BUSINESS DATA SERVICE MARKET PLAGUED BY ILLEGAL COST ALLOCATIONS, OVERCHARGES AND EXCESS PROFITS

 

Joint Comments Filed

BUSINESS DATA SERVICE MARKET PLAGUED BY ILLEGAL COST ALLOCATIONS, OVERCHARGES AND EXCESS PROFITS

Consumer Federation of America and New Networks Institute data show deeply anti-competitive, anti-consumer practices

Joint Press Release: Consumer Federation of America and NNI

On April 28, 2016, the FCC presented their findings about special access and discuss next steps.

Civic Hall Book Day — New Expose: The Book of Broken Promises

Civic Hall Book Day — Tuesday, April 28, 2015

NOTE: Other speakers include Susan Crawford, Astra Taylor, Allison Fine, Micah L. Sifry, and Alissa Quart — (See below)

New Expose Released: About the Book: Fact Sheet, Table of Contents, About the Author, About the Trilogy. Now available in paperback, ebook for Kindle, or an inexpensive PDF

bookcoversmallamazonsmallwe

It Is Time to Start Fixing What’s Broken with Communications in America.

With the Comcast-Time Warner Cable merger now dead in its tracks, and weeks earlier, the FCC released its new Open Internet/Net Neutrality decision only to be greeted by an onslaught of legal challenges that will continue for years, The Book of Broken Promises emerges to expose the sad truth about communications services in America and to answer a fundamental question — How did we get into this mess and what can we do to fix it today?

Bruce Kushnick, author, senior telecom analyst and industry insider, lays out, in all of the gory details, how America paid over $400 billion to be the first fully fiber optic-based nation yet ended up 27th in the world for high-speed Internet (40th in upload speeds). But this is only a part of this story.

It is Time for Audits, Investigations, Accountability, Oversight, Enforcement, Un-Manipulated Data, Transparency and Ethics.

  • SPECIAL: How to Get New York City and New York State
  • Competition Now: Re-open the phone networks (as well as the cable networks) to direct competition. Customers should regain the right to choose their own ISP (Internet), cable, broadband and phone provider over the wires coming into homes and offices — that they paid for.
  • Broadband Scandal: Start immediate investigations into the commitments that were made to upgrade homes, offices, schools and libraries with fiber optics, replacing the aging copper wires, as well as the billions charged to customers per-state.
  • Deceptive Billing: Everyone reading this knows that their bills are littered with ‘made up’ fees, pass-through-taxes, and the advertised price means nothing. Let real competition and ‘choice’ lower rates and fix deceptive sales practices.
  • Investigate the Time Warner and Comcast Social Contracts; actual agreements with the FCC to wire schools and charge customers.
  • Investigate the massive financial shell game and cross-subsidies we uncovered between and among the wired networks and the companies’ wireless services and other lines of business.
  • Separate the companies’ control of the wires and airwaves because— “The Companies that Control the Wires Control Access & America’s Communications Future.”.

Everyone Gets Upgraded: How Do We Get There? Broken Promises provides extensive documentation and a proactive plan, a road-map on how states and cities can take advantage and leverage the companies’ failed broadband commitments and the companies’ questionable financial and business practices. The goal — Move America to an open, very fast, fiber optic-based, yet affordable, broadband, Internet, and cable service for everyone — since everyone paid for it over and over and over.

Check Out the Details: The Book of Broken Promises is the third in a trilogy spanning 18 years. See the Fact Sheet, Table of Contents, details of “$200 Billion Broadband Scandal” featured on Bill Moyer’s PBS “The Net at Risk”, in 2006 (with over 730,000 downloads) and “The Unauthorized Bio of the Baby Bells”, (with Foreword by Dr. Bob Metcalfe), published in 1998.

NOTE: WE ARE ALREADY WORKING ON CHANGE

Broken Promises is based on over 20 years of research and analysis. However, it is not just a history book; it has been enhanced by the work of New Networks Institute’s team of independent experts, analysts, auditors and lawyers who have been working on projects together over the last decade.

