Posted on: Thursday, August 26, 2004
Phone companies' 'regulatory' fees face challenge
By Ellen Simon
Associated Press
NEW YORK — T-Mobile USA Inc.'s first-quarter financial results looked great this year, but it wasn't because customers were spending more time chatting on their cell phones.
The wireless company's revenues were up $1 per customer compared with the previous quarter. That was because T-Mobile, for the first time, counted as revenues two fees it tacks onto customer bills. Without those surcharges, the average revenue per customer would have dropped.
The surcharges certainly make T-Mobile more attractive to investors — they added $58 million in revenue during the quarter.
The fees aren't taxes, though they may look that way on your bill. Wireless, long-distance and local phone service companies use fees like these chiefly to recoup normal business expenses, including property taxes and the cost of posting their rates on the Web. And that's led to a challenge before the Federal Communications Commission by consumer advocates including officials from nine states and the District of Columbia.
The fees have raised consumers' ire. Ken Juler of Angwin, Calif. says he pays "under objection" the 99 cent monthly fee that AT&T Corp. adds to his bill.
"These were costs the company was supposed to pay themselves out of operations," Juler said. "They want to make the bottom line look better, so they stick the customer with it. It's dishonest."
Very little from the fees goes to the federal government, said Patrick Pearlman, deputy consumer advocate for West Virginia's Consumer Advocate Division.
"Regulatory costs are not the reason for the fees, they're the cover for the fees," he said. "Any industry has a cost of complying with government regulation. You don't get nailed with a National Environmental Policy Act surcharge by General Motors when you buy a car."
One problem for consumers: Companies' advertised rates don't include extra fees.
"The explosion of line items has made it all but impossible for consumers to compare rates and shop around," FCC Commissioner Michael J. Copps said in March. "You need a lawyer and an accountant — preferably both — to root out what you're being charged for and why."
Regulators and consumer advocates are petitioning the Federal Communications Commission to ban the line-item fees phone companies add to bills.
The fees are big money. At 45 cents a month per user, Verizon Wireless has the lowest fees of any wireless carrier. But because it has the most customers, the fee brings in about $173 million a year.
Where does the money go?
"We would describe it as a fee for the general cost of doing business," said Sprint spokesman Scott Stoffel.
Sprint PCS says it uses the fees for "a host of regulatory compliance costs imposed by the FCC," according to the National Association of Consumer Advocates petition. Yet those costs include "posting its rates on the Internet, responding to informal complaints and investigations and administrative costs associated with the federal Universal Service Fund."
Sprint Corp's land-line bills say that its 99 cent-a-month "Carrier Cost Recovery Charge" includes "certain property taxes." AT&T Corp. bills say its 99 cent-a-month fees include "regulatory compliance and proceedings costs and property taxes."
T-Mobile USA's 86-cent-a-month "regulatory cost recovery fee" pays for local number portability (the cost when customers keep their numbers but switch providers), enhanced 911 and "other regulatory mandates and programs," the company says.
