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Cell phone providers abuse monopoly standing

On Nov. 24 a new rule goes into effect that will allow cell phone users in key markets to switch carriers but keep their number. Service providers are striking back at consumers with hidden monthly fees that are applied to even those customers who do not wish to switch, a practice that is hardly fair to the consumers.

The new rule, which affects large metropolitan areas such as San Francisco, New York and the St. Petersburg/Tampa areas, was heralded as the arrival of golden era for cell phone users as it will allow the consumer to switch to a better plan, yet keep the established number. This, experts said, would lead to a price war between carriers because they would have to compete with each other for the same customer base.

Carriers tried to fight the implementation of the new rule but were unsuccessful.

To counteract the loss of customers , which some carriers fear will come once the rule goes into effect, some carriers are charging monthly fees. Sprint PCS, Nextel, Verizon, Cingular, as well as AT&T Wireless are charging monthly fees ranging from 32 cents to $2.83. These fees are listed with such cryptic descriptions like “Regulatory Program Fees” or “Federal Programs Cost Recovery” on the monthly bill.

The only carrier that is not billing customers for a service that they probably will not use anyway is T-Mobile. The carrier even offers “loyalty minutes” to some of their customers.

To charge such fees, most of which have a description on the bill that gives no indication to the consumer what they are being billed for, is hardly what the new rule intended. It appears that the cell phone service providers are trying to use their monopoly standing to reap profits from customers with the hidden fees.

The inflated pricing that carriers with near-monopoly standing hand down to their customers have hurt consumers before. The now defunct AT&T subsidiary Long Lines was the target of an antitrust suit issued by the Department of Justice. The suit eventually led to a forced split of the company.

For now, companies should at least mark the fees in a way that lets the consumers know what they are being charged for. Furthermore, as many businesses and private customers depend on their cell phone coverage on a daily basis, the legality of such fees should be investigated.