From helping to get communities upgraded to fiber optics in New Jersey or in New York, (in 2012-2014), filing complaints at the FCC and at the state commissions, or helping to develop current and successful, settled class action suits (getting customers back tens of millions of dollars), Broken Promises uses this wealth of expertise to create an active guide for real change and it documents, in detail, the reasons why fixing communications is now an imperative.

New Networks’ Current Activities:

Want to be part of the change? bruce@newnetworks.com

==============================================================

Civic Hall Book Day — Tuesday, April 28, 2015

156 Fifth Avenue, Second Floor, New York City

Other authors and speakers include:

  • 8:30 AM – Susan Crawford, author, Captive Audience and The Responsive City
  • 12:00 PM – Astra Taylor, The People’s Platform: Taking Back Power
  • 2:00 PM – Afternoon snack with featured authors
    Bruce Kushnick author of The Book of Broken Promises: $400 Billion Broadband Scandal and Free the Net
    Allison Fine author of Matterness: Fearless Leadership for a Social World
  • 5:00 PM – Micah L. Sifry, The Big Disconnect, Why the Internet Hasn’t Transformed Politics
  • 6:00 PM Poetry in the Café, Happy Hour with Alissa Quart, author of Monetized

 

 

 

 

 

 

 

 

 

New Networks Institute Activities, 2013-2015

New Networks Institute & Teletruth Activities, 2013-2015

Previous Work, 1993-2013

Net Neutrality and Verizon’s Use of Title II

  • New Networks Institute’s (NNI) work in highlighted in the FCC’s Internet Order, and influenced some of new added safeguards pertaining to billing and disclosure issues, March 2015.
  • NNI & Teletruth have filed a Petition for the FCC to investigate whether Verizon has committed perjury as Verizon has failed to disclose to the FCC, courts or public that their entire financial investments are based on Title II; filed January 13th, 2015.
  • Ars Technica Featured article: FCC urged to investigate Verizon’s “two-faced” statements on utility rules
  • Verizon has responded with a letter denying our claims, filed, January 20th, 2015
  • New Networks Institute & Teletruth Response to Verizon, Feb 23rd, 2015
  • Verizon: Show Us the Money PART I: Verizon’s FiOS, Fiber Optic Investments, and Title I. – Part 1 is a supplement to the original Petition for Investigation.
  • Letter to the FCC, Comments: Open Internet proceeding. RE: Verizon’s Fiber Optic Networks are “Title II” — Here’s What the FCC Should Do. DOCKET: Open Internet Proceeding, (GN No.14-28)
  • Comments First: FCC Open Internet Proceeding “Title Shopping: Solving Net Neutrality Requires Investigations” , July 14th, 2014
  • Comment Second: Verizon’s FiOS Fiber to the Premise (FTTP) Networks are Already Title II in Massachusetts, Maryland, Florida, New Jersey, District of Columbia, Pennsylvania, New York…

Time Warner Cable- Comcast Merger; New Findings

  • Comcast and Time Warner Cable Merger In 2015 we filed a Petition for Investigation and Complaint against Time Warner Cable with  the NYPSC and FCC to stop the mergers for multiple reasons, from deceptive billing and made up fees, to overcharging via the “Social Contract”. The “Social Contract”, an actual agreement between the cable companies and the FCC, allowed the companies to charge the cable subscribers for network upgrades and the wiring of the schools.  The Contract ended in 2001, however we could find no schools wired under this program, and no removal of the  additional charge of $5.00 a month, which started in the 1990’s.
  • Some of this material was quoted in Mayor DeBlasio’s comments pertaining to the TWC Comcast merger with the NY PSC.
  • Ars Technica article: Petition: Time Warner Cable mistreats customers, shouldn’t merge with Comcast

