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Telecom Carriers Use Deceptive Advertising

michael posted more than 10 years ago | from the sleaze-and-fees dept.

The Almighty Buck 285

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."

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285 comments

First Post (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9164724)

oohhh Yeah!

Re:First Post (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9164731)

yeah, but you're just an anonymous coward so it doesn't count.

Deceptive, not illegal (5, Interesting)

CptChipJew (301983) | more than 10 years ago | (#9164727)

Although these tactics could be seen as immoral and lame, it doesn't look like they're actually breaking any laws. From the article, "Actually, T-Mobile's monthly charge of 86 cents is among the more clearly labeled.". As well, "though thankfully there's at least a footnote below owning up to the fees as Nextel's doing."

Like EULAs, they are taking advantage of the fact that nobody reads them.

Re:Deceptive, not illegal (5, Interesting)

LostCluster (625375) | more than 10 years ago | (#9164751)

For the record, the FCC's FAQ on the issue [fcc.gov] states very clearly that the USF is an obligation of the telecom carrier that they're allowed to shift onto their consumers, but they clearly don't have to.

So, basically, this is just a way for them to itemize it like it's a tax, when really its a tax on the telecom company rather than one on the consumer at the point of sale.

Just like the IDT ads claim, the big guys even try to pass their own property taxes [fortwayne.com] off to the consumers by a fee.

Re:Deceptive, not illegal (4, Interesting)

CptChipJew (301983) | more than 10 years ago | (#9164775)

Of course, such is big business. When you buy a car, you pay a "transportation fee" for getting the car from the factory to the dealership.

When I was a kid I lived near one of Toyota's factories, and the same transportation fees applied at the nearby dealership than at the one near me here in Los Angeles.

I would hope that eventually the cell industry will become saturated with companies someday to the point of "No hidden fees!" advertising.

Re:Deceptive, not illegal (3, Funny)

Anonymous Coward | more than 10 years ago | (#9164841)

"I would hope that eventually the cell industry will become saturated with companies someday to the point of "No hidden fees!" advertising."

I remember a Dilbert book that called these things "Confusopolys" - where the only way they make money is confusing the customer so much they pay for unnecesary stuff.

Scott Addams described it far better than I could. Anyone remember which dilber book this was?

Re:Deceptive, not illegal (5, Insightful)

TykeClone (668449) | more than 10 years ago | (#9164776)

There are no taxes on businesses - All taxes are passed on to their customers. Telecoms just are kind enough to itemize it.

Re:Deceptive, not illegal (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9164782)

Mod parent up: this is a very good point.

Re:Deceptive, not illegal (3, Interesting)

LostCluster (625375) | more than 10 years ago | (#9164800)

The costs of businesses are not always passed on to consumers. Sometimes they come out of the profits... that's taking money from the owners rather than the consumers.

If music piracy were to go down, do you really think we'd instantly see a price cut?

Re:Deceptive, not illegal (4, Insightful)

TykeClone (668449) | more than 10 years ago | (#9164817)

No I don't, but I also don't think that if corporate taxes go to 0% that we would see price cuts either.

In the last couple of years, we've been in an environment where most businesses have had no pricing power - near 0% inflation has made it so that no one could raise prices.

Now that the economy is starting to pick back up, prices will be easier to raise and I suspsect that most companies will be passing on the increased taxes of the last couple of years (you don't think that the states have been sitting idly by, do you?) on to consumers.

I think that a close to ideal tax structure (at least for businesses) would be a sales tax - that way everyone would be up front about what the government gets.

Re:Deceptive, not illegal (4, Interesting)

miu (626917) | more than 10 years ago | (#9165006)

I think that a close to ideal tax structure (at least for businesses) would be a sales tax - that way everyone would be up front about what the government gets.

Sales tax only works if you have an exemption on food (probably qualified as just those things that can be purchased with food stamps) and a higher rate on luxury consumables. The reality is that every US state (48 of em) that has instituted a sales tax has started out with a 2.0% rate that can never ever ever be raised and an exemption on basic necessities.

In the majority of cases the rate is 5%+ within 10 years and the exemptions for basic necessities are gone. So sales tax winds up as an unreasonable burden on the poor and middle class.

Re:Deceptive, not illegal (4, Interesting)

nolife (233813) | more than 10 years ago | (#9164969)

I know saying the FCC allows this makes it all sound good but think about that concept big picture. What gives the FCC the right and or power to allow my cellular phone provider to modify the terms of my contract I have with that cellular provider? You can tell this story 100 different ways but bottom line, that is exactly what is happening here. I am paying MORE per month then my original contract states and it is not because of a federal or local tax, that money goes directly to the carrier with little to no oversight on what they can charge and for how long. The cost of doing business is exactly that. A contract is exactly that. The cellular providers WANT long contracts to tie you into the service but also want the ability to raise rates after that contract is signed but masking it as an add on "fee" to cover costs. Here is an idea for them. If they want the ability to adjust the fees based on the cost of doing business, then do not have such long contracts. What if my county raises the taxes they want for each cellular phone, can I deduct that exact amount I pay my cell carrier every month as a "cost of owning a cell phone"? If the government raises the minimum wage and now all CSR's at the cellular company make 25 cents more an hour, would they be allowed to add a few bucks to you bill as a federal minimum wage increase fee? Hell no.

