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Carriers Might Profit From Cell Number Portability
Makarand writes "Carriers that are adding cell-number portability fees to your monthly
cell phone bills (while fighting against actually implementing the requirement) may actually rake in profits from these levies as the total amounts collected will be more than the projected costs of meeting the FCC's
number portability requirements. Although federal law requires that such fees be 'just and reasonable', it
does not require reporting of their actual expenses. Consumer advocates feel that
the number portability verification processes required are similar to those used by long-distance phone companies when a customer switches from one service provider to another and there is little reason to believe that expenses to meet portability requirements should vary widely among carriers and be so excessive as to bring profits for the carriers."
NEW YORK (AP) -- Some cell phone companies appear poised to profit off a new fee that covers the cost of enabling customers to switch wireless services without giving up their phone numbers.
The fee, permitted by the federal government, is already being levied by four national carriers and is generally less than $1 per month. That adds up quickly when multiplied across the millions of subscribers each carrier serves.
And in certain cases, the money being collected appears to exceed the actual cost of meeting a November deadline set by the Federal Communications Commission for "number portability" -- which will let people keep their cell numbers when switching wireless providers.
Sprint PCS, for example, has about 17.9 million customers who began paying an additional 63 cents per month in July, generating $11.3 million per month for "cost recovery."
Over the course of a year, Sprint's fee would bring in about $135 million at current subscriber levels -- though that amount likely will be even higher since Sprint and other carriers are signing up hundreds of thousands of new customers per quarter.
Sprint refused to quantify its expense for enabling number portability beyond a rough estimate of "hundreds of millions of dollars" -- an amount several times larger than more specific estimates disclosed by rivals Verizon Wireless and Cingular Wireless. Similarly, Nextel Communications says it has spent about twice the costs estimated by Verizon and Cingular.
Although costs surely vary among the different companies, government officials and industry analysts say there is little reason to expect those expenses to vary widely as the carriers upgrade systems and create verification processes similar to those that long-distance phone companies use when a customer switches from one service to another.
"A reasonable person would say that carriers of similar size, serving the same markets, providing the same level of service, would have similar cost structures," said John Muleta, the chief of the FCC's wireless telecom bureau. In fact, he added, almost all wireless carriers are using the same software vendor to implement number portability.
'Just and reasonable' fees required
Other carriers lump their fee for the changeover in with other charges related to regulatory mandates, such as providing enhanced 911 capabilities so a cell phone can be pinpointed in an emergency.
Nextel has been charging $1.55 per month since October; Since the spring, AT&T Wireless has been charging some customers what it calls a temporary fee of $1.75. Since April, Cingular has been charging from 32 cents to $1.25 per month depending on the state. Verizon says it has not yet decided whether to levy a number portability fee.
Beyond a general requirement under federal law that such fees be "just and reasonable," there is no specific cap. Likewise, the FCC does not require the companies to report their actual expenses and the agency is not monitoring the fees.
But other government officials, and consumer advocates, have criticized the new fees as excessive.
"Sprint is just asking for regulation, and we'll bring tougher regulation on them if they do things like this," said Sen. Charles Schumer, D-New York.
Varied estimates
Sprint stood firm in asserting it has already spent "hundreds of millions of dollars" to prepare for number portability. That figure contrasts sharply with public estimates from Verizon, which has irked its rivals by breaking ranks with the industry's long-standing opposition to wireless number portability.
Verizon says it has spent about $60 million on preparations, and estimated its ongoing costs to facilitate number portability at 10 or 15 cents per subscriber per month.
With 34.6 million subscribers, Verizon's estimate suggests that it expects monthly portability expenses of up to $5.2 million, or less than half the amount Sprint will be collecting per month.
Verizon's figures are consistent with the estima
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Actually, it's
1) don't actually offer cell phone number portability
2) charge for it
3) profit!