Verizon customers vexed by new $2 fee

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Ventura County Star (California)

Phone companies are often slammed by disgruntled consumers upset over service, cost or fees.

Verizon‘s basic rate customers had one more thing to gripe about when they opened their April bill — a new $2 charge for having the ability to make long-distance calls, regardless of whether they use the service.

The fee is a “minimum spend level” imposed on customers who have not selected a long-distance calling plan, said Jim Smith, Verizon‘s director of media relations in New Jersey.

Customers were notified through bill inserts in February. Verizon would not release the number of basic plan customers, but Smith said it is a small minority.

Most customers choose the 5-cent-a-minute plan with the $6 monthly fee or one of Verizon‘s unlimited calling plans that start at $34, he said.

Smith compared the fee to paying for cable TV. People pay the monthly bill because the cable service is made available to them, whether they watch a little or a lot of TV.

Customers who don’t use a land line to make long-distance calls can opt to have their long-distance access removed altogether. The one-time fee to cancel it runs about $5 to $7.

Eileen Valles of Camarillo is looking at alternatives ‘ such as switching to Vonage — so she won’t have to pay the $2 fee every month. Along with Verizon‘s increasing costs, she said, she is unhappy with their customer service.

When sifting through the baffling list of fees and charges on her April phone bill, she noticed a new plan charge that was prorated at $1.73, though it was unclear to Valles whether the fee was for the availability of long-distance service.

For many customers, the $2 fee might be the last straw. But paying to have the service available is only fair, Smith said.

“We decided that it was fair for them to contribute something to the operation and maintenance of the very complicated, very expensive network, in return for the ability to possibly make a long-distance call if they want to,” Smith said.

But customers do pay for the service via the high per-minute rate they pay, “so it’s not like they are getting off free,” said John Breyault, research associate at the Telecommunications Research & Action Center in Washington, D.C.

Smith disagrees, saying that having long distance available costs customers nothing until they make a long-distance call.

“The rates for long distance have dropped like rocks over the past 10 years,” Smith says. “We can’t afford to give things away anymore at the no-margin prices the market has taken us to.”

Breyault countered that the permanent rate for long-distance calls has decreased, but add-on fees have been increasing.

“Carriers are feeling the pinch from inter-modal competition, from cell phones, e-mail… they’re seeing the number of land lines decreasing, and it has for years,” Breyault said. “They see the writing on the wall, and they’re trying to make as much money as they can from the people remaining with them.”

According to the Federal Communications Commission’s February 2007 Trends in Telephony Report, there has been a decline of more than 17 million wire line telephone lines. The commission attributes the dropoff to some consumers using cell phones instead of land line service, and some households removing second land lines when they switch from dial-up Internet service to broadband.

Phone companies are looking for any reason to increase their profits, said Harvey Rosenfield, founder of the Foundation for Taxpayer & Consumer Rights, a consumer advocate group in Santa Monica.

“I think it’s a consumer outrage,” he said.

Good luck finding a phone company that doesn’t charge these types of additional fees, said Mindy Spatt, communications director of TURN, a utility consumer advocacy organization in San Francisco.

“You’re likely to find it anywhere you go,” Spatt said. “There are not many choices for the consumer.”

AT&T charges $4.95 a month to have long-distance service available under its basic rate plan. The fee was increased $1 on May 1. This is a monthly recurring charge for calling state to state that customers pay whether or not they use the service. Consumers are charged by the minute on top of that fee.

Smith said Verizon‘s charge is different, calling the $2 charge a minimum spend level versus a fee, because customers can “buy” the service back by making long-distance calls. For example, if customers talk for five minutes at 40 cents an hour, they are in essence not being charged for those minutes, he said.

He added that the basic plan is not economical, but Verizon offers it for its low-volume callers.

“Companies like Verizon and AT&T will penalize you if you don’t buy one of their bundles, and this is one of the ways they will do it,” Spatt said. “The real goal is to get people into expensive bundles so they can have more services they don’t use.”

The basic rate plans tend to be disproportionately subscribed to by seniors, who typically started their service 30 years ago and have never changed their plan since, Breyault said. He recommends families check the phone plan of their elderly relatives because, more than likely, they’ll have the basic rate plan whether it makes the most sense for them.

“They’re trying to make additional money off their legacy customers — the people who have been with the company for years and years and are unlikely to switch,” he said.
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