Sunday, August 17, 2003

Cell phone fee may bring profit

Keeping same number costs

By Bruce Meyerson
The Associated Press

NEW YORK - Some cell phone companies appear poised to profit off a new fee that covers the cost of enabling customers to switch wireless services without giving up their phone numbers.

The fee, permitted by the federal government, is already being levied by four national carriers and is generally less than $1 per month.

In certain cases, the money being collected appears to exceed the actual cost of meeting a November deadline set by the Federal Communications Commission for "number portability" - which will let people keep their cell numbers when switching wireless providers.

Sprint PCS, for example, has about 17.9 million customers who began paying an additional 63 cents a month in July, generating $11.3 million a month for "cost recovery."

Over the course of a year, Sprint's fee would bring in about $135 million at current subscriber levels.

Sprint refused to quantify its expense for enabling number portability beyond a rough estimate of "hundreds of millions of dollars" - an amount several times larger than more specific estimates disclosed by Verizon Wireless and Cingular Wireless.

Although costs surely vary among the different companies, government officials and industry analysts say there is little reason to expect those expenses to vary widely as the carriers upgrade systems.

"A reasonable person would say that carriers of similar size, serving the same markets, providing the same level of service, would have similar cost structures," said John Muleta, the chief of the FCC's wireless telecom bureau.

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