Car dealers (3, Offtopic)

nycsubway (79012) | more than 10 years ago | (#9164860)

My favorite thing at the car dealer is the "conveyance fee" that is pre-printed on the invoice for a car. They say "it's necessary, everyone has to pay it. It's state mandated." Of course none of it is true, but people will pay anyway, because they're not being told the whole truth.

It's not illegal, but its very sneaky. It's something that most people will miss, and when most people dont know they are being ripped off, then the government can take a closer look at it.

Re:Deceptive, not illegal (5, Insightful)

Anonymous Coward | more than 10 years ago | (#9164940)

So, because it's not breaking any laws, and they're only innocently taking advantage of people not reading the 5,000 page included agreements, we should let this go?

Don't you get kind of fed up with companies taking advantage of people? Why is this so accepted in this country? Shouldn't we start doing something to companies that blatantly lie to costomers to gain their business? How long are you going to allow people to get screwed over and then point the finger at the individual because it's "their fault" they didn't take time out of their 50 hour workweek to deal with one-of-several-hundred companies bullshit lies?

How the hell is this news? (4, Interesting)

00420 (706558) | more than 10 years ago | (#9164730)

Telephone companies have been doing this for many years.

One of the companies I worked for even listed the surcharges at the end of the taxes so that when people called the first five or so things they asked about would get an answer of "that's a tax, there's nothing we can do about it," that way they usually stopped asking before getting to the surcharges.

Most companies won't even list them though, they just put "Other taxes and surcharges... $X" on the bill.

Re:How the hell is this news? (4, Informative)

LostCluster (625375) | more than 10 years ago | (#9164767)

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.

Isn't there some code of ethics in the US? (2, Insightful)

King_of_Prussia (741355) | more than 10 years ago | (#9164735)

Where I come from, the consumer protection authority jumps all over companies who don't include fees like this in advertised costs. I bet sleazeballs like this charge a hefty early disconnection fee too...

Re:Isn't there some code of ethics in the US? (3, Funny)

Anonymous Coward | more than 10 years ago | (#9164744)

Yeah, but Prussia doesn't exist anymore. Coincedence? I think not.

Five cents turns into 16.37 cents? (4, Informative)

LostCluster (625375) | more than 10 years ago | (#9164736)

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 [abtolls.com] 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:Five cents turns into 16.37 cents? (5, Interesting)

Marillion (33728) | more than 10 years ago | (#9164750)

I've heard people call it "Stealth Inflation." Real Prices have been rising for a while, but Advertised Prices haven't.

Another example is airline's fuel surcharge.

Re:Five cents turns into 16.37 cents? (1)

LostCluster (625375) | more than 10 years ago | (#9164787)

It's interesting that gas stations have to display an "includes all taxes" price, while in several states such as California there is a sales tax based on a percentage of the true price as a component. In those cases, when the price goes higher, the tax per gallon tags along for the ride...

Nearly every other product in the marketplace is marked with a before-taxes price, and the tax is added when you hit the register...

Cell phone taxes (1)

amspencer (472804) | more than 10 years ago | (#9164742)

On my $30 bill with SprintPCS, there are about $7 in taxes. Most of them are local taxes. What I don't like is paying for portable phone numbers if I don't intend to move my number.

Re:Cell phone taxes (1)

whoppers (307299) | more than 10 years ago | (#9164917)

I have two PCS phones and told them I won't move these numbers, so take the fee off and they have.

Don't worry (1)

RuneB (170521) | more than 10 years ago | (#9164748)

According to the T-Mobile girl, you can always take your number to a better place!

Re:Don't worry (1)

`Sean (15328) | more than 10 years ago | (#9164774)

> According to the T-Mobile girl, you can always take your number to a better place!

So you really can take it with you when you die?

Re:Don't worry (1, Funny)

Anonymous Coward | more than 10 years ago | (#9164793)

I wouldn't call 'up my ass' a better place, necessarily. I'm sure that's where she'd tell me to put my number.

don't use Telecom use . . . (2, Interesting)

Anonymous Coward | more than 10 years ago | (#9164753)

Personal Telco [personaltelco.net]

Less-than-forthright fees (1)

drsmack1 (698392) | more than 10 years ago | (#9164754)

These addtional charges represent the "less-than-forthright taxes" levied on the telecommunications industry by the Federal Government. I called and asked about it one time. One of them is Gore's "I invented the Internet" tax.

Re:Less-than-forthright fees (1)

Whumpsnatz (451594) | more than 10 years ago | (#9164761)

Yeah, but it's actually a pretty puny piece of the overall robbery.

Big Fat Duh! (3, Interesting)

mbrother (739193) | more than 10 years ago | (#9164758)

Phone companies have been pulling this crap for years, banks too. Doesn't mean they should or that people like it. Tempted to try this on my next government grant budget, but will probably have an attack of integrity. Deceptive but not illegal is still sucky. And that's the technical term.

Re:Big Fat Duh! (5, Insightful)

tomstdenis (446163) | more than 10 years ago | (#9164857)

No, deception but not illegal is called "modern business". It's gotten to the point that to make more money than your competitor you don't make a better product [why? Standards are fairly subjective nowadays]. Instead you trap your customers into useless deadend contracts and then tact on this charge and that charge.

Banks are by far the most useless institution I've seen. For instance, I get paid via cashier cheques made out to my name. However, if I walk into another branch of the same bank I can't cash the cheque despite the fact every teller has a new-fangled computer with a 17" LCD monitor [which probably cost serious coin].

