Cingular to Charge Customers With Older Phones $5 Extra Per Month

NEW YORK – About 4.7 million Cingular Wireless subscribers with older phones will have to pay $5 extra each month as the company tries to prod them to get new handsets so it can devote its entire network to one type of signal.

The new surcharge, unique among the major U.S. carriers, will be added to bills starting in September, the company told The Associated Press on Monday.

Cingular, jointly owned by prospective merger partners AT&T Inc. (T) and BellSouth Corp. (BLS), reported earlier this month that roughly 92 percent of its 57.3 million customers use phones based on the globally dominant technology known as GSM, which stands for Global System for Mobile Communications.

[The French-developed system's initials originally stood for "Groupe Spéciale Mobile," the name of the standard-determining body.]

The rest have handsets based on one of two older technologies.

One dates back two decades to the first-generation of mobile phones, which used an analog, or non-digital, signal to transmit calls.

The second is a digital transmission technique known as TDMA, which stands for Time Division Multiple Access.

The new fee, which will generate $23.5 million a month for Cingular, adds to a confusing array of surcharges and government taxes that, regardless of the wireless company, can boost the average cellular bill by up to 50 percent from the advertised rate.

Like other U.S. cellular carriers, Cingular is required by the Federal Communications Commission to keep providing analog service until early 2008 so long as it still has customers with those phones.

Although the company is not required to continue providing TDMA service, it has no plans to turn off that service until the analog phaseout because both use the same portion of Cingular's network.

Nonetheless, having to carry three different kinds of wireless signals leaves less room for Cingular to connect calls and provide data services to its much larger audience of GSM customers.

That network capacity is crucial because Cingular is trying to shake a reputation for poor service, boasting in national ad campaigns that its customers suffer the fewest dropped calls.

Cingular's image was tarnished after its acquisition in late 2004 of AT&T Wireless Services, a merger that required the complex integration of two disparate networks.

[AT&T Wireless was the only major American carrier to use TDMA.]

In early July, a federal lawsuit was filed claiming Cingular promised to provide uninterrupted service to AT&T Wireless subscribers, but instead degraded their phone reception in an effort to persuade them to sign new contracts.

Cingular strongly refuted the claims in the lawsuit, which seeks class-action status on behalf of the more than 20 million customers AT&T Wireless had at the time of the merger.

Many paid $18 "transfer" fees to switch to Cingular plans and were required to buy new phones or pay other fees, according to the complaint, filed in U.S. District Court in Seattle.

On Monday, Cingular issued a statement to the AP saying that with the number of analog and TDMA users dwindling, "the per-customer cost of using that network is increasing considerably. That's why we made a decision to impose this charge."

The statement stressed that, "Customers can avoid the charge by switching to our GSM network and equipment. The combination of coverage, service quality, devices, and advanced features on GSM is superior to TDMA."

Verizon Wireless, jointly owned by Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD), serves most of its 54.8 million subscribers with a different digital wireless technology known as CDMA [Code Division Multiple Access], but still has an undisclosed number of analog customers. Those users are not charged an extra fee.

Sprint Nextel Corp. (S) has no analog subscribers on either of its two networks, which were built later than those at Verizon and Cingular and use digital technologies.

The Sprint network uses CDMA, while Nextel employs a standard called iDEN [Integrated Digital Enhanced Network].

[T-Mobile, which is owned by Germany's Deutsche Telekom (DT), has an entirely GSM-based network, part of which it inherited when it bought VoiceStream Wireless, a major American carrier, in 2001.]