- The Washington Times - Sunday, August 22, 2004

NEW YORK — T-Mobile USA Inc.’s first-quarter financial results looked great this year, but it wasn’t because customers were spending more time chatting on their cell phones.

The wireless company’s revenues were up $1 per customer compared with the previous quarter because T-Mobile, for the first time, counted as revenues two fees it tacks onto customer bills. Without those surcharges, the average revenue per customer would have dropped.

The surcharges certainly make T-Mobile more attractive to investors — they added $58 million in revenue during the quarter.

The fees aren’t taxes, although they might look that way on your bill. Wireless, long-distance and local phone-service companies use fees like these chiefly to recoup normal business expenses, including property taxes and the cost of posting their rates on the Web.

That has led to a challenge before the Federal Communications Commission (FCC) by consumer advocates, including officials from nine states and the District of Columbia.

The fees have raised consumers’ ire. Ken Juler of Angwin, Calif., says he pays “under objection” the 99-cent monthly fee that AT&T; Corp. adds to his bill.

“These were costs the company was supposed to pay themselves out of operations,” Mr. Juler said. “They want to make the bottom line look better, so they stick the customer with it. It’s dishonest.”

Little from the fees goes to the federal government, said Patrick Pearlman, deputy consumer advocate for West Virginia’s Consumer Advocate Division.

“Regulatory costs are not the reason for the fees, they’re the cover for the fees,” he said. “Any industry has a cost of complying with government regulation. You don’t get nailed with a National Environmental Policy Act surcharge by General Motors when you buy a car.”

One problem for consumers: Companies’ advertised rates don’t include extra fees.

“The explosion of line items has made it all but impossible for consumers to compare rates and shop around,” FCC Commissioner Michael J. Copps said in March. “You need a lawyer and an accountant — preferably both — to root out what you’re being charged for and why.”

Regulators and consumer advocates are petitioning the Federal Communications Commission to ban the line-item fees that phone companies add to bills.

A petition before the FCC, filed by the National Association of State Utility Consumer Advocates and supported by the National Association of Regulatory Utility Commissioners, maintains that surcharges should be built into companies’ rates.

The FCC is accepting comments on the petition through its electronic filing system, under docket No. 04-208.

There is no statutory deadline for the FCC to rule on the petition, said David Bergmann, assistant consumers’ counsel in Ohio.

“The FCC has a lot on its plate,” Mr. Bergmann said. “We hope this would take a place on the plate.”

The fees are big money. At 45 cents a month per user, Verizon Wireless has the lowest fees of any wireless carrier. But because it has the most customers, the fee brings in about $173 million a year.

Where does the money go?

“We would describe it as a fee for the general cost of doing business,” said Sprint spokes-man Scott Stoffel.

Sprint PCS says it uses the fees for “a host of regulatory compliance costs imposed by the FCC,” according to the National Association of Consumer Advocates petition.

Yet those costs include “posting its rates on the Internet, responding to informal complaints and investigations and administrative costs associated with the federal Universal Service Fund.”

Sprint Corp.’s land-line bills say that its 99-cent-a-month “Carrier Cost Recovery Charge” includes “certain property taxes.” AT&T; Corp. bills say its 99-cent-a-month fees include “regulatory compliance and proceedings costs and property taxes.”

T-Mobile USA’s 86-cent-a-month “regulatory cost recovery fee” pays for local number portability (the cost when customers keep their numbers but switch providers), E911 and “other regulatory mandates and programs,” the company says. Its other surcharge, currently 1.39 percent of a customer’s bill, goes toward the company’s contribution to the federal Universal Service Fund, which subsidizes phone service in rural areas.

A company’s Universal Service Fund contribution is calculated annually as a percentage of its revenue, currently 8.9 percent. The FCC also mandates three other telecom surcharges.

Together, the three fees equal less than 1 percent of a company’s revenue.

To make matters more confusing, some companies bill consumers directly for their Universal Service Fund contributions, then add other fees. The FCC allows the fees as long as they’re “just and reasonable” and puts no cap on them.

People who fight the fees say they are no different from passing on the companies’ cost of buying office supplies.

Frustrated customers have a simple request, voiced by Sherri Heckman of Reading, Pa., in comments filed with the FCC. “Wireless providers should include their federal regulatory fees in the monthly rates so consumers know what their monthly bill will be.”

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