Every time I see a teller it costs money. Whenver I cash my cheque it costs me money [2% + fee to change from USD to CDN]. Whenever I take out money from non-branch ABMs it costs me money. etc, etc, etc.

Then you get into bank hours which are often anywhere starting from 9 to 11am and ending from 3 to 5pm totally useless for students and the employed.

Then you get into the stupid tellers. Who rarely follow procedure [one teller will cash your cheque without a hold another with a 20 *BUSINESS* days hold].

Then commercials tell you "you are first, we are here to put you first, if you are not first then we are not doing out job to put you first. You are the first important job we deal with because as our first customer you will get the first attention you firstly deserve" which are just trying to hide the fact that banks don't give a rats ass about customers. If they can find a way to make a buck off a customer [including raping you up the ass when you're not looking] they'll certainly try.

Personally if I could find another way to turn a cashier cheque into rent+school+bill+food I would do it in a heart beat.

Back on topic. Phone companies pretty much work on the same M.O. Using stupid commercials to blindside the customer into signing 3yr contracts for plans they don't need, can't use and wouldn't want given the option. 60 "anytime minutes", unlimited weekends, 0.30$/m net access, bullshit bullshit bullshit.

Personally I'd love to see a plan "you pick up da phone and you can talk", no net, no ring tones no stupid extras. Just a fucking phone. These "value added gourmet quality" additions are just there to cover up the fact that you pay too much for the little coverage/service you get. It's like adding salt to dog shit and calling it steak.

That's my rant and I'm sticking to it.

Tom

Re:Big Fat Duh! (3, Informative)

mbrother (739193) | more than 10 years ago | (#9164886)

I have a credit union with direct deposit, very few fees, if any at all most months. I know I'm smart/lucky there. The direct deposit gave me 0.25% off on a car loan, too, at a decent rate already. The phone thing though...do you also get Qwest commercials where you are that intimate that their customers love getting their bills and phone calls?! Unbelievable...

Not with AT&T (4, Interesting)

Anonymous Coward | more than 10 years ago | (#9164759)

I just signed up with AT&T wireless not a week ago. They were very clear and up front about the fact that it is not a tax, but it is used to cover the expenses of follosing the various regulations. I signed up anyway, knowing full well what they were doing.

They call it a "Regulatory Programs Fee", like Verizon does.

Maybe some other carriers have problems with this - and maybe AT&T has their own problems, I haven't been signed up long enough to know - but I can't at all fault them for this.

In all fairness, the article did not single them
out.

--Russell (not logged in because it's Sat. Night and I'm a lazy f*ck)

Re:Not with AT&T (5, Insightful)

DAldredge (2353) | more than 10 years ago | (#9164895)

But they don't include those fees in their TV, radio or print ads, do they?

THAT is what upsets people.

Re:Not with AT&T (1)

kidgenius (704962) | more than 10 years ago | (#9164908)

Wow.

You actually chose to go w/ AT&T. Be prepared to be calling them up on a regular basis to correct your billing. AT&T was rated #1 for customer complaints, incorrect billing, and service. The two people I know with AT&T are itching to get out of their contracts b/c of the crappy service. Click here [cnn.com]

Re:Not with AT&T (1)

mabu (178417) | more than 10 years ago | (#9165031)

I just signed up with AT&T wireless not a week ago.

Congrats! You're now in bed with the Verisign of wireless; the Microsoft of Telcos. The most expensive wireless company on the planet, with nowhere near the best calling area or plans.

I researched all the companies over many years. One company I would never deal with is AT&T.

So who is supposed to pay for increased overhead? (4, Informative)

caffeineboy (44704) | more than 10 years ago | (#9164770)

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'?

Re:So who is supposed to pay for increased overhea (1)

TykeClone (668449) | more than 10 years ago | (#9164791)

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.

Are you sure that you're paying for other people to use non-networked ATM's? Many times the owner of the ATM has a surcharge (to pay for the ATM) and your bank will have a fee for using ATMs out of the network - something that is directly proportional to your usage.

Re:So who is supposed to pay for increased overhea (1)

caffeineboy (44704) | more than 10 years ago | (#9164821)

No, you misunderstand. The .86 on t-mobile is to pay for number portability and 911 location service, if I understand correctly. I don't use number portability, and I haven't used 911 location service (although I can see paying for this in case). I am sharing T-mobile's cost of other people using this service.

At my bank, I only pay ATM fees if I use non-network ATMs. If the government passed a law outlawing ATM fees, the administrative costs would probably show up in a similar way. Since they are allowed to charge for this service per use, I don't see any cost.

Re:So who is supposed to pay for increased overhea (1)

TykeClone (668449) | more than 10 years ago | (#9164840)

Oops - sorry - too much beer :)

I agree that that's not right, but where a business can pass on taxes like that, they will.

There are no taxes on business - only consumers.

Re:So who is supposed to pay for increased overhea (2, Funny)

weston (16146) | more than 10 years ago | (#9164827)

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.

It's a tax on people who patronize businesses who built crappy enough infrastructure or business models that number portability was a problem.

In the same way, of course, that a lottery is a tax on people who are bad at math.

Re:So who is supposed to pay for increased overhea (2, Insightful)

LostCluster (625375) | more than 10 years ago | (#9164833)

Number portablity was actually a break-even proposition for most of the cell phone carriers.

