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Clash over cell phone fees

Fees and taxes are on the rise, a cell phone industry group says, and state regulators are to blame.

Cell phone bills will dramatically increase if American states and cities enact thousands of new laws in the pipeline, a wireless-industry lobbying group has warned.

Already, about 17 percent of a typical U.S. cell phone bill covers state taxes and federal fees--an increase of three percentage points more than in 2003, Steve Largent, president of the CTIA, told attendees at this week's CTIA Wireless show in New Orleans.

Lawmakers in California, Massachusetts, New York and other states are currently considering a total of 1,541 new cell phone measures, he said. If that legislation goes through, "the tax burden continues to get heavier and heavier," Largent said. "There are clouds on the horizon of the future of wireless."

The CTIA is now trying to organize its members, which include Cingular Wireless, Hewlett-Packard and Intel, to battle the proposed laws.

Largent's comments signal a new skirmish between familiar foes--the cellular industry and state regulators, who are working to fit new telephone technology into laws designed for traditional phone calls.

Although the proposed laws might raise the cost of cell phone use, they are necessary, consumer advocates have argued. Without government oversight, potential abuses from cell phone operators can't be kept in check, they said.

To that end, Nebraska and Oregon lawmakers want to give state regulators additional authority to investigate customer complaints. In another example, Louisiana lawmakers want to exempt military service subscribers from paying penalty fees for early termination.

California regulators created tough consumer-friendly cell phone rules but only eight months later suspended them at the behest of Gov. Arnold Schwarzenegger.

Cellular-industry members say those measures put limits on their business.

"They are treating us like a monopoly by applying classic wireline utility regulations to wireless," said Joe Farren, a CTIA representative.

The cellular industry is working to counter legislative moves. The CTIA recently launched a grassroots campaign to battle a wireless tax created by the Baltimore and by Montgomery County, Md., and the top four U.S. operators--Sprint, T-Mobile USA, Verizon Wireless and Cingular Wireless--have joined that effort to strike down the measure.

Should they succeed, the administrative challenge may play a major role in battles over other city wireless taxes.