23 March, 2016
Prepaid Wireless E911 Fees—2016 Update
It's spring again, and that means another round-up of E911 fees charged by the states to prepaid wireless customers. Last year, we ran a comprehensive review of prepaid wireless E911 fees by state in which we detailed the current fees, collection methods and outlook on this tax. If you haven't read that article, it would be the best place to start, particularly if you are looking for ways to minimize your spending on prepaid wireless airtime refills. Here we will only highlight what has changed in the last calendar year.
The E911 fees are collected by states (and a few local municipalities) in order to fund the E911 system for emergency response. Again in 2016, there are two basic collection methods. A few states charge a monthly fee to prepaid wireless subscribers in the form of a monthly account charge. The more popular method is to collect the E911 fee at the point of sale, either as a percentage of each transaction or as flat rate per transaction.
Monthly Balance Deductions
There are three states (and Puerto Rico) in which E911 fees are still collected as a withdrawal from a subscribers account on a monthly basis. Kentucky and Nevada still collect the same fee as last year. Massachusetts, however, has raise their monthly E911 fee for prepaid wireless subscribers by fifty cents from $0.75 to $1.25, an increase of sixty-seven percent.
The table below details the states collecting monthly E911 fees from prepaid wireless customers. Values in black (in this and all tables on this page) are the same as 2015. Values in red are changes to the E911 fees for prepaid wireless subscribers.
Point of Sale Fee
Most states choose to collect prepaid E911 fees at the point of sale for prepaid wireless service refill cards. These systems rely on the investments retails have already made in collecting taxes, shifting the burden away from wireless service providers.
Point of Sale Fee—Percentage of Retail Transaction
Of the fifteen (15) states which collected E911 fees as a percentage of the retail transaction in 2015, two have raised their percentages. Illinois (up from 1.5% to 3.0%, a 100% increase) and Kansas (up from 1.06% to 2.0%, an 89% increase), have doubled, or nearly doubled, their E911 fees on prepaid wireless subscribers. While these two states doubling E911 fees might sound like the largest part of the story, it, unfortunately, isn't.
On January 1, 2016, the state of California began collecting E911 fees on prepaid wireless customers as the Prepaid Mobile Telephony Services (MTS) Surcharge. The MTS surcharge rate varies by municipality in the state of California and is calculated by adding the local prepaid 911 surcharge, California Public Utilities Commission reimbursement fee and telecommunications universal service charge, and whatever other local charges are demanded. For the prepaid wireless subscriber in California, the lowest MTS surcharge rate is 9.26%. This is the rate in effect in just over eighty-five percent of California municipalities. The largest MTS rate is 18.26%. The highest MTS rates are found around Los Angeles County. Other areas have intermediate rates. If you would like to find your exact rate, the Prepaid Mobile Telephone Services (MTS) Surcharge rate schedule is available and organized alphabetically by municipality.
Regardless of the particular location in California, prepaid wireless customers are paying, on average, about ten percent more for their prepaid wireless service in 2016. That is the largest story of the year in regard to prepaid wireless E911 fees.
A complete list of states collecting E911 fees from wireless customers as a percentage of the retail transaction are listed in the table below.
District of Columbia
† 9.0% in the city of Chicago.
‡ 10.16% is the average for the state of California. The rate is set by individual municipalities and varies from 9.26% to 18.26%. See the Prepaid Mobile Telephone Services (MTS) Surcharge rate schedule for more details.
Point of Sale Fee—Flat Fee
For the states collecting flat fees, or per retail transaction fees, there was a bit more movement. That movement came both in fee increases, a 100% increase in Indiana, 19% in Minnesota and 65% in Pennsylvania, and the introduction of E911 fees in New Hampshire and Oregon, both at $0.75. That puts the average flat E911 at $0.80 per retail transaction. The largest fee is still Alabama at $1.75 and Wisconsin, the first state to enact an E911 fee on the point of state transaction for prepaid wireless customers, is still the smallest at $0.38 per retail transaction.
A complete list of states collecting flat E911 fees for each retail transaction are listed in the table below.
† $0.25 fee for the state, $0.75 fee for the county, $0.95 is the net fee.
As we predicted last year, more states have begun collecting E911 fees from prepaid wireless customers. Three more states were added to that list in the last calendar year (California, New Hampshire and Oregon) bringing the total number to forty-one (including the District of Columbia). The distribution of collection methods is about the same, with a slight increase in the number of states collection a flat fee at the point of sale for accessories, mobile phones and wireless airtime. For the three states collecting E911 fees by monthly deduction, the average monthly fee is $0.73. In states collecting the E911 fee as a percentage of the retail transaction, prepaid wireless customers are, on average, paying 2.31% in E911 fees. For customers in states collecting a flat fee per transaction for E911 costs, the average E911 fee is $0.80 per retail transaction.
For the six states raising their E911 fees, the average percent increase has been 73% in the previous calendar year. It seems unlikely that the cost of providing E911 services has grown by a similar amount during the last calendar year. One would have to guess that these states are making up for a chronic shortfall in funding in these services. And that they are doing it in a way that is, while obvious on a receipt, not clearly stated or easily noted by the majority of citizens. Certainly post-paid wireless customers don't receive or make a breakdown of the taxes and fees on their wireless bills regularly, and those fees are generally larger than on prepaid wireless accounts.
By far the most telling story this year was the introduction of the Prepaid Mobile Telephony Services Surcharge in the state of California. Prepaid customers in California, as of January 1, 2016, are now, on average, paying an MTS surcharge (their language for E911, and other, fees) of just over ten percent. This introduction of an E911 fee is certainly the largest burden a prepaid wireless customer is likely to bear (ok, a prepaid wireless customer in Alabama who adds only ten dollars in airtime for each transaction will be paying a rate of twenty percent in E911 fees, but there is a way to limit the impact of E911 fees in that, and other, states along with purchasing prepaid wireless airtime below cost.
There is it, the state of prepaid wireless E911 fees in the United States as of spring 2016. The trend of the last few years has continued—states are looking to prepaid wireless customers as another source of funding for the E911 system. Currently only ten states do not collect E911 fees from their citizens who are prepaid wireless customers. There have also been dramatic increases to some of the existing rates for E911 fees. Clearly the state governments have recognized a solid source of funding for emergency services and are willing to pursue raising funds from prepaid wireless customers.