It turned out to be a knockout blow to AT&T Wireless because they botched an IT upgrade that ended up not allowing them to accept new customers during the critical moments when portability first opened up. All off the other companies, ended up just trading customers [chicagotribune.com] leading to higher customer satisfaction rates.

In short, this was one of the best advertising boons the cell providers ever had, as unhappy customers could move to a company that better serves them, and overall customer complaints went down.

overhead is fine, dishonesty is not (4, Insightful)

David Jao (2759) | more than 10 years ago | (#9164869)

But honestly, if services are going to be mandated, we have to expect to pay for them.

The complaint is not that we have to pay for them. The complaint is that these fees are not honestly disclosed to the customer until after the customer is already signed up, in many cases to a long term contract.

Without up front disclosure of the amounts of the fees, it is impossible to make an informed choice of telecom company based on what the service really costs. The practice of hidden fees also unfairly penalizes those companies that satisfy the mandates more efficiently and thus can charge lower fees.

In short, nobody minds fees. The problem is the way the telecom companies deceptively advertise their prices without the fees.

Re:overhead is fine, dishonesty is not (1)

/dev/trash (182850) | more than 10 years ago | (#9165026)

This is okay if the fee exists before I sign up, but if it comes into effect after I sign up, how do they predict that?

Fine. (1)

DAldredge (2353) | more than 10 years ago | (#9164870)

All the phone companies have to do is advertize what they will charge you. As it is now, they lie and 'forget' to include all the fees/taxes when the advertize their prices.

It isn't that they all these extra fees, it's that they are saying their service only costs X when it really costs X+20%.

In other news..... (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9164778)

The Sky is Blue.

Windows is full of holes.

yadda.... yadda... yadda.

Re:In other news..... (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9164805)

dude the other day I got stuck in an elevator with a hot latina yadda yadda yadda and my weekend ended so good :).

Lawsuit (5, Funny)

OneIsNotPrime (609963) | more than 10 years ago | (#9164780)

I would encourage a class action lawsuit, but then l would probably just see this on my bill next month-

Regulatory Consumer Disloyalty Juris Prudence Fee - $14.86

A not-so-funny side (3, Informative)

Anonymous Brave Guy (457657) | more than 10 years ago | (#9164926)

You laugh, but T-Mobile UK just started charging one pound per month just to send you an itemized paper bill.

That would seem less serious if I hadn't just caught them double-charging me for text messages supposedly included in my monthly allowance, based on the itemized records from previous months' bills.

ultimate cell phone alternative no gimmicks!!! (2, Funny)

Anonymous Coward | more than 10 years ago | (#9164786)

It's called....

Drums roll!!!!!!!

Quarters!!!!!, public phones are vailable everywhere.

Stop being a snob.

Save yourself to get beaten to death when your cell phones rings in public events restaurants,movies,concerts you name it.

Prove your geekiness making free phone calls from your public phone, still possible :).

and you have to stop your car to make/attend a phone call so what are you waiting for?

Re:ultimate cell phone alternative no gimmicks!!! (2, Funny)

Guppy06 (410832) | more than 10 years ago | (#9164893)

"Quarters!!!!!, public phones are vailable everywhere."

Please deposit an additional ten cents.

Re:ultimate cell phone alternative no gimmicks!!! (0)

Anonymous Coward | more than 10 years ago | (#9164976)

Sadly, payphones are getting near impossible to find.

I would not mind IF (1)

the_2nd_coming (444906) | more than 10 years ago | (#9164789)

if the fees were associated with upgrades or costs incurred for providing me with service then I would not mind, BUT when they raise my rates because of a tax penalty or a cost involved in purchasing capitol, then I get pissed.

is there going to be a 2600 fee? (1)

multi-flavor-geek (586005) | more than 10 years ago | (#9164790)

I fear the next addition on the list of fees could be a fee alowing the continuation of the carrying of 2600 hertz over the phone, not that most people would understand, but how many people would realize that the service that they are charging for has since been repolaced with a message bithing us out for 'attempting to compromise thier service' Hell they are charging us for use of the lines that they are running accross our properties for free, arrgghhhh.
Oh well, I am ranting, someone please stop me

Some of these percentages are pretty high too! (5, Interesting)

acadiel (627312) | more than 10 years ago | (#9164794)

Looking at my last Nextel bill: Wife's phone plan charge was $17.59. "Taxes" were $6.66 to bring the total to $24.25. That's 37% in taxes. The * ones ("Fees Nextel elects to collect to recover its costs of funding and complying with Gov't mandates and initiatives") were $3.11, or a grand total of almost 18% of my wife's bill.

To break it down, the Federal TRS charge was only 0.073% (0.01). The Univ Serv Assessment was 1.25% (0.27). The Cost program recovery fee was a flat $2.83.

My account plan rate was $47.54. Taxes were $10.98 to bring the total to $58.52. That's 23% in taxes. The * ones were: TRS Charge: 0.073% (0.04), Univ Serv Assessment 1.25% (0.65) and Cost recovery fee ($2.83). Result? $3.52 in these charges, or only 7% of my bill.


What makes me sick is this:

I was paying $65.13 a month to Nextel plus a total of $17.64 in taxes and fees. (A 27% tax rate!!!!).

