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T-Mobile and the $200K Phone Bill: What's Wireless Data Worth?

T-Mobile and the $200K Phone Bill: What's Wireless Data Worth?

T-Mobile has reduced a customer's bill to about 1 percent of the previously demanded amount after it tried to charge her $200,000 for a couple of weeks of international data use. The initial charge and the fact that T-Mobile was willing to back down to such a degree have raised questions about the true cost of wireless data services.

By Richard Adhikari CRM Buyer ECT News Network
10/19/11 2:54 PM PT

A woman in Florida was floored recently by a T-Mobile cellphone bill that totaled nearly a quarter of a million dollars, according to Miami TV station WSVN.

After intervention on the part of the TV station's news department, though, the carrier slashed Celina Aarons' bill from US$200,000 down to $2,500.

The charges were incurred by the customer's brother, who's covered on Aarons' family plan, when he used international roaming data services while traveling for two weeks in Canada.

While T-Mobile may have been reasonable in reducing the bill, the original amount demanded has raised questions regarding whether carriers are perhaps charging too much for international roaming.

The carrier did not respond to requests for comment by press time.

How to Ring Up $200K in Roaming Charges

Aarons said she was stunned when she received her phone bill last month. It had ballooned from its normal $175 to a 43-page document showing a total of more than $200,000, WSVN reported.

The charges had been incurred by her younger brother Shamir, whom she'd put on her phone plan. He'd been vacationing in Canada for two weeks and had apparently sent more than 2,000 texts and downloaded multiple videos while north of the border.

T-Mobile told WSVN it had texted the rate to Shamir and had sent four additional texts to his phone as he racked up charges.

The carrier has cut Aaron's phone bill to $2,500 and given her six months to pay it off.

What's Customer Love Got to Do With It?

T-Mobile was being practical, not generous, Craig Mathias, a principal at Farpoint Group and a Focus.com mobile communications expert, told CRM Buyer.

"There's no way that person was going to pay that bill, so T-Mobile had to cut it," Mathias explained.

"The bottom line is that it's just good business for T-Mobile to back off," Mathias continued. "They're now able to collect $2,500 instead of zero."

On the other hand, perhaps T-Mobile's generosity is real.

"A good chunk of the $200,000 bill is cost to them that gets passed through to whatever carrier handled the roaming," Rob Enderle, principal analyst at the Enderle Group, told CRM Buyer.

"So T-Mobile will still have to pay a portion of this bill even though the subscriber has been discounted," Enderle added.

Carriers incur international roaming costs because they're borrowing another carrier's infrastructure to send their signals, Enderle explained.

The Naked Face of Capitalism

International roaming is "a well-known pitfall," Farpoint's Mathias continued.

It's more like a pit, really.

The U.S. Federal Communications Commission Chairman Julius Genachowsky has said he's met with several people hit by unexpected international roaming charges. They included a woman whose bill exceeded $34,000 and a man whose bill totaled $18,000.

"The industry is an oligopoly, and the dominant carriers see roaming as a profit center and a mechanism for controlling competition, so they have used roaming in an anticompetitive, anti-consumer way," Mark Cooper, research director at the Consumer Federation of America, told CRM Buyer.

"[International roaming] costs are high because the carrier being roamed on wants to create an incentive for people to sign up for its services rather than loaning it out piecemeal, and because the roaming customer doesn't have a choice," Enderle concluded.

The FCC's Bill Shock Mandate

An FCC survey of 3,005 U.S. adults in 2010 found that one in six cellphone users has experienced bill shock, or unexpected charges, and few of them had been alerted by carriers about this in advance.

That means about 30 million Americans have experienced bill shock at one time or another.

To reduce bill shock, the FCC on Monday announced an agreement with carriers and industry trade group CTIA that requires carriers to warn customers before, and when, they hit their plan limits so as to minimize unexpected overage charges.

Carriers will also have to notify consumers of international roaming charges when they travel abroad.

Participating carriers were scheduled to provide customers with at least two out of the four notifications for data, voice, text and international roaming as of Monday, and the rest by April 2013.

Could the mandate have helped prevent Aarons getting a $200,000 phone bill?

"We're not going to comment on that specific case," FCC spokesperson Neil Grace told CRM Buyer.


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