Subject: [NEXTEL-1] Wireless Carriers' Charges to Cover Federal Fees Vary

From: [email-masked]
Date: Tue, 21 Oct 2003 00:40:10 -0400

Wireless Carriers' Charges to Cover Federal Fees Vary
By Yuki Noguchi
Washington Post Staff Writer
Tuesday, October 21, 2003; Page E01

Consumers have paid $629 million in fees to the top 10 wireless phone
carriers to cover various federal regulatory costs since January 2002,
according to a watchdog group's survey, released yesterday, that criticized
the companies for not explaining those charges.

The federal fees range by carrier from nothing to $1.75 a month.

"The cost and fees are all over the board," said Bob Williams, senior writer
of the study, conducted by the Center for Public Integrity. "The problem is,
if you're not giving customers information on what this is being charged for
and why, it's hard for the market to work well."

Cell-phone companies are permitted by the Federal Communications Commission
to set their own price for complying with various laws, including ones that
allow law enforcement to tap phone lines and identify the location of 911
calls. Most cellular companies' bills have a regulatory line item intended
to cover those costs. The regulatory fee also covers the cost of a new rule
kicking in Nov. 24 that will allow customers to keep their numbers when they
switch carriers.

There are no restrictions on how much a carrier can charge for regulatory
compliance, said Chelsea Fallon, a spokeswoman for the FCC. The FCC
traditionally has allowed carriers to pass on regulatory costs and does not
monitor how the money is spent, because competition creates a natural
incentive to keep charges down, she said.

Nextel Communications Inc. became the first carrier to add a federal
regulatory line item on its bills in January of last year, the study said.

The regulatory charge is not the only fee appearing on wireless bills.
Another, called "universal service charges," goes toward subsidizing
networks in rural areas. State and local governments also charge separate
taxes and fees.

Among carriers, AT&T Wireless Services Inc. charges the most for its federal
regulatory fee -- $1.75 a month. The fee was phased in earlier this year to
new customers and those no longer covered by contracts. As of July, about a
third of the carrier's customers were paying the fee . The company said its
actual costs for allowing customers to take their numbers with them to other
carriers -- including modifying its network hardware and software, changing
business policies, training employees, and hiring customer service
workers -- will be about $150 million by the end of this year.

"We are incurring significant costs in order to comply with these mandates,"
said Rochelle Cohen, a spokeswoman for AT&T Wireless.

AT&T Wireless and other companies said they are not profiting from the fees
but simply passing on actual costs.

T-Mobile USA Inc. is the only big carrier that has not imposed a regulatory
fee.

Verizon Wireless charges customers a nickel a month and said it is
considering raising that by 10 to 15 cents to cover its number-switching
costs. But Verizon Wireless also said that won't cover the $60 million it
has already spent to upgrade its billing system and set up a 1,000-person
customer service center in Murfreesboro, Tenn., to handle the anticipated
increase in calls resulting from number switching.

"We thought it was an ongoing cost of doing business," said Jim Gerace, a
spokesman for Verizon Wireless. The company could use its lower regulatory
fee as a selling point, he said.

Consumer advocates faulted the FCC for allowing great leeway for companies
to charge.

"There's no accountability" to audit whether carriers are spending the money
on actual changes required by the government, said Chris Murray, a
telecommunications expert for Consumers Union.

http://www.washingtonpost.com/wp-dyn/articles/A55896-2003Oct20.html

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