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Regulators to Change How Calls Placed to Cell Phones Are Billed

By John Schwartz

Federal regulators Thursday took aim at one of the most exasperating things about owning a cellular phone: that when someone dials your number, you pay for the privilege of taking the call.

Under a “calling party pays” (CPP) system tentatively Thursday proposed by the Federal Communications Commission, cell phone users would have the right to designate that people calling their phones would foot the full bill. In a variation, people would be able to designate that they’d continue to pay for calls coming from certain numbers -- the aged parents’ home, for instance. The move is “an important step forward for competition” in the cell-phone market, said FCC Chairman William E. Kennard. “It will introduce wireless services to a whole new category of consumers.”

Since the advent of cell phones in this country in the 1980s, users have paid for “airtime,” regardless of whether they placed or received the call. On typical bulk rate plans, subscribers pay 10 cents a minute for calls in either direction. Many plans, trying to mitigate the effect, make the first minute of incoming calls free.

Many people don’t buy cell phones for fear of incoming charges, Kennard said; others get phones but turn them off when they are not making calls, for the same reason, making the phones half as useful as they might be.

Under the proposed system, people dialing a CPP cell phone would hear a recorded message saying that they were about to incur charges. The charges would appear on their monthly phone bills, in much the same way that long-distance calls do. CPP is currently in small test markets around the country, but no cell-phone company has been able to offer the service nationwide because of regulatory and billing issues, said Tom Wheeler, chief executive of the Cellular Telecommunications Industry Association.

The new system “is going to remove this albatross that has hung over the neck of wireless subscribers over the last 15 years,” Wheeler said, allowing head-to-head competition between wireless phones and conventional, or “wireline,” phones: “How can you ever compete with the wireline market if every incoming call is a collect call?” he said.

The system is already common in Europe and many other countries, and accounts for a measure of the explosive growth in use of cell phones worldwide. Kennard cited figures gathered for cell-phone maker Motorola Inc. showing that the advent of CPP in Argentina, for example, coincided with a doubling of cell-phone use.

“When I talk to my counterparts in the European community, they just don’t understand why we don’t have ’calling party pays’ in this country,” said Kennard, who leaves his own cell phone off so he won’t have to pay for unwanted incoming calls. Despite Wheeler’s enthusiasm for CPP, many cellular companies don’t like the system because of the expense and administrative hassles of tracking down the callers for billing, said telecommunications analyst Jeffrey Kagan of Kagan Telecom Associates.

“It looks as though the FCC is finally going to drag America’s cellular industry kicking and screaming into ’calling party pays,’ ” Kagan said. “They’ve convinced themselves that there is not a lot of consumer demand for it -- but asking consumers about something that doesn’t exist yet can be tricky.”