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Cellphone overcharges putting a strain on many families

Jayme Rose sends a text message in her mother’s Hyannis shop. Steve haines/For the Globe

It’s a story all too familiar to many parents: When Eren Celozzi signed up for a Verizon Wireless family plan, the monthly bill for three phones was supposed to be $199. But some months, her teenage daughters just can’t stop chatting, and the bill goes as high as $290.

“That’s a whole car payment,” said Celozzi, a tailor who owns Hems While You Wait, in Hyannis. She regularly threatens her girls with the ultimate consequence — “I’m taking you off my phone bill” — but the overcharges keep coming.

“It’s stressful when you’re a single mom,” she said.

Even as giddy consumers await delivery of  their new ­iPhone 5s, a less happy side of mobile life is emerging. Think of it as “iStrain,” or wireless-induced financial anxiety.


Once discretionary, cellphones have become a fact of life for the vast majority of Americans — as have the bills consumers incur for plans that cover calls, texts, and data.

Nearly half of Americans with mobile phones pay $100 or more per month, and more than 1 in 10 spend at least $200 a month, according to a September survey by CouponCabin, conducted by Harris Interactive. That’s a major cost for those struggling to make ends meet.

“People say ‘I have to pay my phone bill, I can’t pay the doctor,’ ” said Jay Gonsalves, president of the Action Collection Agency of Boston, in Middleborough. “People put cellphone bills right up there with paying the rent.”

It’s the same story at American Consumer Credit Counseling, a Newton-based nonprofit. More than half of the agency’s 20,000 clients tell counselors that their wireless-phone bills are adding to their woes.

“Wireless bills are a significant problem, especially once you add in text and data,” said Katie Ross, the firm’s education and development manager, “but people don’t want to let go of staying connected.”


So many consumers complained about unexpected fees and increases in charges that in 2010 the FCC proposed regulatory action for wireless carriers unless they agreed to voluntarily alert consumers before (and after) they exceeded their text, voice, or data limits, or incurred roaming charges. The new rules go into effect in October.

The action follows a 2010 survey by the agency that found that one in six mobile device users had experienced “bill shock,” with 23 percent of those users facing unexpected charges of $100 or more. Some totaled thousands of dollars.

With an ever-increasing percentage of Americans owning mobile phones — use by adults is now at 85 percent, according to the Pew Internet and American Life Project— cost has become a matter that concerns even the White House.

“Our phones shouldn’t cost us more than the monthly rent or mortgage,” President Obama said in April.

So far, the average wireless bill doesn’t exceed most rents, or come close. But as more people get smartphones, costs become a bigger issue. Thirty-five percent of people with a household income under $30,000 a year now own a smartphone, according to Pew. That’s up from 22 percent in that income category in May 2011.

Once smartphones were only for business, but today even grade-schoolers are walking around with iPhones and BlackBerrys.

Figures from the wireless industry association, CTIA, show that the monthly cost of service per wireless device has dropped slightly. The average was $47 a month in 2011, for example, compared with $47.21 per month in 2010, and $48.16 in 2009. But with more households paying for multiple devices, many consumers end up paying more.


And, of course, some people are paying much more. Prices for the new iPhone 5, for example, start at $199.99, with a contract, and can go over $800 for an iPhone 5 without a contract.

Because the iPhone 5 is a different size than previous ­iPhones, new accessories and chargers will likely add $100 or more to the price.

Additionally, the larger screen size could encourage more data consumption, experts say, and with it, the need for a larger, more expensive monthly packages, or pricey overage charges.

“We’re the frogs in the proverbial pot,” said Jason Alderman, a senior director at Visa Inc., who runs the company’s global financial literacy directive. “We keep adding costs and the temperature keeps going up, but we don’t realize the water is now boiling.”

Not only can a phone be a large one-time purchase, Alderman said, “but it becomes a permanent line item for the rest of your life, and one that will likely grow,” as data and text plans that initially seem fine soon feel woefully inadequate.

So why can’t consumers simply limit themselves to the most basic phones and minimal service, or get a prepaid phone with no annual contract and no chance of inadvertently incurring extra charges? That sounds good, financial advisers say, but cutting back isn’t always easy. Some consumers, for example, are locked into multiyear contracts that cost hundreds of dollars to break.


The wireless industry association has a response to consumers who consider themselves helpless against the siren call of high-powered phones and unlimited connectivity.

“There are a wide variety of options for consumers,” said Robert Roche, the wireless-industry association’s vice president of research. “Ninety percent of consumers live where there are five or more wireless service providers, offering multiple calling plans. Those plans include individual and family plans, as well as prepaid, pay-as-you-go, and postpaid options.”

But in South Boston, Myrianah Evans, 33, a disabled homemaker, say she is in a no-win situation.

Her $100-plus monthly bill is too high, but the thought of paying $200 to break her contract so she can lower her bills with another carrier also seems wrong to her. “Why should I have to pay to get out?” she asked.

Other consumers, like Celozzi, the tailor in Hyannis, are dealing with teenagers who don’t quite understand what the words “monthly minute limit” mean. And many adults say they’re baffled at all the fees that show up on their bills, but they lack the wherewithal to dispute the charges.

The bills may be confusing, but one thing is clear: mobile phones have become so necessary in today’s world that the government expanded its Lifeline program, which provides free or discounted phone service to people who meet income and eligibility requirements.

Starting in 2005, subscribers were given the choice between financial assistance for landline service or low cost, prepaid wireless service. The majority of subscribers, the FCC says, have gone wireless.


Meanwhile, many who struggle with bills say they routinely stall other creditors while making sure their phone service stays on.

“Sometimes I put off paying my medical bills — I need my phone,” said Shirley Drayton, a laborer with the Boston Housing Authority, as she swept a street in front of the Old Colony development, in South Boston.

“I’m already late with my NStar bill,” Chrissy Leon, 37, a legal secretary from Quincy, said as she walked to work through Downtown Crossing on a recent morning. She has an iPhone 4 and a $90 monthly phone bill, but like millions of other Americans, she’s coveting the new iPhone 5.

“Getting a new phone is more on my mind than paying my [wireless] bill,” she said.

Beth Teitell can be reached at bteitell@globe.com. Follow her on Twitter @bethteitell.