Telecom Carriers Use Deceptive Advertising

theodp writes "Regulatory Programs Fee. It sure sounds like a government tax. It isn't. The latest addition to T-Mobile's monthly bill is merely the latest example of telephone companies passing their own cost of doing business to customers with an array of surcharges that one might easily mistake for taxes being collected on behalf of the government. With millions of subscribers at each company, these less-than-forthright fees add billions of dollars per year in extra revenue without raising advertised rates."

Comments

Five cents turns into 16.37 cents?

[LostCluster]

ABtolls.com maintains a database of phone rate planes, and does the consumer the favor of computing the true cost of a plan after all the USF and PICC fees are added in. This particular dial-around plan has to go down as one of the worst offenders. While they claim that the first three minutes only costs 5 cents, "regulatory fees" make that three-minute call cost 16.37 cents, more than triple the advertised rate!

Sure, that's only pennies of difference, but nickeling and diming in volume adds up.

Re:How the hell is this news?

[LostCluster]

The newsworthy aspect is because T-Mobile was the last major phone company, celluar or landline, to not be charging such a fee. Now, it's impossible to switch carriers to avoid such fees. It really can be said that everyone's doing it.

So who is supposed to pay for increased overhead?

[caffeineboy]

So what do you want? If the government mandates things like number portability and location, this makes a change to the company's bottom line. I don't see how this is different than a tax really.

I'd be more likely to call things like this "unfunded mandates". People groan about getting screwed by companies and then groan again when the companies charge them for services that they mandate.

Personally, I'm a little ticked by this way of recovering costs. I'm now paying monthly for other people to have number portability. This seems akin to having a monthly charge on my bank account for other people to use non-network ATMs. I don't like paying for non-network ATMs, so I don't use them. Similarly, I don't like paying to move to a new network, so I don't do it.

But honestly, if services are going to be mandated, we have to expect to pay for them. You can't really complain too much about .86. Have you seen what land lines charge per 'service'?

My Favorite Deceptive Cell Phone Advertising

[ctwxman]

Many cell providers advertise "no charge for roaming nationwide." The plan I'm on from Cingular features that. What is not said is, many of the places you could roam from in the days of paid roaming are now blocked from your phone! At home, on my "no charge for roaming nationwide" plan, I often get a full scale signal. But, when I try to make a call I am admonished, "Emergency use only."

Look at the State if you want the Crooks

[s.fontinalis]

"New York State has collected $440 million since 1991 in special taxes on cellphones. But only about $30 million of that has gone to the program named on most cellphone bills as the purpose of the tax: enhanced 911 service, which can help police, fire and ambulance dispatchers locate a cellphone caller in need of emergency help"

http://www.nytimes.com/2004/05/10/nyregion/10pho ne .html

Re:uh

[fermion]

Most honest companies will estimates all costs and expected profits into a price quote. They will than add taxes to that quote . Most honest companies, like some car dealers, will even estimate the additional taxes and fees up front.

What the phone companies are doing is making the costs of service look cheaper than it is. They quote you $50, but in fact are charging you $55. The $5 is not going to an government agency. The $5 is revenue. It is what you pay for the private company for the service, which most of us would consider the real cost of the service.

The problem with this is that limits your ability to compare prices. Many mail order places use this shady tactic to make their inferior products seem less costly. For instance, a music service may list prices for CDs that are, on average, $8. However, after adding the handling fee, a fee that is in fact revenue to the company, the real costs of the CD may be closer to $12. Note that is not the shipping fee that is paid to the carrier, which may be as low as $1.50. By quoting an intentionally deflated price, they deceive consumers. Many of the shady mail order place, like fingerhut, play the same game. I believe UPS paid a fine for doing this with the insurance charge.

As an example, suppose car insurance companies were allowed to add a statutory loss fee that would pay the expected claims of the year. In this way the insurance company could quote you a price that would only cover their administrative costs, which might be 65%-75% of the real quote, and then add the fee onto that. When you compare prices, you would not be able to find the cheapest quote because of this large percentage that was unknown. The companies that were in fact the cheapest would tell you this missing bit. This might make these companies seem more expensive.

In the end there is no reason for a telco not to quote the actual money the customer will have to pay everyone month. It is generally going to be the same for all providersin a region.. In fact, them not doing this is costing the major telcos business. The smaller companies are doing one of two things. Everyone knows how much they pay for the land line every month, but not everyone know how much basic service costs. The small telcos are taking advantage of this. Some telcos are targeting the good customer looking to save a few bucks. These are quoting basic service that is one or two dollars cheaper the the major telco, but are doing it in such a way that it looks like this is all the customer will have to pay, therefore making the service appear much cheaper than it is. Other telcos are targeting the customers that don't always pay their bills. These companies set their basic service charge to the average amount the customer would pay at the major telco, and then add taxes on top of that. They advertise in such a way that it looks like the customer would be paying the same as if they went with the major telco.

Clearly it is deceptive and we should not tolerate it. If Walmart charged a two dollar store use fee on every transaction, fewer people would shop there.