$2.00 Shortfall Charge - 05/07/07 11:39 AM
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AP Business News
Phone companies levy new fee for not making calls
John Murawski / Raleigh News & Observer Thursday, May 3, 2007
Phone bills are notorious for rankling customers with fees, taxes, tariffs and other mystery assessments.
Now some phone companies are adding a new line item to monthly bills: a charge for not making long-distance calls.
The category of customers affected by the new fee is the shrinking subset of people who have no-frills home-phone service and don't pay for a long-distance-calling plan.
Verizon last month introduced the $2 fee. It is charged to customers who could dial out for long distance, but don't subscribe to a long-distance service and don't make long-distance calls.
Durham, N.C., retiree Daniel Bius discovered the $2 charge on his April bill. He says he has no use for Verizon's long-distance calling plan because he makes long-distance calls on his cell phone.
"Even though I don't have a plan with them, they say I still have the ability to make a long-distance call if I ever need to, so I have to pay them $2 a month?" Bius said. "What am I supposed to do? Am I supposed to pay them $2 for no reason?"
Telecommunications companies are increasingly profiting from bundled services that package wireless, Internet and even television services on one bill. Basic-phone customers are telecom's least-profitable sector, spending a minimal amount but demanding reliability.
Phone companies are beginning to charge basic-phone customers for long-distance access, even if they choose not to use the network. "This is not a unique practice to Verizon," said John Breyault, a research associate at the Telecommunications Research and Action Center in New York. "Most of them charge you some sort of fee nowadays. We're concerned because we don't think you should have to pay for something you're not using."
AT&T and Embarq, the other large local-phone companies for the region, don't charge North Carolina customers who don't make long-distance calls, the companies said.
The price of long-distance service is not regulated at the state or federal level, a policy intended to spur competition. Phone companies can charge customers a minimum fee for not using long-distance service.
"The bottom line is: They're trying to push people onto one of their long-distance plans," said John Garrison, an engineer with the Public Staff, North Carolina's consumer advocacy agency. "They get a monthly recurring charge from most of these plans. And if you don't use any long distance, that's profit in their pocket."
Regulators require phone companies to provide basic local-phone service. The phone companies have to give customers a way out of the new monthly fee _ but they will charge another fee to eliminate the first fee. For instance, if Bius pays a $6.75 charge to have his long-distance access disconnected, Verizon will end the monthly $2 fee, but block his outgoing long-distance calls.
Customers such as Bius who don't have long-distance calling plans can make long-distance calls, but they pay the highest rates. This is the way long-distance service worked decades ago, before telecommunications companies began to sell packages with monthly minutes.
Verizon charges up to 50 cents a minute for customers without a long-distance calling plan.
The $2 monthly fee is pro-rated. If customers rack up long-distance charges exceeding the monthly fee, the fee is dropped. If their long-distance bill for the month is less than the fee, they pay only the difference. Either way, Verizon customers will pay $2 a month, guaranteeing revenue for the telecom giant whether customers make long-distance calls or not.
Verizon officials say the monthly charge is no different than paying a monthly bill for a home-phone connection and not making phone calls. But consumer advocates disagree.
"It's infuriating because they take advantage of grandmothers," said Bob Williams, a spokesman for Consumers Union, the publisher of Consumer Reports magazine. "It's really cynical, but they count on that."
Verizon spokesman Jim Smith defended the decision to charge customers the $2 fee. "Because what they're helping to do is supporting the network they would use if their cousin Tillie is critically ill in California and they need to arrange a critical-care nurse," he said.
Bius hasn't decided whether he will pay $6.75 to have his long-distance access blocked. His other option is to switch to another local-phone service provider, but there's no guarantee that company won't charge him for not making long-distance calls.
AP Business News
Phone companies levy new fee for not making calls
John Murawski / Raleigh News & Observer Thursday, May 3, 2007
Phone bills are notorious for rankling customers with fees, taxes, tariffs and other mystery assessments.
Now some phone companies are adding a new line item to monthly bills: a charge for not making long-distance calls.
The category of customers affected by the new fee is the shrinking subset of people who have no-frills home-phone service and don't pay for a long-distance-calling plan.
Verizon last month introduced the $2 fee. It is charged to customers who could dial out for long distance, but don't subscribe to a long-distance service and don't make long-distance calls.
Durham, N.C., retiree Daniel Bius discovered the $2 charge on his April bill. He says he has no use for Verizon's long-distance calling plan because he makes long-distance calls on his cell phone.
"Even though I don't have a plan with them, they say I still have the ability to make a long-distance call if I ever need to, so I have to pay them $2 a month?" Bius said. "What am I supposed to do? Am I supposed to pay them $2 for no reason?"
Telecommunications companies are increasingly profiting from bundled services that package wireless, Internet and even television services on one bill. Basic-phone customers are telecom's least-profitable sector, spending a minimal amount but demanding reliability.
Phone companies are beginning to charge basic-phone customers for long-distance access, even if they choose not to use the network. "This is not a unique practice to Verizon," said John Breyault, a research associate at the Telecommunications Research and Action Center in New York. "Most of them charge you some sort of fee nowadays. We're concerned because we don't think you should have to pay for something you're not using."
AT&T and Embarq, the other large local-phone companies for the region, don't charge North Carolina customers who don't make long-distance calls, the companies said.
The price of long-distance service is not regulated at the state or federal level, a policy intended to spur competition. Phone companies can charge customers a minimum fee for not using long-distance service.
"The bottom line is: They're trying to push people onto one of their long-distance plans," said John Garrison, an engineer with the Public Staff, North Carolina's consumer advocacy agency. "They get a monthly recurring charge from most of these plans. And if you don't use any long distance, that's profit in their pocket."
Regulators require phone companies to provide basic local-phone service. The phone companies have to give customers a way out of the new monthly fee _ but they will charge another fee to eliminate the first fee. For instance, if Bius pays a $6.75 charge to have his long-distance access disconnected, Verizon will end the monthly $2 fee, but block his outgoing long-distance calls.
Customers such as Bius who don't have long-distance calling plans can make long-distance calls, but they pay the highest rates. This is the way long-distance service worked decades ago, before telecommunications companies began to sell packages with monthly minutes.
Verizon charges up to 50 cents a minute for customers without a long-distance calling plan.
The $2 monthly fee is pro-rated. If customers rack up long-distance charges exceeding the monthly fee, the fee is dropped. If their long-distance bill for the month is less than the fee, they pay only the difference. Either way, Verizon customers will pay $2 a month, guaranteeing revenue for the telecom giant whether customers make long-distance calls or not.
Verizon officials say the monthly charge is no different than paying a monthly bill for a home-phone connection and not making phone calls. But consumer advocates disagree.
"It's infuriating because they take advantage of grandmothers," said Bob Williams, a spokesman for Consumers Union, the publisher of Consumer Reports magazine. "It's really cynical, but they count on that."
Verizon spokesman Jim Smith defended the decision to charge customers the $2 fee. "Because what they're helping to do is supporting the network they would use if their cousin Tillie is critically ill in California and they need to arrange a critical-care nurse," he said.
Bius hasn't decided whether he will pay $6.75 to have his long-distance access blocked. His other option is to switch to another local-phone service provider, but there's no guarantee that company won't charge him for not making long-distance calls.