Taxes, fees for phone and cable drive up costs

By Jason Fink

Almost anyone with a phone or cable TV has experienced it: The shock of a monthly bill much higher than what you signed up for.

In one case, a $39.99 cell phone plan becomes $54.70; in another, a $99.99 plan turns into $116.83.

The main culprits can be found in the last few lines on your bill, where enigmatic items like “State Telecom Excise” and “MCTD Surcharge” increase the total.

“Every month they seem to be going up,” said Sal Ottomanelli, 25, of Manhattan, who said he pays $30 to $40 in taxes and fees on two phones. “They pad it a lot.”Though some of the charges are for specific services, like the 911 system, many are simply taxes that go to the general funds of local and state governments, charged to the phone or cable company and passed on to the consumer.

Lou Manuta, an attorney for the Public Law Utility Project, an advocacy group, said New Yorkers pay more than people in almost any other state.

"Not only are there more taxes but the tax rates are higher," he said.

Besides paying state and local sales taxes, New Yorkers also reimburse companies for the business taxes they pay to the MTA, the fees they pay to connect to local phone networks, the fees they pay to the FCC to regulate them, and a host of other charges.

Phone companies were also permitted to charge for the cost of allowing people to keep their numbers when they switch carriers, though only for five years.

Both phone and cable providers pass along the costs of franchise agreements with local governments.

“It's ridiculous, I don't think they should have the authority to do that,” said David Simone, 45, of Manhattan, who switched to prepaid phone cards to avoid the fees. “They know people won't question it.”

The extras are only a few cents to a few dollars but they add up: According to CTIA, the industry association for wireless companies, New Yorkers pay 16 percent of their cell phone bills to taxes and fees.

“We do hear from consumers that they have an enormous number of taxes on their bills,” said K. Dane Snowden, a spokesman for CTIA. “We are really the collection agency for the government.”

A spokesman for Verizon, John Bonomo, called the taxes “an irritant.”

Cable TV customers don't pay sales tax but they do shoulder costs for franchise fees and public access broadcasting.

Time Warner cable declined to comment. Cablevision, which owns amNewYork, lists its charges as “taxes and fees.” Like other cable providers, it does not charge the same taxes for phone service as traditional carriers, a fact Verizon and others would like to see changed.

Phone companies also pass on the cost of providing service in rural areas, which is

required by the FCC.

That charge, the highest on most phone bills, is known as the universal service fund. It jumped from 7 to 12 in recent years, according to Manuta.

“It's outrageous,” he said. “It's astronomically high.”

Manuta said wireless companies are allowed to charge the same as those installing

land lines in under-served areas, even though it is cheaper to erect cell phone towers.

Assemb. Audrey Pheffer (D-Rockaway Beach), who heads the consumer affairs committee, said the state's focus has been on assuring that charges are listed clearly on bills.

“We try to be as fair as we can,” she said.

In the city, Public Advocate Betsy Gotbaum is pushing a bill that would require cell phone retailers to more fully disclose the cost of plans, including hefty termination fees.

Manuta said that with little chance of getting these taxes and fees rolled back,

pressing for transparency has been the goal of most consumer groups.

“If you want to tax someone tell them you're taxing them so if they don't like it they can go their legislators and ask them to change it,” he said.

Anastasia Economides contributed to this story

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