Examining the Financial Shell Game

  • In May 2014,  Public Utility Law Project, (PULP) published  “It’s all Interconnected”, written by New Networks (with assistance by David Bergmann) and it relied on unexamined data from Verizon New York using different Verizon supplied financials books.
  • The Verge: Game of Phones: How Verizon is playing the FCC and its customers, May 2014
  • In 2010, NNI  started an investigation of the financial books of  five Verizon’s state-based utility phone companies,  including Verizon New York and Verizon New Jersey  and  the ties to Verizon Communications affiliate companies, (subsidiaries) including Verizon Wireless, Verizon Online, Verizon Services, among others.Published in 2012
  • In 2013, our next report focused on Verizon New York and was the centerpiece of a filing by Common Cause, Consumer Union, CWA, and the Fire Island Association, which called for an investigation of Verizon’s financials and business practices.
  • The Connect New York Coalition, filed a Petition with the New York State Public Service Commission to do a formal investigation of Verizon New York. July 1, 2014. The Petition is based, in part,  on NNI’s continuing research.
  • Coalition members include AARP, Consumer Union, Common Cause, CWA, and NY state politicians.
  • Event Reverse ALEC Legal Hackathon” Thursday, January 31st, 2013, Brooklyn Law Incubator and Policy Clinic (BLIP) and the New Networks Institute hosted a Reverse ALEC Legal Hackathon at Brooklyn Law School. The invitation-only event, something of an emergency meetup, brought together experts, lawyers, advocates, technologists and competitors, who are concerned with the state of telecommunications in the United States. The goal was to create consensus and build a campaign to define principles for model regulation, pursue legal actions, and create a working path to accomplish the following goals.
  • New Book: The Book of Broken Promises: $400 Billion Broadband Scandal & Free the Net, Published New Networks Institute, February 2015.

 

 

Connect NY Petition to Investigate Verizon NY

Petition by Connect New York Coalition  to Investigate Verizon New York’s Financials and Business Practices, based, in part, on New Networks’ Research.

On  July 1, 2014, a new group,  Connect New York Coalition, filed a Petition with the New York State Public Service Commission to do a formal investigation of Verizon New York.

Read the Petition: http://www.scribd.com/doc/232125660/Connect-New-York-Coalition-Petition
Coalition members: http://teletruth.org/docs/ConnectNewYorkCoalition.pdf

“15 major consumer and labor organizations and a bi-partisan group of 69 elected officials announced today the formation of the Connect New York Coalition, a major new effort to reverse the decline in telephone service and ensure high-quality advanced telecommunications services for all New Yorkers. They filed a formal Petition with the Public Service Commission seeking a complete and public review of New York’s telephone and telecommunications systems.”

The Connect New York Coalition  petition “asks for a formal proceeding with evidence-gathering and cross-examination of witnesses”, and asks the following questions, among others:

•    How much do providers invest in the legacy, fiber optic and wireless systems?
•    What are the actual costs and revenues for each system and what are the rates of return?
•    What is the current level of service quality in all systems and how is it measured?
•    Does competition exist?

The Petition is based, in part,  on New Networks’ continuing research.  For a summary of the most recent report, written for Public Utility Law Project (with the assistance of David Bergmann)  and why this investigation was necessary see:

http://newnetworks.com/publicnnrelease/

Some of the Connect NY Coalition’s questions have been addressed by New Networks’ team of experts, auditors and lawyers in our reports and research.

  • In May 2014,  Public Utility Law Project, (PULP) published  “It’s all Interconnected”, written by New Networks (with assistance by David Bergmann) and it relied on unexamined data from Verizon New York using different Verizon supplied financials books.
  •   http://newnetworks.com/verizonfiostitle2/
  •  In 2010, New Networks  started an investigation of the financial books of  five Verizon’s state-based utility phone companies,  including Verizon New York and Verizon New Jersey  and  the ties to Verizon Communications affiliate companies, (subsidiaries) including Verizon Wireless, Verizon Online, Verizon Services, among others.
  • Published in 2012,  http://www.newnetworks.com/Verizonshellgame2012.pdf
  • In 2013, our next report focused on Verizon New York and was the centerpiece of a filing by Common Cause, Consumer Union, CWA, and the Fire Island Association, which called for an investigation of Verizon’s financials and business practices.
  • http://newnetworks.com/verizon-wireless-affiliates-harming-verizon-wireline-customers/

 

 

 

 

VerizonvsState

New York Supreme Court — Verizon Sues the State Commission Over FOIL Requests — New Networks 2013 Report part of the requests for information.

