Consumer Reports – February 2005 Issue

It’s easy to feel as if you’ve been had when you receive your cell-phone bill each month. You chose your monthly service plan for its $29.99 advertised price, not to mention that free nifty flip phone. But with all the taxes and unexpected fees and surcharges tacked on, you pay far more than that amount. The extras can add some 20 percent to your monthly tab, and that’s on top of any charges for minutes you used over your plan limit.

So what exactly are all those charges? Here’s a quick guide to sorting out the fee clutter broken down into four basic categories, which may be summarized on one page of your bill.

Note that you might also get socked with hefty one-time penalties for starting a new cell-phone service – the so-called activation fee (up to $36) – or for terminating a plan before the contract expires (as much as $200), not to mention charges for paying late or for downloading ring tones and games. (You can find more information on understanding cell-phone bills as well as tips on
lodging complaints about them at http://www.hearusnow.org, a new Consumers Union Web site.)

1- MONTHLY SERVICE CHARGE. It’s what you saw advertised and includes extras you added to your plan, such as unlimited text or photo messaging, which may be listed separately on your bill. Plans can range from $19.99 a month to $299.99 a month, excluding taxes, depending on the geographical coverage, minute amount, and extra services you choose. (Voice mail typically comes standard on monthly plans.)

2- USAGE CHARGES. This section can include a wide variety of charges. It might also have a detailed summary of your calls so that you can check the bill’s accuracy, but the convenience may cost you a few dollars a month. (The Foundation for Taxpayer and Consumer Rights is suing Nextel for issuing unitemized bills unless a customer ponies up $2.50 a month.) Here are some usage charges you might find on your bill:

Overage charges – Going over your plan minutes can cost 7 cents to 45 cents per extra minute, plus taxes. To avoid overage charges, find out how your carrier defines the minutes in your plan, which might include night, weekend, peak, and “anytime” minutes. Not all carriers consider 6 a.m. a “peak” time, for example. Also remember that most plans bill for incoming calls and that you might be charged for unanswered calls you make.

Roaming fees – Calls made outside your “home” area could cost 49 cents to 69 cents per minute. You might also get socked with long-distance fees. Make sure you understand the “local” and “regional” areas your plan covers. Carriers define them differently and might not even provide you with an accurate map. Even nationwide plans can hit you with roaming charges if your cell-phone carrier has holes in its network.

Text messaging – Unless you purchased a service plan that includes text messaging, which can add $2.99 to $20 to your monthly bill, carriers will charge you 2 cents to 10 cents to receive a text message and 5 cents to 10 cents to send one.

411 – The cost of a call to information usually ranges from $1.25 to $1.29.

3- MANDATORY FEES AND TAXES. These fees are set by government authorities.

State, city, county, and district taxes – Amounts are based on your mailing address and bill size.

Federal excise tax – Set at 3 percent.

911 and E911 fees – Charged by local governments to cover fire and rescue services and to upgrade 911 wireless services.

4- DISCRETIONARY SURCHARGES AND FEES. These extras have mushroomed in recent years, but they aren’t standardized or well explained and they’re not included in advertised plan prices. (Under a settlement with 32 states, however, a few leading cell-phone companies are now required to disclose these fees on their Web sites and in retail outlet sales materials.) Although they may sound like official fees required by a government authority, they are in fact determined by the carriers, which can up the ante whenever they like to cover their overhead expenses and services that aren’t yet available to you.

Federal Universal Service Fund charge (aka federal universal service charge) – Phone companies must contribute to this fund to make phone service widely affordable and available. The amount your carrier charges depends on the size of your bill. Cell-phone companies are not required to pass this cost along to consumers, but they always do.

Number-portability and pooling fees – These enable carriers to recover costs related to number-portability rules and the allocation of new numbers. The government allows carriers to collect these fees but doesn’t control what they charge. So fees are all over the map and usually get folded into the so-called regulatory fee. Some good news: Sprint and Verizon are cutting number-portability fees.

Regulatory fee – Some carriers consolidate numerous charges associated with government programs under this rubric. They can add $ 0.45 to $ 1.55 to your bill.