Subject: [NEXTEL-1] A Minor Victory In The Big Picture- Nextel will change fee disclosures in Missouri bills, ads

From: [email-masked]
Date: Thu, 03 Jul 2003 01:52:07 -0400

A Minor Victory In The Big Picture- Nextel will change fee disclosures in Missouri
bills, ads

07/02/2003 09:42 PM

Two big cell-phone companies, Nextel and Sprint, will stop confusing Missouri
customers with monthly bills that make some add-on charges look like taxes when
they aren't.

Also, the companies will "clearly and conspicuously disclose" in ads that their
added charges - amounting to millions of dollars a year - aren't required by the
government.

Their agreement is with Attorney General Jay Nixon, and it applies only to
cell-phone customers in Missouri. But cell ads are often national, and the phone
companies might change their practices elsewhere or risk fraud suits by states
following Missouri's lead.

"Once you've had a sonic boom, the sound barrier has been broken," Nixon said of
other states.
The agreement, which was made final Wednesday, doesn't prohibit the companies from
charging add-on fees. It means that consumers will be able to compare the ads of
cell-phone companies side-by-side and figure out whose monthly rates are cheaper.

That's often impossible now, because cell companies advertise one price but add
surcharges in their fine print.
For example, Nextel has charged most of its 11 million customers $1.55 per month
for emergency 911 services and two other government-mandated services.

Nextel has called its fee "federal programs cost recovery," listing it on customer
bills under "taxes, fees and assessments."
Sprint, with about 14.5 million customers, has called its extra charge "USA
regulatory obligations fee."

The charges often are buried deep in the fine print.

The Missouri suit, filed in St. Louis Circuit Court, says the deception made price
comparisons meaningless.
"Hopefully, consumers will now be able to compare apples to apples," Nixon said.

In exchange for Missouri dismissing its suit, Nextel and Sprint will take several
steps:
Clearly stating the amount of added charges on each bill, along with language
saying the fee "is not a tax or a government required fee." The bill may state
that the fee is intended to help with defraying the company's costs in complying
with federal regulations.

Allowing the attorney general's office to monitor sales calls to Missouri
customers.

Paying $50,000 each to reimburse the cost of the state's investigation.

The companies say they broke no laws. A spokesman for Nextel said the company was
cooperating with the attorney general, but he had no other comment. Sprint had no
comment.

The investigation began after the Post-Dispatch reported in August that some
cell-phone companies were charging fees for emergency 911 services, even after
Missouri voters had defeated a proposal to pay for the necessary equipment. That
measure, Proposition A, was designed to raise $15.4 million a year to pay for the
equipment to pinpoint the source of 911 emergency calls.

Many Missourians voted against the measure so they wouldn't have to pay an extra
50-cent monthly cell-phone fee. They were surprised to learn that cell-phone
companies were charging a similar fee, anyway, and disguising it as a federal tax.

"They just moved the fee a line lower on their bills," Nixon said.

The agreement is not expected to affect about a dozen class-action suits pending
nationwide against cell-phone companies. One is filed at state court in Kansas
City, where the companies are fighting it by transferring the case to federal
court there.
Nextel and Sprint first tried to delay Missouri's fraud case by transferring it to
federal court in St. Louis. In February, a federal judge ruled that the company
had acted improperly and ordered them to pay a total of $3,000 to cover the
state's legal costs.

Reporter Michael D. Sorkin:

E-mail: [email-masked]
Phone: 314-340-8347
http://www.stltoday.com/stltoday/news/stories.nsf/News/2B921F42286C9C8486256D58000FDCA6?OpenDocument&Headline=Nextel,+Sprint+will+change+fee+disclosures+in+Missouri+bills,+ads

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