Additional charges, especially in Florida, anger, confuse phone customers
BEATRICE. E. GARCIA
The Miami Herald

MIAMI — Consider this: You’re new in town and need phone service. Enter BellSouth, the major local phone provider in South Florida, offering basic phone service, with no extras like Caller ID or call waiting, for $11.04. Not bad for someone on a budget.

But your monthly bill reads $27 — nearly $16 are fees and taxes. A single fee of $6.50, called an FCC line charge, accounts for more than a quarter of the total bill. Despite the official-sounding name, this fee isn’t a tax. The dollars go to BellSouth.

Your long-distance bill from AT&T is equally disturbing: You spent only $8.61 on calls and there’s another $8.63 tacked on in fees and taxes, including $2.49 to have the AT&T charges appear on your BellSouth bill.

When consumers closely examine their phone bills, whether it’s for local, long-distance or wireless service, their blood boils.

«It’s expensive, and it’s deceptive,» said Dominique Virchaux, who runs Virchaux & Partners, an executive recruiting firm in Coral Gables.

Virchaux, who maintains a home office with eight phone lines, gets clobbered by that FCC line charge eight times. BellSouth, his local phone company and most phone service providers charge this fee per line.

Linda Sherry at Consumer Action in San Francisco tells consumers to add about 15 percent to advertised prices for local and long-distance or wireless packages to cover all the fees. «That way people won’t get caught short.»

The industry says the fees are necessary to recoup normal business expenses.

Those fees add up to significant dollars. T-Mobile USA, a major wireless provider, reported that two fees it adds to subscribers’ bills contributed a neat $58 million to its fiscal first-quarter revenues.

For Florida consumers, ever-escalating fees are part of a double whammy.

In 2003, the state Legislature passed a law allowing the three major phone companies operating in Florida — BellSouth, Verizon and Sprint — to ask for a record $350 million rate increase over the next two years. Rates for basic service could rise $4 to $7 a month.

What’s worse is the aftermath: Local phone companies will be able to raise rates as much as 20 percent per year without PSC approval and no reductions in long-distance rates.

The matter is before the Florida Supreme Court.

«Both the Florida Legislature and the FCC have thrown Florida consumers to the wolves,» said Rich Sayers, editor of 10–10PhonesRates.com.

Nearly a year ago, wireless companies were required to let customers take their number with them when they changed phone carriers. To cover their costs, cellular companies added a so-called number portability fee to all their customers’ bills. Some companies began charging the fee in early 2002, more than 18 months before the service was offered.

The Center for Public Integrity in Washington figures wireless companies are collecting about $94 million a month in portability fees.

The rub is that there’s no end in sight when it comes to escalating fees.

A telecom industry group plans to ask the Federal Communications Commission for permission to raise that FCC line charge to $10 per line by 2008. The filing is expected in the next few weeks. If the major telecom companies get their way, the first increase will come in mid-2005.

When the FCC first allowed phone companies to implement this charge in 1984 after the break-up of the AT&T phone monopoly, the rationale was that local phone companies would recoup access fees they paid to long-distance companies to terminate calls on their networks. The FCC line charge was initially $3.50. Today it stands at $6.50.

The industry now proposes to eliminate the access fees between companies, allowing the local carriers to raise the FCC line charge to make up the lost revenue, and long-distance companies would lower their rates if they no longer had to pay access fees.

Richard Whitt, senior director for federal law and public policy, said the FCC line charge increase to $10 is not a given. He expects competition among carriers might keep a lid on the charge and perhaps force some companies to keep it down.

Those fees «are a slush fund for the phone companies,» said Bruce Kushnick, who runs a small New Jersey-based watchdog group known as TeleTruth.

Kushnick and the National Association of State Utility Consumer Advocates have petitioned the FCC to better enforce its Truth-in-Billing requirements.

«You can’t avoid those charges,» said Mark Cooper, director of research, Consumer Federation of America. «The consumers have to elect a set of public policy makers that understand that consumers are getting ripped off.»

Furious over phone fees