates (NASUCA), to serve on the Federal-State Joint Board on Universal Service. This appointment fills the position held by William Levis, Colorado Consumer Counsel, on behalf of NASUCA.

The House Commerce Committee passed a bill that would allow law enforcement agencies to access a cellphone user’s location information in an emergency.

The bill -- the Kelsey Smith Act, named after a Kansas teen who was murdered in 2007 -- would allow law enforcement officials to obtain tracking data if that person’s life or physical well-being is believed to be in danger. Currently, “that information remains locked up behind a bureaucracy at the wireless provider,” said Communications and Technology Subcommittee Chairman Greg Walden (R-OR). The bill was introduced last year by Rep Kevin Yoder (R-KS) and ushered through the subcommittee by Chairman Walden.

Policymakers seeking to craft a new Compact for 21st century networks that advances essential consumer values must recognize and address how expanding consumer choice and preferences -- spurred by innovation and new competitive offerings—have fundamentally altered the telecommunications landscape, according to a new study released today by the Internet Innovation Alliance (IIA). Policy scholar and communications industry analyst Dr. Anna-Maria Kovacs authored the 36-page report, “.” The paper details the impact of consumer choice in the digital marketplace and demonstrates how this new paradigm will influence future efforts to design a set of basic consumer protections for the communications platforms of tomorrow.