Telecom Rip-Off: The Hidden Fees in Your Wireless and Phone Bills

As a New Year’s present to its subscribers, Verizon Wireless announced a plan to start charging a $2 “convenience fee” for payments subscribers make over the phone or online with their credit or debit cards. 

To Verizon’s chagrin, and in the spirit of the spreading Occupy Wall Street movement, people across the country railed against the new fee. Molly Katchpole, who had led a campaign against Bank of America’s effort to impose a $5-per-month fee for debit-card use, kickstarted an online petition against the Verizon fee on Change.org. The petition generated nearly 100,000 signatures and pushed Verizon to drop the new fee.

Verizon’s capitulation over the new payment-processing fee, like the battle against Bank of America debit fee, illustrate the power of ordinary people to contest corporate greed. However, it’s important to recognize that the convenience fee is but one of a growing number of charges and fees that telco and cable providers are charging unsuspecting subscribers.

The media attention to Verizon’s new fee obscured the far more significant fact that many other bogus fees are already on a subscriber's wireline, wireless and cable bills. More consequential, the FCC’s recent capitulation to the Communication Trust over the National Broadband Plan (NBP) -- an initiative seemingly designed to promote the public good through the expansion of broadband -- will generate a host of new fees that will plague consumers for years to come. Unfortunately, there has been little to no outcry regarding this massive ripoff.

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While Verizon Wireless’ convenience fee, like the Bank of America debit fee, drew the public’s ire, little attention has been given to other hidden fees that squeeze subscribers. For example, Verizon charges $3 to pay in person at an authorized payment center; there's no charge at self-serve kiosks in Verizon stores. Verizon also charges $3.50 to “pay-by-phone” using a credit card or even your bank account.

The convenience fee is an example of corporate America’s effort to squeeze more money out of customers without delivering any new or improved services. In addition, in their ceaseless efforts to cut costs, the telecom trust, like other corporate sectors, are automating – thus cutting -- customer service positions.

Verizon convenience fee scam is not the only creative fee being inflicted on customers. Nearly all the leading telcos have introduced schemes to get subscribers to move to automatic bill payments programs. AT&T offers a $10 gift card for those who set up AutoPay. Sprint Nextel charges subscribers $5 monthly unless they set up automatic payments and some Sprint's indirect dealers levy a convenience fee for use of their in-store payment machines.

One of the most widespread “inconvenience” charges being adopted by some telco and cable companies is the fee to speak to a live agent. AT&T Wireless and T-Mobile charge $5 to pay by phone with a live agent; AT&T also charges a $5 fee to pay through a clerk at a store, but it's free at self-serve kiosks. (It should be noted that U.S. Cellular, Sprint, Alltell, CenturyLink/Qwest and Vonage do not charge for connecting to a live agent.)

The cable companies have adopted a similar program. To pay by phone, Cablevision charges $5, Charter charges $1.99, Comcast charges $4, Cox charges $5, Time Warner Cable charges $5 and Verizon Telecom charges $3.50. These are just the tip of the iceberg of the growing number of direct and hidden charges, fees and taxes telecom subscribers are getting whacked by.

However, a new round of fees will come with the FCC’s National Broadband Plan, an old con in a new outfit. With the passage of the Telecommunications Act of 1996, the telcos promised to fulfill Al Gore’s vision and bring broadband, the Information Superhighway, to the nation. Now, nearly a decade-and-half later, the broadband promise has not been met and the FCC is calling for still new fees to remedy its past failures. Two facts frame the underlying issues behind this failure: