Telecoms Want Money for Nothing

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One of my favorite discussion boards here at Fool.com is the Foolish Collective -- a gathering of some of the brightest investing minds you will find this side of Omaha. A topic recently surfaced on the board that bears looking into: America's cell-phone providers are floating a plan to establish a directory of previously unpublished wireless phone numbers.

The idea goes like this. The telecoms have more than 160 million Americans hooked on cell phones; of that number, 5% have completely "cut the cord," or terminated their landline contracts and gone completely wireless. Right now, any cell-phone user can get her mobile number listed in the phone book, but this does not happen automatically. Hence, wireless numbers are essentially anonymous. You want to be locatable? Get listed. You don't want to be? Great. You aren't.

The wireless providers now want to change that, by invoking the terms of service contained in most wireless contracts, which give providers the right to publish customers' wireless numbers in a directory. The directory would be an "opt-out" affair, meaning that unless a customer asks to keep her number unlisted, it will be listed. Selling access to these numbers through directory assistance could yield up to $3 billion in additional annual revenues for the telecom industry.

And that is just one revenue stream. The other one -- the one the industry's mouthpiece, the Cellular Telecommunications and Internet Association (CTIA), does not want to publicize -- is that customers who wish to remain unlisted will likely have to pay a fee for this "privilege" (that they now enjoy free of charge). While the CTIA denies that its members plan to charge unlisted-number fees, the standard contracts used by at least three wireless providers -- Verizon (NYSE: VZ), ATT Wireless (NYSE: AWE), and Deutsche Telekom's (NYSE: DT) T-Mobile -- already envision charging such fees. (As far as I can tell, the contracts used by Sprint (NYSE: FON) and Cingular, a joint venture of SBC Communications (NYSE: SBC) and BellSouth (NYSE: BLS), do not envision charging fees for this service -- yet.)

I have to admit to a morbid fascination, even admiration, for this budding telecom scam. The providers see something we now enjoy free of charge (unlisted numbers). They take it away (by listing our numbers). Then they lease it back to us with a monthly "privacy" fee. They'll get our money for nothing and our checks for free.

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Fool contributor Rich Smith owns shares in SBC Communications. He has no interest in any of the other companies mentioned in this article.