As cell users keep digits, firms can profit
By Bruce Meyerson
Associated Press
NEW YORK — Some cell phone companies appear poised to profit off a new fee that covers the cost of enabling customers to switch wireless services without giving up their phone numbers.
The fee, permitted by the federal government, is already being levied by four national carriers and is generally less than $1 per month. That adds up quickly when multiplied across the millions of subscribers each carrier serves.
And in certain cases, the money being collected appears to exceed the actual cost of meeting a November deadline set by the Federal Communications Commission for "number portability" — which will let people keep their cell numbers when switching wireless providers.
Sprint PCS, for example, has about 17.9 million customers who began paying an additional 63 cents per month in July, generating $11.3 million per month for "cost recovery."
Over the course of a year, Sprint's fee would bring in about $135 million at current subscriber levels — though that amount likely will be even higher since Sprint and other carriers are signing up hundreds of thousands of new customers per quarter.
Sprint refused to quantify its expense for enabling number portability beyond a rough estimate of "hundreds of millions of dollars" — an amount several times larger than more specific estimates disclosed by rivals Verizon Wireless and Cingular Wireless. Similarly, Nextel Communications says it has spent about twice the costs estimated by Verizon and Cingular.
Although costs surely vary among the different companies, government officials and industry analysts say there is little reason to expect those expenses to vary widely as the carriers upgrade systems and create verification processes similar to those that long-distance phone companies use when a customer switches from one service to another.
"A reasonable person would say that carriers of similar size, serving the same markets, providing the same level of service, would have similar cost structures," said John Muleta, the chief of the FCC's wireless telecom bureau. In fact, he added, almost all wireless carriers are using the same software vendor to implement number portability.
Other carriers lump their fee for the changeover in with other charges related to regulatory mandates, such as providing enhanced 911 capabilities so a cell phone can be pinpointed in an emergency.
Nextel has been charging $1.55 per month since October; Since the spring, AT&T Wireless has been charging some customers what it calls a temporary fee of $1.75. Since April, Cingular has been charging from 32 cents to $1.25 per month depending on the state. Verizon says it has not yet decided whether to levy a number portability fee.
Beyond a general requirement under federal law that such fees be "just and reasonable," there is no specific cap. Likewise, the FCC does not require the companies to report their actual expenses and the agency is not monitoring the fees.
But other government officials, and consumer advocates, have criticized the fees as excessive.
"Sprint is just asking for regulation, and we'll bring tougher regulation on them if they do things like this," said Sen. Charles Schumer, D-N.Y.