Take my last Cingular bill (I just switched). My monthly service charges were $47.97. The fees on the account were $6.52 on the line with a $38.98 charge, and $2.71 on the line with the $8.99 charge. That's only 19%! Cingular charged me 17% on one line and 30% on the other (well, the second one is skewed since it only has a $8.99 plan.)

Cingular charged me only $1.07 for the Federal USF, and 0.60 for the "Cost Recovery Fee". The rest was a Federal/State and 911 tax. On the other phone, they charged me .25 for the USF and 0.60 for the Regulatory cost fee.

I find it real sneaky how these providers are doing this.....

Re:Some of these percentages are pretty high too! (1)

LostCluster (625375) | more than 10 years ago | (#9164854)

One thing to note is that the providers apply most of these fees on a per-line basis, so it's the customers with the cheapest monthly plans that end up with the highest percentage of their bills turning out to be fees and taxes.

Re:Some of these percentages are pretty high too! (2, Informative)

acadiel (627312) | more than 10 years ago | (#9164885)

That's true - but if you look at the plain percentage for the whole account, Nextel was taxing me 27%, and Cingular only taxes me 19%. The same federal,state, and 911 taxes, but entirely different "optional" charges make up the 8% difference.

Bottom line: Nextel is charging me 8% more to make money.

That _is_ a tax - a corporate tax (4, Insightful)

Whumpsnatz (451594) | more than 10 years ago | (#9164795)

If you can't get the product (phone service) without paying that extra, then as far as I'm concerned, it's a tax, especially if you really do need the service.

When I add up all those outrageous charges, I calculate that taxes (by my definition) amount to about half the cost - if not more.

Really makes me want to totally disconnect. But then how would I complain on Slashdot?

More to the point, those charges only happen when the politicians allow (or encourage) it. Here in Florida, the politicos passed a bill that allows a 70% increase in basic rates. I'm taking names.

yeah, exactly, "cost of doing business" (-1, Flamebait)

Anonymous Coward | more than 10 years ago | (#9164801)

[...] is merely the latest example of telephone companies passing their own cost of doing business to customers

Damn telephone companies.. next thing you know, McDonald's will start charging enough to cover the health insurance costs for their employees, Radio Shack price mark-up will include their retail store expenses, and ISP's will start raising fees to cover the cost of their electricity. It's as if these companies are trying to make money or something.

Re:yeah, exactly, "cost of doing business" (5, Insightful)

profet (263203) | more than 10 years ago | (#9164861)

No one is saying they shouldn't make money.

The gripe is that they are using the old bait and switch tactic, by disguising extra fees as taxes.

So instead of advertising a plan for $50/month + tax...its actually $40/month + tax + B.S. charges.

Re:yeah, exactly, "cost of doing business" (1)

DAldredge (2353) | more than 10 years ago | (#9164967)

Unlike the telcos, each of those companies you listed include those in the price you pay. IOW, they don't advertize one price and then charge you 20% more later.

Re:yeah, exactly, "cost of doing business" (2, Interesting)

Awptimus Prime (695459) | more than 10 years ago | (#9164987)

Damn telephone companies.. next thing you know, McDonald's will start charging enough to cover the health insurance costs for their employees, Radio Shack price mark-up will include their retail store expenses, and ISP's will start raising fees to cover the cost of their electricity. It's as if these companies are trying to make money or something.

Check this out, EarthLink was $19.99/mo until it began outsourcing it's call centers overseas. Even after getting the super-cheap labor, they turn around and raise rates to $21.95/mo.

Yeah, all of this is really good for the economy. But only if your name is Gary Betty.

What I Want to Know is ... (5, Funny)

Professor D (680160) | more than 10 years ago | (#9164802)

Can I deduct my costs from the payment I make to the phone companies?

Let's see. If I write more than 5 checks a month, it costs me $5 per. I can pass that on to them. Oh, and don't forget the cost of the stamp. How about all the taxes I pay as a result of me making a living? Gas tax, income tax, sales tax, Social security ... I'll just deduct all that from my payment ...

What? Didn't anyone at the company notice the EULA they accepted by accepting my payment? I included it in the envelope and they accepted it by cashing the check.

Re:What I Want to Know is ... (1)

mbrother (739193) | more than 10 years ago | (#9164904)

This kind of thing pisses me off, too. I don't mind THAT much (although I mind) credit card company late fees. I pay some too -- up to $39, because I'm a busy guy. But at least I've agreed to it and can punish that card by putting it in the "do not use" pile for a year, or usually calling to complain and threatening to cancel will eliminate the charge. But when you have different companies (like hospitals, or other companies that prefer to bill you down the line) assigning arbitray late fees and the like, it's just irritating.

Re:What I Want to Know is ... (2, Funny)

/dev/trash (182850) | more than 10 years ago | (#9164995)

You pay $5 per after 5 checks a month? Whoa.

Scrutinize, deny, withdraw (2, Insightful)

tomstdenis (446163) | more than 10 years ago | (#9164815)

Always scrutinize contracts, get things on tape if you have the time. When stupid charges pop up deny them. If they don't then withdraw absolutely every add-on [call display, voicemail, net access] that you don't need.

Not like you will "hurt" the company since there's always another moron to take your place but you can make "your" stand and at the very least have a lower bill to show for it [even if it still has a moron-fee] attached to it.

Tom

Good rant, even better cause (4, Interesting)

l0ungeb0y (442022) | more than 10 years ago | (#9164835)

There is nothing wrong with what T-Mobile is doing.
And that's entirely what's wrong with the picture.

