UCAN

FOR IMMEDIATE RELEASE:                                                NEWS MEDIA CONTACT:

February 15, 2012                                                               Janice Wise, 202-418-8165           

                                                                                          E-mail: janice.wise@fcc.gov

FCC ADOPTS RULES TO STRENGTHEN CONSUMER PROTECTIONS AGAINST UNWANTED TELEMARKETING “ROBOCALLS” TO WIRELINE AND WIRELESS PHONES

Washington, D.C. – To further protect consumers from unwanted autodialed or prerecorded calls, often referred to as “robocalls,” the Federal Communications Commission (FCC) today approved changes to its telemarketing rules.  Unwanted telemarketing calls and texts were consistently in the top three consumer complaint categories at the FCC in 2011.  Robocalls invade consumers’ privacy, and can, in the case of calls to wireless numbers, use up their minutes. 

The Order adopted today helps put an end to these intrusions by empowering consumers with increased rights under the FCC’s telemarketing rules.  The new rules reduce regulatory uncertainty with minimal burden on industry and maximize consistency with those of the Federal Trade Commission.  Specifically, the rules protect consumers by:

• Requiring telemarketers to obtain prior express written consent from them, including by electronic means such as a website form, before placing a robocall to a consumer;  
        
• Eliminating the “established business relationship” exemption to the requirement that telemarketing robocalls to residential wireline phones occur only with prior express consent from the consumer;
   
• Requiring telemarketers to provide an automated, interactive “opt-out” mechanism during each robocall so that consumers can immediately tell the telemarketer to stop calling; and,
   
• Strictly limiting the number of abandoned or “dead air” calls that telemarketers can make within each calling campaign. 

The rules also ensure that informational calls, such as those related to school closings and flight changes, continue to be available to consumers who wish to receive them. 

Action by the Commission February 15, 2012, by Report and Order (FCC 12-21).  Chairman Genachowski, Commissioners McDowell and Clyburn.  Separate statements issued by Chairman Genachowski, Commissioners McDowell and Clyburn.

For further information, contact Karen Johnson at 202-418-7706 or karen.johnson@fcc.gov.  Press contact:  Janice Wise (202-418-8165; janice.wise@fcc.gov).

Recently, Cox released a lower-cost cable package that, surprisingly, does not include ESPN. For those sports lovers out there, ESPN is a must-have. However, for those people who spend their time watching other stations like the Travel Channel or Food Network, ESPN is an unnecessary channel. As it turns out, ESPN is one of the most expensive cable channels that cable companies offer to its customers. Does Cox’s unbundling of this expensive channel mean that it is finally moving towards an a la carte pricing method? 

Now, this news shouldn’t come as a surprise to anyone who regularly reads our blog. In fact, we had a post up last fall discussing this exact move by the cable providers. Instead of providing channels individually for a specific cost, cable companies are just repackaging certain channels and offering other channels as premiums. This doesn’t necessarily provide a consumer with more choice, but it may reduce the strain on a consumer’s wallet.

Cox is marketing its newest cable package as a low cost alternative. But at $34.99, it isn’t really that low cost. When you factor in the cost of a cable box at around $10 a month, $45 a month for 20 channels doesn’t really seem like that great of a deal.

Instead, you could spend $8 a month on Netflix, $8 a month on Hulu Plus, and about $7 a month for Amazon Prime, which would give you access to thousands of movies and TV shows, both new and classic. And that do it yourself cable package will run you about $25 a month. You could even buy a little device like a Roku box for around $50 so you can watch your shows on your TV rather than your computer. This doesn't even include the myriad of free content options available on the internet.

While it is great that cable companies are moving forwards in its cable plan offerings, we can help but wondering if cable packages as we know it are a dying breed. With inexpensive devices that bring streaming content to your TV, as well as internet-enabled TVs looming over the horizon, cable providers may need to drastically shake things up to retain its subscriber base—and something much more drastic than a $35 “low cost” option without ESPN.

