Cell phone customers paying for nothing -- Page 2
By Monique Cuvelier • Bankrate.com

A stack of other fees have snuck into the mix of many companies, including those for number pooling, a method of conserving phone numbers related to number portability; E911, a government mandate that dates back to 1996 and has a deadline of Dec. 31, 2005, requiring wireless companies to install tracking devices into phones for emergency calls; and in one case Communications Assistance for Law Enforcement, a 10-year-old act that requires cell phone companies to help with surveillance.

Escalating costs
Wireless companies are unified in saying their number portability costs will be high to implement, but just how high is difficult to predict. Costs go toward retooling existing systems, training in-house staff and partners, building call centers and hiring specialists. Verizon Wireless says it spent $65 million to set up for number portability. Cingular's estimations are considerably higher at between $152 million and $177 million for just 2003.

"It's not clear upfront how much these things are going to cost. It depends on how much vendors charge and how many people they think are going to port," says Adam Guy, senior analyst at Wireless and Mobile Services at The Yankee Group in Boston.

"I sympathize with these guys, because they're running businesses. I'm a wireless customer, and I hate to be charged, but these guys have to pay for it somehow."

Consumer advocates say with the amount wireless giants are charging, they could pay for number portability several times over. The final cost of portability -- or E911 or a host of other services -- rings in far below the amount wireless companies are pocketing. The theory from many consumer advocacy groups is that cellular companies are battling over customers with vicious price wars and are locked into their advertised rates. To boost those would mean to lose customers. Instead, they can raise rates in the guise of fees, and maybe make a few bucks in the process.

"Many of these fees aren't even disclosed in the fine print," says Rosenfield. He says most wireless companies issue contracts that heavily restrict the customer while leaving themselves free to change the terms at any time. "The system is rigged."

Rosenfield, representing the Foundation for Taxpayer and Consumer Rights, sued Nextel for instituting a policy late last year of no longer issuing itemized bills. The system made it nearly impossible for consumers to detect billing errors. Nextel argued consumers could pay $2.50 per phone per month to get a fully itemized bill or keep a personal diary of all the calls they make.

"If Nextel thinks we should pay $2.50 a month to receive a bill that makes sense, what's next -- a fee to cover executive bonuses?" asks Rosenfield.

Nickel and dimed
Nickel and diming customers can add up to bad business. As Verizon's Nelson points out, "People talk. They stand around in their offices and compare bills. We think keeping the fees to a minimum is a competitive advantage, because we don't want people saying, 'Hey, you don't have this $2 fee on your bill.'"

People are starting to talk, and it's filtering up to government officials and advocacy groups. Sen. Charles Schumer, D-N.Y., introduced the Cell Phone Users Bill of Rights, a bill that would make it easier to switch providers, force carriers to provide better service and require providers to clearly disclose contract and service terms on all solicitations. The California Public Utilities Commission has also been moving toward developing tougher standards for carriers in that state.

The Cellular Telecommunications & Internet Association is concerned enough with the outcome of a bill of rights that it contributed more than $200,000 for California lobbyists to get the initiative derailed.

Rosenfield can't imagine the wireless giants altering their system easily, but it's time for a change. "The theme is, 'catch me if you can,' but if you're lucky enough to, they still might rip you off."