And while this may indeed be Yet Another Reason to Bitch to Government with some requests for some regulation, keep in mind there WILL always be loopholes for accountants (just as crafty as lawyers, just not as loathed (ever seen an accountant on CNN defending high profile clients?), so all it would amount to is a finger in the dyke.

What you need here is full disclosure... and correct me if I'm wrong, is already mandated THAT IF YOU ASK THEY MUST GIVE. So next time ask the sales rep to outline all the surcharges and taxes BEFORE signing up for service and do the obligatory second opinion from a competing carrier. But chances are they will be roughly the same.

excuse the subject line on my post (1, Offtopic)

l0ungeb0y (442022) | more than 10 years ago | (#9164850)

Had one thing in mind when I started typing and while thinking it through changed tact. So the subject line is in fact bogus

Re:excuse the subject line on my post (1)

l0ungeb0y (442022) | more than 10 years ago | (#9164894)

Rating an addendum to my parent post as off-topic?
Excuse me while I weep for both my lost karma and the sheer stupidity of the mod who wasted one of their precious points.

*sighs -- prepares for another mod down for typing this post*

And so now I must give the obligatory Animal House qoute:
"Thank you sir, give me another!"

In other news.... (3, Funny)

hta (7593) | more than 10 years ago | (#9164836)

water has been found to be wet.

Can you spot the real taxes? (4, Interesting)

profet (263203) | more than 10 years ago | (#9164838)

Federal Excise Tax: $1.29
Federal Universal Service Fund: $0.56
State Gross Receipts Tax: $0.15
State Sales Tax: $1.76
State Telecom Excise: $1.00
County Surcharge: $0.05
County Telecom Excise: $0.79
MCTD Surcharge: $0.24
Local Sales Tax: $1.81
State 911: $1.20
County 911: $0.30
Regulatory Programs Fee: $0.86

Re:Can you spot the real taxes? (1)

mbrother (739193) | more than 10 years ago | (#9164871)

I doubt it. If it isn't a tax, why not roll it into the monthly rate? It's very frustrating to see incomprehensible, mandatory fees on a bill you must pay to maintain service. Roll it into the monthly fee and let us eat our Soylent Green like happy cattle. We've got bigger fish to worry about.

My Favorite Deceptive Cell Phone Advertising (4, Informative)

ctwxman (589366) | more than 10 years ago | (#9164845)

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."

uh (2, Insightful)

Peyna (14792) | more than 10 years ago | (#9164848)

latest example of telephone companies passing their own cost of doing business to customers

Isn't that what companies do? You pay them to do some service or deliver some good, and as such you're always paying their cost of doing business plus some for their profit.

Re:uh (0)

Anonymous Coward | more than 10 years ago | (#9164876)

Yup. But usually, they don't try to pass off their costs of doing business as ersatz taxes.

Re:uh (4, Informative)

fermion (181285) | more than 10 years ago | (#9165020)

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.

T-Mo will let you cancel your service without... (1)

outz (448278) | more than 10 years ago | (#9164874)

a penalty if you do it during the first month after you receive the bill with this added fee. You just have to mention this is why you are wanting to cancel. I opted to cancel but could not find any better rates for what we're getting.

Seems what they want are better descriptions (3, Interesting)

caffeineboy (44704) | more than 10 years ago | (#9164877)

It seems that the real issue there is that the charges are named strangely. This is certainly nothing new.

I remember the first AT&T local service bill - charges like 'line charge' and 'access charge'... Why these are itemized on a bill makes no sense to me.

Even worse are medical bills. I got a bill with 25 different charges that looked like LOCKBOX 54345333453345 - $45.55. Why even break it down? It would be nice if there were some kind of 'transparency in billing' law that required bills to make some kind of dang sense.

Re:Seems what they want are better descriptions (1)

JimBobJoe (2758) | more than 10 years ago | (#9165015)

I got a bill with 25 different charges that looked like LOCKBOX 54345333453345 - $45.55.

Dude, You just got reamed for paying the secretary's Citibank Mastercard bill.

Take some business classes (2, Insightful)

Ruprecht the Monkeyb (680597) | more than 10 years ago | (#9164892)

the latest example of telephone companies passing their own cost of doing business to customers

Oh good lord. All companies pass their cost of doing business on to the customer. Put down your copy of the Communist Manifesto and step away from it slowly. Companies don't pay for operating expenses, taxes, payroll, or anything else. It all ultimately comes out of the pocket of their customers. Or do you think these companies stole their money from leprechauns?

Re:Take some business classes (1)

DAldredge (2353) | more than 10 years ago | (#9164950)

The fucking problem is that they ADVERTIZE one price know damn well it isn't the price they will be charging.

That is what pisses people off and it may be illegal.

Re:Take some business classes (1)

BCW2 (168187) | more than 10 years ago | (#9165021)

No it's not. They tack on the charges as tax and Govt. mandated fees. Since most of this actually is through regulation by the Govt. It is not repeat not false advertising. It's absolutly normal.

Re:Take some business classes (1)

DAldredge (2353) | more than 10 years ago | (#9165032)

No, if it was only the goverment fees than it would be normal. They are including fees that they are pulling out of their asses.

Re:Take some business classes (1)

BCW2 (168187) | more than 10 years ago | (#9165035)

Thank you for a bit of reason.

