After consumers allege systematic overbilling on data charges, Senators tell AT&T it must shed light on how the company bills customers

Kohl and Klobuchar say consumers’ claims underscore the need for a competitive wireless market

Washington, DC – Today U.S. Senators Amy Klobuchar and Herb Kohl pressed AT&T for more transparent billing practices after consumers alleged that the company has engaged in systematic overbilling related to data usage. Klobuchar and Kohl wrote to AT&T CEO Randall Stephenson and said that the consumers’ claims underscored the need for a competitive wireless market and urged the company to provide specific answers on how it accurately charges customers for data.

In the letter the Senators wrote, “Particularly troubling is the accusation that all of the alleged billing errors were made in favor of AT&T and at the consumers’ expense.” The letter continued, “[It is] critical that billing for data usage be transparent, clear, and accurate.”

As Chairman of the Antitrust Subcommittee, Kohl has made enhancing competition in the cell phone industry a priority.   Two weeks ago, Sen. Kohl chaired a hearing in the Antitrust Subcommittee examining the proposed AT&T/T-Mobile merger and its effects on competition and consumers, the first Congressional inquiry into the merger.   In 2008 and 2009, the Antitrust Subcommittee investigated the causes of rising text messaging prices, including holding a hearing on this issue in the Antitrust Subcommittee in June 2009.   This hearing was followed by a letter from Kohl in July 2009 to the Justice Department and FCC calling for action to “remove barriers to competition” in the cell phone market.

Klobuchar has been a leader in pushing to reform the wireless industry to increase competition while increasing fairness and transparency for consumers and has introduced legislation to pro-rate early termination fees and to require carriers to provide better coverage maps and clearer bills.  She has previously urged the Federal Communications Commission to strengthen its oversight of billing practices in the wireless industry and to crack down on “cramming,” which occurs when a third party adds unauthorized, misleading, or deceptive charges to a consumer’s phone bill. Klobuchar noted that cell phone companies are beginning to move toward tiered pricing plans that have the potential to create increased customer confusion, mystery charges, and overages on consumers’ wireless bills. 

Klobuchar is the only senator who serves on both the Judiciary and Commerce Committees, which oversee the Department of Justice and the Federal Communications Commission. Both committees have oversight over the wireless industry.

The full text of the letter is below:

May 24, 2011

Randall Stephenson

CEO, President, and Chairman

AT&T Inc.

208 South Akard Street

Dallas, TX 75202

Dear Mr. Stephenson:

            We write to you regarding allegations that AT&T has been overcharging smart phone consumers for their data usage.  Consumers have alleged that they have incurred data charges well in excess of the data actually used, when data applications were not running on their cell phones, and even while they were asleep and not using their phones.  Particularly troubling is the accusation that all of the alleged billing errors were made in favor of AT&T and at the consumers’ expense.  According to a lawsuit filed against AT&T, independent testing allegedly showed that AT&T systematically overcharged consumers by at least 7%, sometimes up to 300%.  In raising these allegations, we in no way pre-judge their validity nor intend to unduly target AT&T.  We are only concerned because of the tens of millions of consumers who now rely on smart phones and utilize AT&T service to connect to the Internet and the strong public interest in the accuracy of billing for these services. 

            We understand that AT&T contends these allegations of overcharging are untrue and that there is simply a misunderstanding as to how AT&T measures data and communicates that information in monthly bills.  Yet, as you know, consumers cannot easily verify that the amount of data used in any given month is equal to what they have been charged for on their bill.  This fact alone makes it critical that billing for data usage be transparent, clear, and accurate, and further underscores the need for a competitive wireless market that gives consumers adequate choices for cell phone services.     

            In light of these concerns, we request that AT&T respond to the allegations that it has systematically overbilled customers for data usage.   Further, please specify how AT&T ensures the accuracy of billing for data usage and provide an estimate of the extent of errors in such billing.   If AT&T continues to claim that the allegations are simply a miscommunication as to how it bills customers for data, please explain how AT&T enables consumers to verify that their data usage is accurately billed.    Finally, please specify the average number of customers who exceed their monthly data usage caps, and the average amount such customers are billed for excess data usage during the three months preceding the date of this letter.

            The answers to these questions will be important as we consider competition in the cell phone industry, including the proposed AT&T/T-Mobile merger.    And, whatever the validity of the allegations of overcharging, our goal is to ensure going forward that consumers can have confidence that their bills for data service are completely accurate and reliable.    

            Thank you for your attention to this matter.

Sincerely,

Herb Kohl, U.S. Senator

Amy Klobuchar, U.S. Senator