Here is some good news about cell-phone service. In case you haven't realized it yourself, service is actually improving, according to this year's survey by

Consumer Reports

. On the other hand, one of my pet peeves: The hidden costs of discount and "free" phones are now a major concern for buyers.

Cell phones, once the scourge of

Consumer Reports'

surveys, now receive marks of completely or very satisfied by 60% of respondents.

The Consumer Reports National Research Center surveyed 51,700 readers in 23 cities to determine customer satisfaction with service providers. Tops on the list is

Verizon

(VZ) - Get Report

, home of

Research In Motion's

(RIMM)

new BlackBerry Storm. Verizon received high marks in overall satisfaction and customer service and for service being available in most of the country.

Alltel

(soon to be acquired by Verizon) also stood out in areas where it was rated.

The other big winner in this survey was

T-Mobile

(DT) - Get Report

. For the first time, it was statistically on par with the top carriers in almost two-thirds of the cities where it was rated. Here in the New York City area,

AT&T

(T) - Get Report

, home of

Apple's

(AAPL) - Get Report

iPhone 3G and the Blackberry Bold, came in third while

Sprint

(S) - Get Report

, the other major carrier, was not rated in the report at all.

Consumer Reports'

readers reported somewhat better contract terms, and this year noted fewer problems with call quality. For the first time,

Consumer Reports

also rated customer-service satisfaction and found the carriers that stood out in city ratings of reader satisfaction and connectivity also tended to do well in customer service.

Even though consumer complaints were down overall, the top complaint for 14% of readers was the high cost of cell-phone service.

Consumer Reports'

analysis of the carrier's pricing found that cost-cutter consumers might not be aware of "pay-by-the-minute," or prepaid, service, which is offered by all major carriers as well as providers such as

Virgin Mobile

(VM)

and

TracFone

(AMX) - Get Report

.

According to the report, while major carries make no secret of their prepaid plans, which require no contract agreement, traditional plans are so lucrative that carriers have little reason to promote prepaid.

Cell-phone users seem to be coming to their senses about "free" cell phones. They might not be so "free."

Consumers Reports

found that you pay for the phones in your monthly service charges. According to public documents, in 2007, about $4.50 of an average Sprint subscriber's monthly bill was devoted to repaying the carrier for the cost of its equipment subsidies.

Cell phones actually cost carriers hundreds of dollars, so you should be aware that somehow they are going to charge you for some -- or most -- of that. Hopefully, this survey will begin to change all that.

Gary Krakow is TheStreet.com's senior technology correspondent.