Subject: [NEXTEL-1] Fees to cover cell number switching may reap profits

From: [email-masked]
Date: Sun, 17 Aug 2003 17:18:21 -0400

Fees to cover cell number switching may reap profits

NEW YORK (AP) --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.

'Just and reasonable' fees required

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
new 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-New York.

Varied estimates

Sprint stood firm in asserting it has already spent "hundreds of millions of
dollars" to prepare for number portability. That figure contrasts sharply with
public estimates from Verizon, which has irked its rivals by breaking ranks with
the industry's long-standing opposition to wireless number portability.

Verizon says it has spent about $60 million on preparations, and estimated its
ongoing costs to facilitate number portability at 10 or 15 cents per subscriber
per month.

With 34.6 million subscribers, Verizon's estimate suggests that it expects
monthly portability expenses of up to $5.2 million, or less than half the amount
Sprint will be collecting per month.

Verizon's figures are consistent with the estimates provided by Cingular, which
told The Associated Press that setup expenses have totaled about $50 million
so far, while ongoing costs are expected to be about $50 million per year.

As such, if Sprint's fee is generating $11.3 million per month, the company will
have collected at least $55 million by the time portability is supposed to go into

effect November 24, an amount that would be enough to defray all or most of
the set-up costs indicated by Verizon and Cingular.

Thereafter, if Sprint's ongoing expenses for number portability are similar to
those indicated by Verizon and Cingular, Sprint's "recovery" fee may generate
more than $5 million in extra monthly revenue.

Nextel, which has already collected more than $200 million to cover various
regulatory costs, said it has spent "more than $100 million" in preparation for
portability, but has declined to quantify its expenditures.

Cingular's average fee of 50 cents for all regulatory-related costs approximates
what Sprint collects for number portability alone.

AT&T Wireless, which declined to quantify its costs related to number
portability or E911, is currently collecting the $1.75 from "less than a third" of

its 21.5 million customers. Collection totals will increase as the company adds
new customers and as service contracts for existing customers come up for
renewal.

However, Doug Brandon, AT&T Wireless' vice president for federal affairs,
said most of the costs for number portability stem from the preparations. Once
those expenses are covered, "we will eliminate or substantially reduce the fee to
cover the ongoing administrative costs."

Neither Nextel, Cingular nor Sprint indicated any plan to stop charging for
number portability.
http://www.cnn.com/2003/TECH/biztech/08/17/keeping.cell.nos.ap/

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for Your HP, Epson, Canon or Lexmark
Printer at Myinks.com. Free s/h on orders $50 or more to the US & Canada. http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/l.m7sD/LIdGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/