Background:

In 2013,  Common Cause–NY, Consumer Union, Communications Workers of America (CWA) and the Fire Island Association filed comments in the Fire Island-Voice Link proceeding in New York State.  New Networks’ report (with assistance from Alex Goldman) was based on  Verizon New York SEC-filings was part of the call for an investigation and a FOIL request to get the data —

Verizon claims that local service was uneconomical, but there are too many facts pertaining to the affiliate companies’ financials in relationship to Verizon New York’s revenues and profits that call into question Verizon’s claims.

The affiliate companies are Verizon subsidiaries that provide or receive service from Verizon New York, the state utility, and they include Verizon Wireless, Verizon Online, Verizon Business, Verizon Enterprise Solutions, and Verizon Services, among others.

 2013: CWA-et al comments and New Networks 2013 report:

  • COMMENTS: : Common Cause–NY, Consumer Union, Communications Workers of America and the Fire Island Association Call for an Investigation of Verizon Wireline and Wireless Companies Business Relations by the New York State Commission — Data from New Networks research reports.
  • NEW REPORT: Verizon Wireless and the Other Verizon Affiliate Companies Are Harming Verizon New York’s (The State-based Utility) Customers & the State.
  • Other Documents:

FOIL Challenge:

In 2013, the State ruled that Verizon would have to turn over the data requested, and after a challenge, Verizon lost.

NOTE Verizon submitted totally redacted docs: Our personal favorite is this 331 page, Verizon totally redacted document.

In Feb 2014, Verizon took the state to court so it could hide their financials.

New Report: “ It’s All Interconnected.” New Data

In May 2014, New Networks new report for Public Utility Law Project, reinforced the needs for audits of  Verizon’s New York’s ability to charge customers for network upgrades and at the same time show massive financial losses — much of which are being directly caused by Verizon’s affiliate companies. — NOTE: since the first report we found new financials from the State Public Service commission, and Verizon New York’s annual PSC submissions.

=============================================================
The New York Supreme Court filed documents,
2014: Verizon vs the NY Public Service Commission, Amicus by CWA et al.

In the Matter of the Application of  VERIZON NEW YORK INC.,

 Petitioner,

For an Order Pursuant to Article 78 of the Civil Practice Law and Rules

-against-

NEW YORK STATE PUBLIC SERVICE COMMISSION (“the Commission”),  KATHLEEN H. BURGESS, as Secretary to the Commission,
NEW YORK STATE DEPARTMENT OF PUBLIC SERVICE (“the Department”)  and DONNA M. GILIBERTO, as Records Access Officer for the Department

  • PETITIONER’S MEMORANDUM OF LAW IN SUPPORT OF ARTICLE 78 VERIFIED PETITION AND STAY
  • MEMORANDUM OF LAW OF RESPONDENTS PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK AND NEW YORK STATE DEPARTMENT OF PUBLIC SERVICE
  • BRIEF OF AMICI CURIAE COMMUNICATION WORKERS OF AMERICA, DISTRICT 1, COMMON CAUSE, CITIZENS UNION, AND THE FIRE ISLAND ASSOCIATION

Verizon New Jersey Local Service Increases, 1982-2014 — 440%.

Verizon New Jersey and the NJ Board of Public Utilities have created a deal to erase Verizon’s obligations  that require the company to upgrade 100% of their territory, replacing the aging copper wire with a fiber optic wire,  offering speeds of 45 Mbps or better in both directions by 2010. Customers where charged about $15 billion extra since 1993 for these upgrades.

Verizon filed comments as part of this proceeding and claims that the company had no rate increases from 1985 through 2008.  Verizon Stipulation Agreement filing, March 24, 2014:

“In fact, the regulatory plan adopted with Opportunity New Jersey allowed a modest amount of pricing flexibility for certain services while imposing a price cap that resulted in Verizon not increasing the price for basic phone service in New Jersey for twenty-three years (between 1985 and 2008)”.

