Special Report: Cell-phone taxes subsidize land lines, enrich telecoms

Washington Times ^ | February 4, 2007 | Bob Porterfield (Associated Press)

[Tolerance Sucks Rocks]

Cellular subscribers are paying hundreds of millions of dollars each year to subsidize land-line telephone service, enriching big telecommunications companies while providing little or no benefit to cell-phone users.

The subsidies are intended to reimburse the companies for providing traditional phone service in rough terrain and rural areas where stringing lines can be costly. But rampant development has transformed some of these backwaters into booming subdivisions, with no real adjustment to the distribution formula; others, such as the oceanfront celebrity playground of Malibu, are receiving subsidies simply because of their difficult topography.

Outdated formulas for tabulating the surcharges -- coupled with feeble government oversight -- have meant a windfall for phone companies, which are fighting to preserve them.

"It's egregious," said Kimberly Kuo, executive director of MyWireless.org, a national nonprofit advocacy group for cellular users. "By nature, these fees are highly discriminatory because cell users pay in far more than they get out of it."

Nineteen states charge customers a fee to defray the costs to phone companies of providing service in high-cost areas. Of these, 12 do not exempt cell phones -- Alaska, Arizona, Arkansas, California, Colorado, Kansas, Maine, Nebraska, Nevada, Texas, Utah and Wyoming.

Since 2003, these states together have collected more than $4 billion, an Associated Press investigation found. The burden is shared by cellular and regular phone customers alike. In some states, cell users appear to be footing more than half the bill.

"There's an enormous inequity with wireless contributions," said Joe Farren of CTIA-The Wireless Association, a trade group representing the nation's cellular providers and wireless equipment manufacturers. "We think these funds should be no larger than necessary and not favor one technology over another. It's a major issue for us."

[Tolerance Sucks Rocks]

PING!

[Ken522]

It's egregious," said Kimberly Kuo, executive director of MyWireless.org, a national nonprofit advocacy group for cellular users. "By nature, these fees are highly discriminatory because cell users pay in far more than they get out of it."

Fine - don't use a wireless phone and see what happens. Cell phones are very convenient, so people will pay extra for them.

[traviskicks]

Bureaucrat in your cell phone alert...





Libertarian ping! To be added or removed from my ping list freepmail me or post a message here.

[B4Ranch]

Have you ever been asked for your social security number and your birth date while talking on your cell phone or a cordless phone ?

Do you realize that the older scanners enable people to listen to every word that is said on a cordless phone and/or a cell phone?

Think about identity theft when you are using your phone!

[gcruse]

"Cellular subscribers are paying hundreds of millions of dollars each year to subsidize land-line"

And I want you to know I appreciate it. But I'd gladly give it all back if you'd stop using the dang things while driving and if you'd stop subjecting the rest of us to second-hand conversations of trivialities.

[Chode]

my basic monthly local service is $21.00, TEN DOLLARS OF THAT IS TAXES!!!

[lesser_satan]

This type of crap makes my blood boil. I don't even have a landline, but I'm paying for somebody else's?

[Tolerance Sucks Rocks]

I'm about to move, and I plan to use my cell phone exclusively. I would be happy if the feds would get out of this business altogether and the states would restrict their subsidies to truly rural, out-of-the-way places.

[jrd]

Its AL Gore's fault

[Myrddin]

Cross subsidies have been a common part of the telephone business from the beginning. The desire for "universal service" results in a need to offset the costs of less profitable areas (rural) with areas that generate more profit (cities). Cell phones are only wireless from the handset to the base station. Eventually the signal ends up on a landline that enters a telephone central office. The cost of that switching equipment is shared by every user. Cell phone users benefit from being able to ride the coat tails of the existing wired network. If cellular users were bearing a complete and separate financial burden for their own switches and cables, the cellular rates would be much higher. As it is, the higher rates (compared to wired service) are just covering the incremental additional cost of raising all those cell phone towers and installing base stations.

[Myrddin]

Scanners can't pick up CDMA used by VerizonWireless. They could pick up the old IMTS telephone channels. Cordless phones that operate on 49 MHz are also easy. I haven't made any attempt to pick up 900 MHz cordless phones or those on 2.5 GHz or 5 GHz. I suspect the 2.4 GHz and 5 GHz models aren't easy to pick up with a scanner either.

[lonerepubinma]

Look at your land line bill, I bet you are paying for "Touch Tone " service. The phone companies make millions on this charge even though it is more exspensive for them to provide "Rotary" service as part of their package

[WTSand]

How do you think your cellphone works,magic?

[Tolerance Sucks Rocks]

Who in the world would want rotary? (I'm old enough to remember that crap.)

[NVDave]

Remember when Ma Bell's long distance charges subsidized the local services? And subsidized the equipment costs for CPE?

Those were the days -- as in, those were the days when you could pay one bill, pick up the handset off the hook and things just worked.

Sigh.

[B4Ranch]

Starting with good quality low-band antennas all the components needed are available on the Internet. In many cases the items are assembled waiting for a power source.

[B4Ranch]

I still have a few of them. I would imagine they'll be considered antiques soon.

[DustyMoment]

Holy CRAPola, Batman!!! Stop the presses . . . . . . . about 8 years ago.

The Wa Times is just NOW figuring this out!!???

[Myrddin]

Remember when Ma Bell's long distance charges subsidized the local services? And subsidized the equipment costs for CPE?

I worked for Pacific Telephone starting in 1980. I left Pacific Bell in Nov 1991. The details of "settlements" between telcos to level the costs was a major part of the financial picture.