Operating expenses, taxes, payroll, raw materials, building and equiptment depreciation, or anything else is actually the cost of putting something "on the shelf" for purchase. This is the operating expense that is deducted from the gross to leave profit.

Telecom companies deceptively advertise! (2, Funny)

Anonymous Coward | more than 10 years ago | (#9164899)

In other news:
  • Pope Catholic.
  • Politician lies.
  • Bear shits in woods
  • Frog's ass watertight.

Itemized Bills (4, Insightful)

Fiz Ocelot (642698) | more than 10 years ago | (#9164900)

Just a thought, I bet if all of our bills for everything we buy were entirely itemized, we'd be quite outraged about these things a lot more often.

Simple example: What if Starbucks showed the actual cost of making that cup of coffee on the bill seperate from the markup at the register? People already know they're very expensive, but if they "really" saw it things would be different.

Now there is a lot of information you can get if you do some research into the company financial reports, but your average person is not going to do that.

Look at the State if you want the Crooks (5, Informative)

s.fontinalis (580601) | more than 10 years ago | (#9164903)

"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

Every business does this, just not so obviously (4, Insightful)

jbs0902 (566885) | more than 10 years ago | (#9164906)

companies passing their own cost of doing business to customers

You have to be kidding me!

Every company in the entire world since the beginning of time has tried to do this. Even St. Thomas Aquinas thought passing your cost of business on to your customers was OK. And, Thomas was the champion of the idea that a merchant should charge only just enough to cover his labor expenses (sacrifices).

The complaint that "companies pass their cost of business along" is the same as arguing that either (a) the company owes you something, and you should get something for nothing, or (b) the company's charges to you should be totally arbitrary and capricious and have nothing to do with want the service costs to provide. I'll admit that the cost-plus model of pricing is just a starting point, but the cost of goods usually sets the floor as to the price of the good.

From the article:
In truth, many of the surcharges like those imposed this year by DSL and wireless providers reflect real costs related to each company's compliance and payments in support of government-mandated "public goods."

So, these really are costs imposed by the government (i.e. taxes). The telco companies have just made the decision to let the customer know how much the government regulation is adding to the cost of the phone service. I fail to see how this is different from advertising the price of your goods non-inclusive of sales tax.

Is the argument against this that people should not know how much their government charges them in taxes? Granted the "tax included" pricing philosophy is easier to budget for, and I assume that is the "moral outrage" that the price you agreed to isn't what you are charged, but the rest is effectively sales taxes. It is annoying but talk to your government about it.

Re:Every business does this, just not so obviously (2, Interesting)

DAldredge (2353) | more than 10 years ago | (#9164944)

The telcos can still itemize all they want IF they tell people what they are doing. But they aren't, they are tacking on all these charges after the fact and not including them in the prices they advertize. This is different than sales tax in that sales tax is the same for all goods in the same catagory and doesn't vary from company to company.

Re:Every business does this, just not so obviously (2, Insightful)

bug506 (584796) | more than 10 years ago | (#9165005)

I fail to see how this is different from advertising the price of your goods non-inclusive of sales tax

The difference is that the state government charging the sales tax doesn't let the company charge whatever they think is "reasonable" for a sales tax. The sales tax rate is the same across all companies in a given area.

Because of this, a customer can easily compare the prices from, say, Fry's and Best Buy. If Fry's advertises $18 for a DVD, and Best Buy charges $20 for the same DVD, I know the DVD will be cheaper at Fry's (even including the sales tax).

When Sprint advertises a plan for $48 and Verizon advertises a plan for $50, there is no easy way for me to compare these two plans. Both plans will charge me the same tax, but since they are free to set the regulatory fees to anything "reasonable," I can't be sure that Sprint is the better deal. Sprint may decide that $6 is a reasonable fee, but Verizon might decide that $3 is reasonable.

Of course, you could argue that Verizon should then match Sprint's fees and then lower their "advertised price," but that is exactly the problem. The companies would be competing on who could most conceal the real cost of their service.

These "hidden fees" may be less of an issue if the government set the actual fee (like they set the percentage of a tax). Then, you would know that all of the phone companies were charging the same rate, and you could actually compare advertised prices.

The courts.... (4, Interesting)

InnovativeCX (538638) | more than 10 years ago | (#9164923)

Several others have posted comments regarding the legality of such fees and the deception surrounding them. Not a lawyer, and I don't understand exactly where the line is drawn, but I can tell you that a lawsuit would hold up. Case in point: Verizon.

I'll be the first to come out against the obesity lawsuits against McDonalds -- Frivolous court-clogging litigation ranks quite highly on my list of pet peeves. By that token, suing your wireless carrier to recoup $2.93 per month to the tune of legal fees, court costs, and simply the time involved would be quite outrageous. However, were I to take up such a matter, it would be not for the money involved, but for the principle. I've no problem with a corporation recovering extra costs due to the imposition of federal fees and standards from consumers assuming such fees are small and reasonable. I do not appreciate being lied to or otherwise misled -- it is one thing to pass costs back onto the customer, but quite another to masquerade a cost as a state or federal mandatory tax.

In any case, Verizon made this mistake. I never had much of a problem with receiving a $40.21 bill for my $36 plan sans overage -- I've more or less accepted that I'm going to get screwed over no matter what. Apparently a few were a little more upset than I; in November, I received notification that I was part of a class-action lawsuit of fellow customers against Verizon and its affiliates dating back to 1993. Due to their engagement in such practices, the company has been ordered to pay these customers something like $20, offer free text messaging, or free wireless web for a period of time. Nothing required to claim it either...apparently it is all automatic.

