Verizon joins other cell carriers with new portability fee
By Associated Press
Published November 26, 2003
NEW YORK - Verizon Wireless plans to charge subscribers more than $173-million per year in extra fees related to new rules that allow customers take their phone numbers to a new service provider - more than double what the nation's largest cellular carrier had said it expected to charge.
Also Tuesday, a company serving as the intermediary among most major wireless providers in transferring phone numbers said it received about 80,000 requests on Monday, the first day of the new rules. The company, TSI Telecommunications Services of Tampa, had been bracing for a million or more requests on Monday.
Verizon's additional fee of 40 cents per month will be charged to all 36-million wireless subscribers starting early next year, the company confirmed Tuesday. The calculation of $173-million does not take into account additional collections from new subscribers.
The decision by Verizon Wireless leaves T-Mobile as the only national wireless carrier not charging such a fee. The fees are generally charged to all subscribers regardless of whether they plan to change to a new wireless provider.
Even before the new rules went into effect, the nation's biggest cell phone companies had collected hundreds of millions of dollars for "regulatory cost recovery."
Such fees are permitted by the Federal Communications Commission and state utility commissions to help companies defray expenses incurred in complying with various regulatory mandates, including requirements to help emergency operators pinpoint the location of any cell phone used to make a 911 call.
Beyond a general requirement under federal law that such fees be "just and reasonable," there is no specific cap. Because the FCC does not monitor the fees or require the companies to report their actual expenses, it is difficult to determine how the companies calculate their costs.
According to federal filings by wireless carriers during their yearslong battle to block the new rules, the costs being recovered include huge marketing expenditures designed to keep old customers and lure new ones from rivals.
Other major costs have included installation of software systems to handle number transfers and retaining firms like TSI to serve as intermediaries and troubleshooters. They also include training and hiring staff to process requests.
Although the fees are generally less than $1 per month, the amounts add up quickly when multiplied across the millions of subscribers each carrier serves. Sprint has been charging about 18-million customers an extra 63 cents per month since July, for a total of more than $65-million collected through November.
It is harder to calculate collections by other carriers where charges for portability were rolled into a new multipurpose fee: $1.55 a month at Nextel, $1.75 at AT&T Wireless and between 32 cents and $1.25 at Cingular Wireless.