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Phone Rate Tag Team Goes for the Gold

August 19, 2004
Consumer advocates often recommend smaller phone companies as a way to avoid phone bill bloat. But some lesser-known carriers and resellers are following the lead of the big three (AT&T, MCI and Sprint) in adding or increasing fees. At the same time, the big three are continually upping their charges.

AT&T quit advertising to attract traditional consumer accounts. However, it continues to squeeze more money from its millions of existing customers. On August 27 AT&T will increase its "New Service Installation" charge to $65 for primary lines. Current charges vary by state.

"The worst increase I'm aware of is in Oregon, which goes up 300 percent from the old charge of $16.50," said Rich Sayers, editor of consumer help sites 10-10PhoneRates.com and Phone-Bill-Alert.com.

MCI will charge many users more by converting its "Carrier Cost Recovery Charge" from a meager 1.4 percent to a flat 85 cents per month. The September change affects long-distance customers who do not subscribe to MCI local service. "MCI long-distance users spending less than $60 a month will lose under the new fee scheme," says Sayers. "Based on industry averages, most subscribers spend a lot less than $60 each month."

Qwest added an "Interstate Services Fee" to most long distance plans on August 16th. This monthly fee of $0.99 will be added to all Qwest long distance plans, except the Qwest Choice plans. Subscribers to Qwest local service are exempt.

"Among larger carriers, VarTec started the flat extra fee fiasco back in February 2003," according to Sayers. "Then AT&T added a 99-cent fee in July 2003, followed by Sprint in September. With MCI and Qwest joining in this month, all five of the largest national long-distance carriers charge such fees. Why not just add a buck to the advertised monthly fee?"

Smaller players are jumping on the customer-gouging trend as well. Last month Frontier added a 99-cent monthly fee to most of its long distance plans. This month Primus hiked its "paper invoice fee" by a dollar from $2.00 to $3.00 per month. Back in February, ZoneLD increased its "Network Access" charge from $1.00 to $2.00 monthly.

Sprint follows AT&T and MCI on International Hikes

Sprint increased "International Mobile Termination" (IMT) surcharges on August 15th. The IMT is a per-minute rate charged in addition to international calling plan rates. It applies to international calls made from the United States and terminating to a mobile phone, pager or similar service in the other country.

Sprint added surcharges to call 37 countries, increased charges to 58 countries and reduced charges to 22 countries. This follows similar moves by AT&T and MCI in July.

What's a consumer to do? Well, there's always e-mail.

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