T-Mobile (NASDAQ:TMUS) CEO John Legere has been a crusader against hidden fees, sneaky charges, and non-optional line items that appear on wireless bills.
His company even decided to do away with fees and taxes altogether by offering all-in prices with its latest T-Mobile One plan. The company of course still pays taxes, but if it advertises four lines for $160, that's actually the price consumers pay for the service. That's much different from how the other wireless companies operate, two of which -- AT&T (NYSE:T) and Verizon (NYSE:VZ) -- also sell cable and internet service.
Legere, who never misses a chance to mock his two big rivals, went right after them in a press release when T-Mobile's offer was introduced. He was only speaking about wireless; he made no mention of cable or internet, though he might as well have:
Wireless consumers pay billions extra every year in added surcharges, taxes, monthly fees and carrier price hikes. It's reached epidemic proportions! And, the carriers just keep inventing new ways to make their customers pay.
Below are five of the most egregious ways many cable, internet, and wireless companies may be charging their customers more than their advertised prices. These aren't the only tricks up these companies' sleeves, but they are the most common -- and probably the most expensive.
Cable modem rental fee
In many cases cable companies, including Comcast (NASDAQ:CMCSA), charge a monthly rental fee -- generally between $6 and $10 a month -- to rent a cable modem. What many cable providers don't explicitly tell you is that this is not a mandatory charge. Instead of renting a modem and paying its full cost many times over its lifespan, you can buy your own.
The companies that offer modem rentals generally have Web pages that list alternatives, and some smaller players will actually sell you one up front at a fair price if you elect to buy it. For consumers, this is a no-brainer. Cable modems generally cost under $100, and while it's not fun to pay that up front, it makes a lot more sense than spending that much or more each year.
Another cable and satellite add-on fee, the broadcast network fee is an attempt by these companies to recoup the money they pay to retransmit ABC, CBS, NBC, and FOX. The problem with this fee, which is generally between $2 and $5 (though it can be more), is that it's not disclosed when companies advertise prices.
For example, a cable or satellite company may advertise a $99-per-month package offering 100 channels. What they neglect to mention is that you won't actually pay $99 a month, or even $99 a month plus tax, because the broadcast network fee is added on on top of the base price.
While unlimited plans have started to make overage fees a thing of the past, many AT&T and Verizon customers who opt for metered data plans still pay them. An overage fee is a charge consumers pay when they use more than their allotted data amount. Sometimes consumers aren't even notified they have gone over, nor are they offered the option of simply waiting until the next month before using any more data.
AT&T and Verizon have made billions by charging consumers overage fees -- and convincing customers to buy more data than they need in order to avoid those charges. Now, in the cable space, Comcast is getting in on the game: In some markets, it caps internet usage and charges overage fees when subscribers exceed that allotment.
Regional sports fees
Much like the broadcast network fee, the regional sports fee is a charge that some cable and satellite providers add to the base price they advertise. In this case, the added charge goes toward paying for regional sports networks, some of which are owned by the cable companies themselves.
This fee may be even more egregious than the broadcast fee, because many of the people forced to pay it would simply choose not to get these channels if that were a choice. Instead, consumers are forced to pay a few extra dollars each month for channels they may not watch -- and in some cases, that money goes directly to the same company selling them pay television.
Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.