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Cell Phone Company Spared Government, Not Consumers, From Costly Fees

A leading cellular phone company declined to charge the government the same expensive fees it charges consumers for canceling their contracts early, acknowledging that "the government will never, never accept such penalty amounts," according to internal corporate e-mails obtained by The Associated Press.

The exasperating fees are the subject of a hearing Thursday at the Federal Communications Commission. The e-mails from Nextel Communications Inc. come at a time when the FCC is considering whether to offer consumers relief from cell phone fees that the government itself appears to have avoided.

The Associated Press last month revealed details of the industry's efforts to help consumers avoid such fees in exchange for letting companies off the hook in state courts where they are being sued for hundreds of millions of dollars by angry customers.

Cell phone companies routinely charge customers $175 or more for quitting their service early.

In one such lawsuit, employees at Nextel — now part of Sprint Nextel Corp. — debated whether to assess a $200 termination fee to federal government subscribers under a contract with the General Services Administration. It ultimately decided against charging the fees to the government, even though it charges the same fees to consumers and businesses.

"The government will never, never accept such penalty amounts," then-Nextel marketing vice president Scott Wiener wrote in an e-mail in January 2004. Wiener declined to comment Wednesday about his e-mail exchange.

The e-mails obtained by the AP were marked "confidential."

The jury in Alameda County, Calif., was deliberating in that lawsuit Wednesday.

A spokesman for Sprint-Nextel, John Taylor, said the company determined it could not assess the termination fees in its federal contract because it would have been against the law. Taylor said the company is upfront with its customers about the fee and offers a variety of pricing plans.

At Thursday's FCC hearing, wireless companies were expected to argue that the FCC should assert jurisdiction over the fees, which would be preferable for industry to the patchwork of regulations companies face in 50 states. Federal pre-emption also would let carriers off the hook in cases like the one against Sprint-Nextel in California.

FCC Chairman Kevin Martin has said he wants to regulate fees charged to cell phone users who cancel their wireless contracts early.

The hearing includes representatives from the wireless, cable television and satellite television industries as well as consumers and state officials.