And in an Ars Technica article, Verizon spokesperson Lee Gierczynski said the 1993 agreement “imposed a price cap on basic phone service that resulted in no increases in that service from 1985 to 2008.”— You got to be kidding me.

Verizon’s Deceptive Math: Take Out a Bag of M&M’s and Only Count the Yellow Ones.

In 2008, we filed comments with the NJBPU  as part of  a proceeding to raise Verizon’s phone rates. Verizon had made an almost identical statement seven years ago and at the time we went through actual Verizon phone bills and found that local phone service had increased a whopping 300%-350%. And continuing this analysis, by the end of 2013, the company had raised local service about 440% — or more depending on what you count.

verizonnjrateincreaseBut, you don’t have take my word for it. Let’s go through actual charges taken off Verizon’s phone bills. We will attempt to make this as painless as possible as no one can read their bills — they were designed that way.

Verizon Didn’t Count 1:      The FCC Line Charge is on Every Local Phone Bill.

This is a Verizon New Jersey bill from April 2002 that is paying for 2 lines. And it has an “FCC Subscriber Line Charge”, which was $6.21 cents per line. Verizon’s quote doesn’t include this charge in their analysis of no increases between 1985 to 2008.

The FCC Line Charge (it has many different names), is on every local phone bill and the charge started in 1985. You can’t get service without paying this charge and the money does NOT go to fund the FCC but is direct revenue to Verizon New Jersey.

Verizonnj2002

 Moreover, the New Jersey State law details that this “Federally mandated subscriber line charge” is part of local service: N.J.A.C. 14:3 – 7.17 (a):

“’Basic residential local telephone charges’ include charges for basic residential local telephone service, basic residential local service usage, nonrecurring charges for basic services (service ordering charges and installation charges for basic services), the Federally mandated subscriber line charges, and applicable State and Federal taxes.”

And yet, Verizon leaves off this charge.

Then we have the taxes, fees and surcharges that are applied to the FCC Line Charge. On the bill you will notice Verizon applies a “Federal Universal Service Fund Charge” (FUSF) as well as Federal and state taxes.  In 2002, the Universal Service Fund was an 11.4% tax applied on all ‘interstate’ telecommunications services and because the FCC Line Charge is considered Federal it gets taxed FUSF. (Caveats: These charges can vary throughout the year. The FCC Line Charge increased from $1.00 in 1985 to a cap of $6.50 per line per month by 2003. The FUSF has had varying rates through this period.  It was 5.5% in 2000, the first year, by 2008 it was 11.4% and most recently it was 16.4% tax, applied to any ‘interstate service’. And yes, they got the tax on this bill.)

Verizon, of course, will make excuses. Oh, but the FCC Line Charge is “interstate” and Federal vs controlled by the State Commission

Also, on this bill is also something called a “Portability” charge, which is more revenue to Verizon.

Add up the ‘Total Monthly Charges” for 2 phone lines— It’s ugly. While the cost of the ‘monthly charges’ was $25.62, there’s an additional $17.70 cents — 70%. I thought that Verizon said there was no ‘increases’.

Let us be clear. You pay a local service bill. It has charges on it that you must pay and you can’t get service without it.  If Verizon doesn’t want to count these charges, then why shouldn’t the customer have the right to not pay what’s not being counted?

But we’re just getting started… The problem of not counting multiple charges on the bill almost rises to one of the biblical afflictions, like locusts or floods.

Anyone who has ever bought a bundled package of services from Verizon (or the other phone or cable companies) knows that they all play this shell game; the price of service you have to pay is always 10-40% more than the advertised price. That’s because the companies leave out the cost of all of these ancillary charges and taxes in their sale pitch.

Verizon Didn’t Count 2:      “Local Service” was a “Bundled” Service.

In 1982, New Jersey Bell’s (now-Verizon New Jersey) local phone service was a bundled service and it came with unlimited local calling, unlimited directory assistance, the wire in the home and the phone rental.

This next antique bill is from New York Telephone in 1980 and it is similar, if not identical to a New Jersey Bell phone bill from that time. It shows that local service was a total of $8.46, but that included the wire in the home for $1.24 called “wire outlet”,  a phone rental fee at $1.18 as well as the main service line (sometimes called “dialtone”) for a total of $8.46, not counting taxes.

