National Consumers League

Technology

NCL Technology Issues

Understanding your phone bill

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Life's a lot more complicated than it used to be - and so is your phone bill!

With more competition for telephone service and new services being developed every day, you have more choices for your communications needs than ever before. But understanding your options - and your phone bill - has become much harder.

Many phone companies are redesigning their bills to make them easier to understand. However, the charges may still be confusing unless you know some basics about how telephone billing works.

Looking at your phone bill carefully - and understanding what it says - will help you use phone services wisely and avoid fraud.

Basic services

  • Your local phone bill includes a basic monthly charge for the dial tone that enables you to make and receive calls, maintain the connection between your home and the telephone company's central office, be listed in the telephone book, get a copy of the directory, and make a limited number of calls for directory assistance.

Local calling charges

  • You may have a "flat rate" local telephone plan in which your monthly service charge includes the ability to make an unlimited number of calls to other phones located near you. The size of the local calling area varies from company to company.
  • If you have "measured service," you are limited to the number of calls that your monthly package allows; if you make more calls, you pay an additional charge for each one.
  • You may only have one choice for local services now, but as time goes on there will be more competition. The pricing plans and service options offered by each company may vary.

Local toll

  • Sometimes called "short distance calls," local toll calls are made to places that are not close enough to be in your local calling area but not far enough away to be handled as long distance calls.
  • As competition for phone services increases, more consumers can choose whether to have local toll calls completed by their local telephone companies or other companies.
  • The area that each company serves for local toll calling and the prices they charge may vary.

Long distance

  • There are many ways that you can make long distance calls. Most consumers have a regular, or "presubscribed" long distance carrier. When you dial "1" plus the area code and the phone number, the access code for the presubscribed carrier is automatically entered and the call is billed at the rates that company charges.
  • In most parts of the country there is competition for long distance service. Calling plans can vary widely, not only in rates but in the geographic areas they cover, and companies may offer more than one plan to choose from. There may be a monthly fee in addition to the charge for each long distance call and there may be a minimum monthly charge.
  • You can also make long distance calls using a "dial-around service." You manually enter another company's access code (such as 10-10-XXX), then "1", the area code, and the phone number. That company will then bill for the call based on its own rates. Look at ads for dial-around services carefully - the prices they quote may only apply if you talk for a certain number of minutes, or the rates may vary depending on time of day or where you are calling, and there may also be a monthly fee added.
  • Calling cards, which are like charge cards for telephone calls, are available from many companies. You can use them from your home phone, a pay phone, a phone in a hotel room, or somewhere else. The charges might be billed through your local phone company or directly by the calling card company. Depending on your calling card company, the cost of some calls could include a surcharge in addition to the per-minute rate. There may also be a monthly fee. Be aware that some phone companies may not accept calls made with cards issued by other companies.
  • Collect calls are charged to the bill of the person whose number is being called. They can be made through a local or long distance operator or through services offered by other companies. The rates vary according to which company provides the service. For instance, if you call collect through an operator at a pay phone, the cost is set by the company that provides service to the phone you're using. If you make a collect call from the same phone through another company's 800 number collect call service, the call is billed at that company's rates.

Pay-per-call services

  • These are information and entertainment services provided through 900 numbers, some 800 numbers, and certain international phone numbers.
  • The rates can vary from as little as a few cents to several dollars per minute. Some pay-per-call services are billed at a flat rate for each call.
  • Charges for pay-per-call services provided through 900 and 800 numbers are set by the service providers, not the telephone companies. They will appear on a separate page in your phone bill.

Miscellaneous services

  • Miscellaneous services can include caller ID, call waiting, voice mail, paging, and even Internet and other non-telephone services. They may be provided by your local phone company or other companies.
  • Depending on what company provides them, charges for miscellaneous services may appear on the phone bill under your local company's services or on a separate page.
  • Before you pay your bill, read it carefully and make sure that you are only being charged for services you have authorized.

Fees, surcharges, and taxes

  • In addition to the charges you pay for the services you use, you'll find various fees, surcharges, and taxes on your bill. Taxes go straight to the government. Some fees and surcharges billed by telephone companies cover the costs of carrying out government-mandated programs, others are intended to recover portions of their operating expenses. Companies may use different terms to describe these charges.

Directory assistance

  • Your monthly local service charge may include a certain number of "free" calls for directory assistance. If you make more local directory assistance calls than are included in your monthly package, there is an additional charge for each call.
  • You may also be charged by your long distance company for any long distance directory assistance calls you have made using their operators.
  • Many local and long distance companies have begun to provide nationwide directory assistance services, with rates that vary from company to company. You may be allowed to request more than one listing in each call to directory assistance. Know what each company charges for directory assistance before placing the call. And if the directory assistance operator offers to complete the call for you, be aware that there may be an additional charge for this service.

Lifeline surcharge

  • Some states collect a lifeline surcharge to assist low-income consumers. As of July 1, 2000, low-income consumers who subscribe to Lifeline service will not be billed for the subscriber line charge or the universal service fee.

Local number portability charge

  • Local telephone companies have created a system that allows consumers to keep the same phone number when they change local service providers. This fee, charged to all customers, covers the cost of this technology. The amount of this fee may vary based on where you live.

State subscriber line charge

  • Some states allow local phone companies to assess this fee to recover the cost of providing lines for services within the state, like intrastate long distance and local service.

Subscriber line charge, or end-user common line charge

  • This is a fee that the Federal Communications Commission allows local phone companies to charge to recover a portion of the costs of completing long distance calls on their local networks.

Taxes

  • There is a federal excise tax assessed on telephone service.
  • You may also be charged state and municipal taxes depending on where you live.

Telecommunications relay service

  • Some people who have hearing or speech disabilities use a special type of text telephone, called a TTY, to place calls.
  • This fee, which is charged to all customers, covers the cost of providing a "translation" service for calls between TTYs users and people using traditional voice telephone. It also helps to subsidize the cost of specialized telecommunications equipment for people with specific disabilities.

Universal service fees, universal connectivity charge, telephone assistance plan, or universal service fund

  • Long distance companies, and most local providers, charge this fee as part of a federal program to subsidize local telephone service for low-income consumers or those who live in areas where the cost of providing telecommunications services is exceptionally high.
  • It also covers discounted communications services for schools, libraries, and rural health care facilities.

911 surcharge

  • This is collected on behalf of state or local governments to cover the cost of providing 911 access to emergency services.