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Good Question: Where Do Those ‘Fees’ Come From?

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(credit: CBS) Jason DeRusha
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By Jason DeRusha, WCCO-TV

MINNEAPOLIS (WCCO) — You sign up for a $50 cell phone plan, but the bill comes to more than $60. It’s the same story with your cable TV bill. So, what are all of those fees and where does the money actually go?

Charges, taxes and fees are where our cell phone and cable TV bills become very confusing.

Viewers like Nicole in Apple Valley asked, so we analyzed all those fees, like “The Regulatory Cost Recovery Charge,” which costs Jason DeRusha $1.25.

The phone company gets the money because they choose to charge us to cover the cost of FCC licenses and regulations. They also pass along the Federal Universal Service Charge.

The federal government requires phone companies to chip into a fund that helps get broadband and wireless access to schools, libraries and rural areas.

Next, taxes. The federal government charges 5 percent tax and Minnesota charges the regular sales tax at 6.875 percent. Plus, there is an 80-cent fee for a 911 fee each month.

In 2009, Minnesota collected $51.3 million in 911 fees. That pays to connect every new phone line to 911.

Let’s do the cable bill. There are the same state and local taxes. However, there is the Franchise Fee. DeRusha pays $4.20 a month. It goes to your local cites. Comcast pays to be the only company putting cable underground. Well, we pay.

Also, some of that money goes to broadcast city council meetings. There’s also a community TV fee, which, in the Northwest Suburbs, goes to Cable 12.

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