When looking at your phone bill, you might feel overwhelmed by the plethora of specific fees listed in front of you. What even is a “Federal Excise Tax”? An “FCC Recovery Fee”? The truth is, many sneaky costs are hidden in your monthly bill and may be draining your bank account without your knowledge. When you make a payment to your provider, you’re paying for much more than just your monthly service.
The FCC, or Federal Communications Commission, receives thousands of complaints every year regarding phone bills that are substantially higher than what customers expected. Though each case is different, the #1 way to avoid surprises is to know what everything on that paper means – that way, you know exactly what you’re paying for and where your money is going.
Here are some of the most common taxes, fees, and other charges that you may see on your bill:
- Access Charges: These charges – which are not taxes – are fees that pay a portion of what it costs to provide you access to a local network. Though the FCC sets the maximum fee per line, local telephone companies are allowed to charge less or not at all. Access charges may also be more expensive for additional lines at the same residence.
It may appear as:- Federal Access Charge
- Customer or Subscriber Line Charge
- Interstate Access Charge
- State Subscriber Line Charge
- Federal Excise Tax: This tax typically takes up 3% of the bill and is placed on both local and long-distance calls. However, it applies mainly to local service billed separately from long-distance service. A lot of history is attached to this tax, and many people have tried to repeal it. However, they have yet to be successful.
- State and Local Taxes: Though this category is often extremely vague, it plays a massive role in determining the total cost of your monthly service. The average price of a cellular service has dipped by over 20% in recent years, whereas the average tax rate has increased, often making up over 20% of the total bill. So why are taxes so high and continue to rise? How much you pay dramatically depends on where you live, with Illinois having the highest tax rate (22.7%) and Idaho having the lowest (2.8%). Check your state, county, and city taxes to better understand how your money is utilized.
- Universal Service Charge: All providers are required to contribute to the Federal Universal Service Fund (FUSF), which provides funding for nationwide telecommunication services. This program makes these services more accessible to those in rural/high-cost areas or financially sensitive situations. Programs funded by the FUSF include Lifeline, the Connect America Fund, and the E-rate program for schools and libraries. It is not considered a tax but more so a voluntary fee that every phone user is expected to pay.
- 911 and 488: These charges help local governments fund emergency and suicide prevention services. This tax is billed per line and can vary considerably depending on the state. However, it tends to sit around $5 per month.
- LNP: Local number portability allows users to keep their number when switching from one service to another in the same area. Not every company charges for this.
- TRS: Telecommunications relay services assist people with hearing or speech impairments by transmitting or translating calls.
- Directory Assistance: Fee for placing any 411 or (area code)-555-1212 directory assistance calls.
- Monthly Calling Plan Charge: What your provider charges for the phone service you receive.
- Operator-Assisted Calls: This fee is for calls connected to a phone operator and is naturally more expensive than unassisted calls.
- Feature Charges: Fees for additional services like forwarding, three-way calling, call waiting, voicemail, and caller ID.
Wireless Telephone Bills
Although those tend to be the most common charges seen on a typical phone bill, some are specific to wireless telephone bills:
- Airtime Charges: Your provider typically sets a specific amount of airtime (the amount of time you talk on the phone or use your data) every month, depending on your phone plan. If you go over the amount that was allotted to you, these extra minutes or data become an additional charge on your bill. Some providers may round up these minutes to the highest one, two, or three minutes, so check your terms of service to find out how this may affect you.
- Roaming Charges: “Roaming” is activated when you call, text, or use data in areas outside of what your provider regularly covers, typically when traveling to a different location or country far away from your home network. But be careful! These charges add up very quickly.
If you know you’ll be out of the country for a while, it may be wise to look into what your carrier requires (check “international roaming”), especially if you plan to use your phone abroad for calling, messaging, or data. If the rates are too high, get a local SIM card or check any international roaming packages offered by your provider.
- 911 Charges: Due to enhanced technology, emergency services are able to automatically receive the location of the wireless telephone and transmit it to emergency responders. Though this remarkable technology allows responders to get to the site quicker, this service comes at a cost.
- Text Messaging: This may come as a flat, monthly fee or a per-message fee for unlimited text messaging.
- Downloading Fees: It takes a lot of data to download apps, games, videos, or other files, especially if you’re not using Wi-Fi. If you do not have an unlimited plan, you may exceed your data limit (or your provider may even charge extra for the data you used during those downloads). Connect to a local Wi-Fi network for these downloads since they can help you avoid these added charges.
- Detailed Billing: This is an optional service that provides a comprehensive breakdown of your phone plan usage, each call, message, etc., to give you a clearer picture of how each activity contributed to your bill.
Wireline Telephone Bills
Much like wireless telephone bills, certain fees are specific to wireline telephone use. These can be found below:
- Minimum Monthly Charge: Even if you don’t make long-distance calls, long-distance companies may require you to pay a minimum monthly fee for their service.
- Single Bill Fee: This fee combines local and long-distance charges onto a single bill. Some companies waive this charge when you pay online or by credit card – but if your phone company requires it, you can avoid this charge by getting billed for both separately.
Useful Tips
- If you believe charges on your bill must be corrected, contact the billing company or your service producer to resolve your concerns. If you are dissatisfied with their response, file a complaint with the FCC (Federal Communication Commission), your state public service commission for telephone services within your state, or the FTC (Federal Trade Commission).
- Prefer to receive phone bills in your preferred language? Contact your service provider to see their options.
- You may see an “FCC Recovery Fee” on your bill, which can be a sneaky way to make your carrier’s charges look like official taxes or government fees (which they are not). These can seem like “regulatory fees,” but are simply surcharges that assist providers in covering government costs at the federal, state, and local levels. This sly technique can be unlawful and misleading, so make sure to inspect your bill for anything that may seem off.
- If you’ve moved out of state and kept your number, check with your carrier to see if they’ve updated your bill to avoid getting taxed incorrectly.
How Do I Avoid Any Unwanted Phone Bill Surprises?
Though there are a million different ways to try and save on your monthly bill, the best way to stay on top of things is to stay informed. Don’t underestimate the power of knowing what every fee is for, how much it should be for your provider and location, etcetera. Many of these monthly bills build up to tens of thousands of dollars over your lifetime – so understanding your personal needs and how each charge molds your monthly plan might end up saving you a substantial amount of money. To understand yourself and your phone needs better, try to ask yourself these questions:
- Is unlimited data, talk and text an absolute necessity for me?
- Around how much data do I use every month? What do I mainly use this data for? For streaming? Browsing the internet? Using social media? Playing video games? Downloads?
- If I utilize my data for downloads, how often do I download large or small files?
- Do I connect to Wi-Fi networks often, or do I prefer to use my data?
- Around how many messages do I send every month? How many minutes do I use?
- How often do I travel, and where? Does my current carrier have regular coverage in the areas I am visiting?
- How many people do I share my data plan with?
- Am I willing to change my phone usage habits to potentially save data and, consequently, money?
- Have my phone usage habits changed recently?
All of these questions will allow you to better grasp your habits regarding your phone use, which can be tremendously helpful in deciding which carrier and data plan is best for you (and your budget). Compare different providers using this newfound information to get the most out of your money.
If you decide to change carriers, ask the new provider for a sample bill and if they have online resources that explain it line by line. Doing so will keep you “in the know” about what they are charging and why. Also, ask about any termination fees if your current provider requires any.
As you can see, seeking information and doing a bit of self-reflection goes a long way. The real trick, though, is putting your knowledge into action – that’s the only way you’ll see results. Thankfully, you’ve already done the first part. All you’ve got to do is follow through!
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