Cell phone users hit with upgrade charges

Sunday, August 20, 2006

Even customers who don't upgrade their phones may soon pay more.

When Stacy Corcoran of Fruitland bought a new cell phone about a month ago, the list of itemized charges began to blur after a few seconds.

Finally, she just paid them.

"It's a crock, I know," Corcoran said. "But at the same time, you can talk cheaper on your cell phones than you can on your home phone. So what are you going to do?"

Activation fees have always been a fact of the cell phone world. But customers are now being hit with new charges on their cell phone bills -- upgrade fees for new phones that can cost as much as $36.

Even customers who don't upgrade their phones may soon pay more. Cingular Wireless recently announced that, beginning next month, it would start charging customers with older phones an extra $4.99 monthly fee unless they upgrade their phones as the company moves toward using a single network technology.

According to The Telecommunication and Action Center, a telecommunications advocacy group in Washington, D.C., AllTel, Sprint/Nextel and Cingular charge upgrade fees when newer phones are purchased to replace older phones.

So far, Cingular is the only company that is set to charge customers with older phones a monthly fee. About 4.7 million Cingular subscribers with older phones will have to pay the $4.99 starting in September as the company tries to prod them to get new handsets so it can devote its entire network to one type of signal.

"There's a world of difference in our new signal," said Cingular spokesman Chris Comes. "As we begin to turn down one kind of signal, it frees up radio spectrum as we deploy the new signal."

Comes acknowledged the fee is an incentive to encourage customers to switch to phones based on the globally dominant technology known as GSM, or Global System for Mobile. Roughly 92 percent of its 57.3 million customers use phones based on GSM.

The rest have handsets based on one or two older technologies. One dates back two decades to the first-generation of mobile phones, which used an analog, or nondigital, signal to transmit calls. The second is a digital transmission technique known as Time Division Multiple Access, or TDMA.

The new fee adds to a confusing array of surcharges and government taxes that can boost the average cellular bill by up to 50 percent from the advertised rate. Like other U.S. cellular carriers, Cingular is required by the Federal Communications Commission to keep providing analog service until early 2008 so long as it still has customers with those phones, Comes said.

Having three kinds of wireless signals leaves less room for Cingular to connect calls and provide data services to its much larger audience with GSM customers, Comes said.

Comes said that with the number of analog and TDMA users dwindling, the per-customer cost of using that network is increasing considerably. That's why the decision was made to add this charge, Comes said.

Customers can avoid the charge by switching to Cingular's GSM network and equipment, Comes said.

JCS Tel-Link, a Verizon agent in Cape Girardeau, does not charge upgrade fees or special fees for older phones. Operations manager Don Hinkebein said they don't do it because they "value" their customers and it provides a "competitive advantage" over Cingular.

Hinkebein said other cellular companies charge upgrade fees to offset the costs of equipment that is often sold at a discounted rate or given away when a new contract is signed.

"When a new customer pays me $29 for a phone, I probably paid $130 to $200 for it," Hinkebein said. "What Cingular is doing is trying to recoup that cost."

Sprint/Nextel charges a $36 activation fee to new service activations, certain plan changes and handset upgrades.

Robin Cole is president of the Rite Group in Cape Girardeau, a company with a Sprint/Nextel division called Connect-Rite. Cole said the $36 handset upgrade is not to recoup costs, though. Sprint/Nextel charges the fee to handle the transaction.

"It's like the closing fees on a house," Cole said. "It is to handle the processing of the documentation that goes with a new contract. It's a cost of doing business."

Some customers seem reluctant to see it that way.

"They're out for the almighty buck," said Donna Sternickle of Jackson, who has a Verizon and a Cingular phone. "They're taking advantage of the convenience of cell phones by charging more."

smoyers@semissourian.com

335-6611, extension 137

Cell phone upgrade costs

* AllTel: A $25 activation fee applies on all new post-paid accounts. An upgrade fee may also apply when additional lines of service are added to the account.

* Cingular: A $36 activation fee applies on all new accounts unless the new subscriber is signing up for a FamilyTalk plan, in which case the fee is $26 per activated phone. Most FamilyTalk plans include at least two lines of service, so new subscribers should expect at least $52 in activation fees. An $18 upgrade fee applies on all accounts unless the subscriber is upgrading from a former AT&T Wireless phone or to a newer technology phone, in which case Cingular will waive the upgrade fee.

* Sprint/Nextel: A $36 activation fee applies to new service activations, certain plan changes and handset upgrades.

* T-Mobile: A $35 activation fee applies to all new service plans. While a separate upgrade fee is not charged, T-mobile does base its handset upgrade pricing on the length of time the subscriber has been with its current rate plan and the length of time since the last handset upgrade. T-mobile recommends subscribers on one- and two-year contracts wait 11 and 22 months, respectively, before upgrading their handsets in order to get the best price on their upgrade.

* Verizon Wireless: A $35 activation fee applies on all new lines of service, but upgrade fees do not apply.

SOURCE: The Telecommunication and Action Center

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