So, as silly of an idea as a lawsuit may seem, litigation seems to be a viable option, assuming you have an incredible amount of free time on your hands and are bothered by such deceptive practices enough to take the issue upon yourself.

Of course, knowing T-Mobile, I'd be more likely to go after them for their lack of coverage or decent service than slight-overbilling ;-).

-Scott

Headline. (2, Insightful)

Raven42rac (448205) | more than 10 years ago | (#9164928)

Instead of "Telecom Carriers Use Deceptive Advertising", shouldn't the headline read "Telecom Carriers Use Deceptive Billing "?

This isn't really bad. (-1, Flamebait)

Anonymous Coward | more than 10 years ago | (#9164931)

All this is the companies putting on the bill what all the hidden costs they have to go through because of the government. Remember they pay a ton of stuff to the government that isn't on the bill. This is thier way of putting it on the bill. Its really them telling us to pressure government to stop taxing everything so much. The government doesn't NEED 70% of the money it gets, it WANTS it. The government is more greedy than any corporation ever could be. The government never knows when enough is enough, it provides no service of value to the people for the most part for they money they pay. Sure roads, military, etc. But the vast majority of it goes to WELFARE type programs, to people who don't contribute to the community pot. Sure there are people who need it, but a lot don't. Imagine if everybody worked thier fare share that could work, imagine our economy. Don't tell me there aren't jobs, there were jobs, half the problem is the government trying to keep up with those that WOULDNT work costing society so much it couldn't continue to grow.

But you know the number one problem with this country, put the cap back on your bottle of beer girls so you keep your damn legs together. Thats the biggest problem we face in this country.

Telus (0, Redundant)

Malicious (567158) | more than 10 years ago | (#9164936)

I have a phone on Canada's TELUS TALK 30 Plan.

The idea is: $30/month for talk 30.
Great.
+$6.95 Network Licencing Fee
+$2.75 Taxes

Total is almost $40/month for a plan called '30'.

It's not as bad as it is in the states, but it's still deceitful.

Agreed.... it's false marketing (2, Interesting)

rune2 (547599) | more than 10 years ago | (#9165016)

Here in Canada at the moment there is some controversy over cell phone companies who are deceptively marketing their phones by claiming that they have to charge a monthly "Network Access" fee that is supposably required by the government. In fact since the law covering this fee changed April 1 the government is actually only getting a small fraction of the amount that customers are being charged. Yet they're still pitching it to customers as a government fee.

Why is this here? (4, Insightful)

BCW2 (168187) | more than 10 years ago | (#9165009)

1. There is a difference between advertising and billing.
2. All advertisments are lies to one extent or another. Some are smooth and some hit like a sledghammer.
3. 99.9% of prices advertised are before sales tax.

Add the fact that telephone companies (cell or landline) are the worst at this of any industry. Hell, they make electric and cable TV companies look honest, and most of us know better.

Why is this news? It's just business as usual in the good ol US of A.

Cost Recovery Fee (1)

Mr. Piddle (567882) | more than 10 years ago | (#9165011)


That's my favorite one. It's just a matter of false advertising, where the true price is not what the customers think they are buying. It isn't uncommon for fees and taxes to make up 20% of a bill, which is just immoral.

TracFone (2, Informative)

kmsigel (306018) | more than 10 years ago | (#9165024)

I use a great cell phone service called TracFone (www.tracfone.com). I pay $95 per year (yes, year!) for 150 minutes. They often run specials where you can get another 100 minutes free. If you refer a friend you get 100 minutes free (and so does the friend). If you need more minutes you can buy them for ~20 cents a minute or less. This includes all taxes. No hidden fees. No surcharges. Minutes roll over to the next year if you don't use them.

I suspect that traditional cell phone plans are good for very high volume users, but for me TracFone works great. I know this sounds like an advertisement, but I really do use and like the service.

P.S. If you want to sign up, let me "refer" you and we'll both get 100 free minutes. Just leave your email address in a reply and I'll sign you up for the offer. (You'll just get one email solicitation.)

New Trend In Slashdot Headlines? (1, Offtopic)

spoonboy42 (146048) | more than 10 years ago | (#9165025)

Hmm... is Slashdot headed towards simple, concise headlines which state things which are completely obvious to any human with more CPU power than a raddish? Here are some suggestions, if that is the case:

1. SCO pursuing meritless litigation.

2. A robot will replace you in 6 years; awesome!

3. Darl McBride Paternity Test Result: Satan

4. An Indian will replace you in 6 months; outsourcing must be stopped.

5. RIAA Extorts Money From Filesharers

6. Survey: Mac users have overwhelming desire to fsck Steve Jobs

7. People starting to get sick of hearing about SCO.

8. Politicians may be corrupt

9. RMS is pissed off about something

10. Star Wars movies ain't what they used to be

11. Earth doomed, more at 11:00

12. Blah, blah, SCO, blah, blah, blah

A bunch of brainless people asking for a lynching. (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9165027)

Once again, we have a bunch of people who know nothing about this topic, are thinking off the tops of their heads and immediately asking for a lynching. No wonder we're hated by all the world. You just deserve what you get just as I will get what I'll get for "generalizing." PLEASE, someone get the facts before you condemn.
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