Cell phone customers paying for nothing
By Monique Cuvelier • Bankrate.com

Americans are used to paying for cell phone service. They're even accustomed to deconstructing complicated minute plans, shelling out when they want to opt out of a contract early and paying an increasing amount of money for fees and taxes.

But what most aren't prepared for is that many of the fees they've been paying for the last two years are for new services that weren't available -- and still aren't available in parts of the country. What's more, many of those fees are hidden so customers don't even know what they're paying for.

For more than two years, cell phone companies have been gathering more than $629 million by preemptively charging for services, according to The Center for Public Integrity.

"The cell phone marketplace is the wild West," says Harvey Rosenfield, an attorney with the nonprofit Foundation for Taxpayer and Consumer Rights. "It used to be that the consumer was always right. Now the consumer is the target of fraud and deception. They have to figure out ways to trick people, so they sneak in all these fees."

Get ready to rumble
It started back in January 2002 with a fight. In one corner was the Federal Communications Commission, which told wireless companies they had to let customers keep their local phone numbers when they changed to another carrier. In the other corner was a simmering wireless industry that resented the federal mandate. It claimed so-called "number portability" would cost them around $1 billion to implement.

Wireless companies struggled to hold off the mandate. The FCC finally cracked down with a Nov. 24, 2003, deadline for implementation in the nation's 100 largest metro regions. The rest of the country should have number portability by May 2004.

The wireless community's solution to this mandated upgrade: Charge customers a monthly fee to cover the costs involved in switching to number portability. Fair enough, you may think, until you consider those companies charged their 101 million customers anywhere from five cents to $1.75 per month for a service the customers wouldn't receive for nearly two years.

Neither the FCC nor any other wireless company has put a cap on how high these fees will go. In fact, the FCC permitted carriers to charge fees in advance of the number portability deadline. Carriers also are allowed to charge a fee at the time the number is transported.

Not all carriers did charge in advance for number portability. Verizon Wireless, the nation's leading cellular phone company with 37.5 million customers, decided not to charge users upfront for implementation costs.

"Rather than surprise customers with embedded costs, we decided we would count this as part of doing business," says Jeffrey Nelson, executive director for corporate communications at Verizon, which had $22.5 billion in revenue for 2003.

But the great majority of wireless providers -- nine out of the top 10 -- did take advantage of this nod from the FCC to collect various fees, including number portability, according to The Center for Public Integrity. Eventually, Verizon started charging too, but less than most of its competitors at 45 cents per month.