One of the greatest things about this country is the availability of choice. Want a breakfast cereal? You can choose from a multitude at your local grocery store. A loaf of bread? White or wheat no longer cut it--now, the more grains you have the better. 5? 10? 15? The grain sky is the limit. The ability for consumers to choose can be a good thing as long as there is actual choice. However, when we look at certain consumer areas--cell phone providers, for example--the actual ability to choose a specific provider is a limited one.

Sure, there are many prepaid providers popping up along the wireless landscape, but it seems that the prepaid providers are shutting down as quickly as they are starting up. Your main choice of carriers in San Diego is the big four: Verizon, AT&T, Sprint, and T-Mobile. Most offer homogeneous plans for a homogeneous set of phones. Nevertheless, even amongst the big four it can be difficult to change providers. The culprit? The early termination fee.

The early termination fee (ETF) is a lovely little device used by the wireless companies to ensure they make all their profit if you, the consumer, happen to change your mind and want to move to a different provider before your service contract is up. The ETF amount is set at the beginning of your contract term and decreases for every month you are in your contract.

Using Verizon as an example, the ETF at the beginning of your contract is $350 and that amount decreases by $10 for each month of service you complete. The large ETF makes it difficult for anyone other than Warren Buffet to switch providers mid-contract. However, what about situations where consumers are near the end of their contract and want to switch providers, say with only a month left on their contract? Even further, the consumers are willing to adhere to their obligation and pay for the remaining months of service. This way the consumer has made all available payments and the wireless carrier is not wanting for any payment or profit. At this point, shouldn't the wireless carrier allow the consumer to cancel their contract before the end of the two-year term without an ETF? The wireless carriers should allow this, but it is not always the case.

Using Verizon as an example, let us say the customer was on the lowest voice minutes plan with the lowest data package for around $70 a month before taxes ($40 for voice, $30 for data). With one month remaining, the customer had made 23 monthly payments to Verizon. This means the ETF should have decreased by $230 (23 months time $10 a month). With one month to go, this customer's total ETF is $120 ($350 original ETF minus $230 reduction). This is approximately $50 more than the customer's last month's payment.

However, we have found that this is not the case. Wireless providers will hold a consumer to the end of their contracts, even after the consumer has made all payments required under the service contract. We believe that this is another example of the lack of availability of choice for a wireless consumer.

Moreover, along this same vein, we have found that wireless companies have put up more barriers to choice by making the process of cancelling your contract at the end of the term very difficult. Most consumers enter into two-year agreements with a wireless service provider. At the end of the two-year agreement, your service contract automatically rolls into a month-to-month contract. This can be a nice feature because it prevents any disconnection of service.

On the other hand, if you want to cancel your contract at the end of the two-year term to avoid any rollover, you need to call the wireless carrier on the exact day your term ends to cancel. If you call too early, the wireless carrier will not let you cancel and will make you call back on the exact day your term ends. If you call too late--after the two year term ended--you can cancel no problem. All you have to do is pay for the remaining month of service.

Again, using Verizon as an example, you must call on the exact day your contract expires to cancel you contract. If you call too early, there is no mechanism available to set a cancellation date for the future. If you call too late, it is easy enough to cancel. However, your cancellation will not be effective until the end of the next billing cycle. Since Verizon was so nice to put you on a month-to-month agreement, this means the end of the next month's billing cycle. If you call the day after your contract expires, this means that you will have to pay for an entire extra month's service. In addition, there is no proration available--you must pay the entire month's amount whether you used one day or 28 days of service.

A colleague of mine calls this the "two year and one month contract." Since you cannot call ahead to schedule a cancellation, the wireless carriers leave you with a very small window in which you can cancel your wireless service without incurring any additional expenses or fees: one day. If miss that day, another month of service is automatically tacked on to your contract, giving you not a two year contract, but a two year and one month contract.

Are you a victim of these barriers to choice? Did you try to cancel your contract in the last month but were forced to pay an ETF? Did you try to cancel your wireless contract after your two-year term expired? Has a wireless carrier forced you to pay for an entire extra month's service because you missed that one-day window? Let us know in the comments or file an online complaint form.