Subject: [NEXTEL-1] Cell phone users sue, say fee looks like tax

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Date: Tue, 26 Nov 2002 23:02:56 -0500

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in news

Cell phone users sue, say fee looks like tax

BY MICHAEL D. SORKIN

Of the Post-Dispatch[en] 2002, St. Louis Post-Dispatch

11/25/2002 03:28 AM

3 companies charge for

Millions of cell phone customers are getting monthly bills for something that looks like a tax but isn't.

Now two consumers have filed a class action lawsuit claiming the bills are misleading - and that they're being forced to pay for a service they aren't even getting.

Meanwhile, Missouri Attorney General Jay Nixon has begun investigating whether the cell phone bills violate the state's deceptive practices law.

It all started because the federal government wants your location and cell phone number to pop up on a computer screen at the local 911 emergency center. Calls for help on corded phones have had that ability for years, but cell phones require a different technology that's just now starting to be used.

To accomplish this, local public safety departments and cell companies are spending millions of dollars on new equipment. In August, voters in Missouri rejected, for the second time, a referendum to pay for the changes with a 50 cent per month fee on cell phone bills.

Some cell phone companies say they are paying for the equipment without extra charges to their customers. In Missouri, three companies have added separate charges on monthly customer bills for the emergency 911 update: Nextel, Alltel and Sprint.

None of the three companies is providing the emergency 911 service yet, says R.D. Porter, the Missouri state 911 coordinator in Jefferson City. That means that 911 dispatchers can't tell where someone is when he or she calls for help on a cell phone.

"They are telling customers they have the service when in reality it's not available," Porter says. Because of funding problems, he adds, the service won't be available for months - or even years.

What's more, Nextel's description of its fee on monthly bills has drawn the ire of several customers - as well as a group of lawyers who specialize in filing class action suits against big companies.

Nextel calls its fee "federal-programs cost recovery" - and lists it, along with federal, state and local taxes, under the heading "taxes, fees and assessments" on customer bills.

In January, Nextel began charging each customer except government agencies an extra 55 cents a month. Nextel has about 10 million customers and is the nation's fifth-largest wireless phone company.

In October, Nextel upped its monthly fee to $1.55. That amounts to an estimated $15 million a month - more than $180 million a year in extra fees.

Golf buddy

In St. Louis County, a personal trainer named James Sanders learned about Nextel's fee in an article in the Post-Dispatch in August. Sanders has a golf buddy, Tim Van Ronzelen, a personal injury and class action lawyer in Jefferson City.

A week later, they had enlisted two other lawyers and a second client and filed suit in Jackson County Circuit Court in Kansas City. One of their lawyers is former Missouri Supreme Court Judge Edward "Chip" Robertson.

Nextel reacted by moving the case to federal court in Kansas City and asking a judge to dismiss the suit. Class action lawyers usually figure they have a better chance with state court juries than with federal judges.

Nextel's lawyers, including Missouri Republican Party Treasurer Harvey Tettlebaum, argue that the company acted legally, is only doing what is required by the FCC, and is more straightforward in describing its fee than any other cell phone company.

Nextel's main defense is that Missouri and other states are "pre-empted" from regulating cell phone rates by federal law and the FCC.

"We're not really challenging their rates," responds Van Ronzelen. "We're challenging a billing practice, especially the way it's placed on a customer's bill, under all these federal and state taxes. It makes a person think it's a tax - when it's not."

Consumer fraud lawyers in the state attorney general's office also are trying to decide whether they have jurisdiction and whether any laws have been broken, says spokesman Scott Holste.

Missouri's unfair merchandising law prohibits deception, misrepresentations, concealment or omission of facts and other unfair practices. State prosecutors have subpoenaed records from Nextel and Alltel, which operates largely in the south and rural areas. It is charging customers an extra 55 cents per month.

Better pay up

For its part, Nextel says it is losing money, even after raising its fee by $1 last month. "We determined that the fee had to be higher in order to offset the many costs mandated" by the Federal Communications Commission, said spokeswoman Leigh Horner.

She also says Nextel notified customers in advance of the fees and made it clear that it was not a tax and not required by federal law.

Some customers may have overlooked the notifications because Nextel included them in bills sent a month before it began charging the fees.

Horner walked a reporter through the company's Web site (Nextel.com) to show where the $1.55 fee is explained. It covers 911 and two other government-required programs, she said.

But the reporter found nothing on the site that says the fee is not a tax.

"You're right," Horner said.

Why not?

"I think we will," she said.

Next day, Nextel added this sentence to its Web site: "The fee is neither a tax nor mandated."

There are four other big cell companies, and three say they don't charge a separate 911 fee.

"We don't do that," said Chris Martin of AT&T Wireless, the third-largest cell company. "We're not going to make Missourians pay for (emergency) 911 services when they're not getting services."

Said Silvia Manrique of Cingular Wireless, the No. 2 company: "There is no state-mandated (emergency) 911 fee in Missouri, so Cingular doesn't have a charge."

Verizon is the No. 1 company and has a fee in Illinois, where it's mandated by law, but not in Missouri. "The voters decided in August that they did not think the fee was warranted and voted it down" in Missouri, said spokesman Michael McDermott.

The fourth-largest company, Sprint, charges a 2 percent fee, according to spokesman James Fisher.

What can a Nextel customer do, short of filing suit?

Nextel says it will offer to cancel the contract of any customer who objects to the fee within 30 days of when it started.

One thing customers better do is pay their cell bills. Cell phone companies keep a list of people who don't pay. If your name is on the list, other cell companies won't sell you service.

Reporter Michael D. Sorkin:

E-mail: [email-masked]

Phone: 314-340-8347

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