(NOTE: This page was only provided ‘annually’, so unless you had an interest, you’d never know that there were separate charges for these items.)

nytel1980

But, in 1982, prior to the break up of AT&T in 1984, there was a deregulation where the phone rental and the inside wire (which became “inside wire maintenance” fee) were spun off — and each charge would then be able to increase. The phone rental went to AT&T, while the inside wiring was kept in Verizon New Jersey. This deregulation was done so that customers could buy their own phones or not pay for the maintaining the wire in their home.

Verizon New Jersey picked the year 1985 to avoid the truth about what happened to local service rates.

First, the companies were able to still keep the total cost of local service the same, even though it should have been lowered as the component parts were no longer included; i.e., if local service came with the inside wire, then that expense, which was $1.24, should have been deducted from the total cost moving forward. It wasn’t.

While the price stayed the same, you now got less for your money.

But that’s only part of this tale.  From 1982-1985 they added a number of extra charges. This next New York Telephone bill from 1986 shows an inside wiring fee, (which went down a bit to $.92 cents) as well as an additional, but related ‘wire investment charge’ of $1.29.  For the phone rental, there was the phone rental charge, as well as an additional “investment recovery charge” of $1.90.  New Jersey went through an identical process.

Veizonnj1986chargesBut the kicker is that in 1985, about 90% of all customers still paid for inside wiring and about 75% were still renting the phone, (which went up to $3.18 a month by 1986 from $1.18 a month in 1980, not counting the additional charge).

In 1985, then, the majority of customers were paying a) inside wire maintenance, b) a second charge for inside wire called ’wire investment’, c) a  phone rental fee, d) an  additional phone rental fee “investment recovery” and e) an inflated ‘basic service’ cost. (Notice that the FCC Line Charge was $1.00 in 1986.)

Thus, if we start with 1985, these other charges would have been part of ‘local service’, but Verizon, of course, never discussed this.

Verizon Didn’t Count 3:      Inside Wire Maintenance Increases.

In our surveys of thousands of phone bills and interviews we found that at least half of those paying an inside wire maintenance fee didn’t order it and didn’t know it was on their bill as there is confusion from all of the terms sounding the same — inside wire, FCC subscriber line, dialtone line, etc.

However, this one Verizon New Jersey charge went from $.95 in 1982 (where it remained through the 1990’s) to $7.99 per month— A 741% increase. And by 2008, it had increased 364%, not counting the related taxes, fees, and surcharges.

njinsidewire

There is no data about the number of customers who are paying for the service in 2014.

Verizon Didn’t Count 4:      Directory Assistance Increases

Directory Assistance, i.e. calling ‘411”, was a free service as part of Verizon New Jersey’s ‘basic local service’. By 2008, the company removed most free calls, but kept an ‘allowance’  of four free calls per month in 2007, then reduced to two per month in 2008 with a charge of $1.50 after the allowance runs out, per call.

In 2008, when Verizon was asked how many customers use directory assistance and how many calls do they make a month, they sent this:

verizonDAallowanceremoved

The NJ Rate Counsel claimed that the changes to service by Verizon eliminating these last remaining free calls would add $187 million in extra costs to customers.

“The 4 free Directory Assistance calls for residential customers could be eliminated and rates increased. Rate Counsel’s estimate is that elimination of free calls and rate increases for Directory Assistance could cost ratepayers another $187 million.”

The last records we found around 2008 showed that, with automation, it cost 15-25 cents to offer directory assistance per call.

To recap, we have a bundled service where every part is ‘deregulated’, prices continue to go up, and Verizon’s data claims that there have been no changes.

Verizon Didn’t Count 5, 6 & 7:  Other Expenses/Increases Not Mentioned

There have been multiple changes to phone charges in New Jersey from 1985-2008 for residential and business services.

  • Local Number Portability Surcharge — Throughout this period there was an additional $.23 charge per line per month, which was revenue to the companies for allowing you to take your number with you if you changed providers. It came to $18-$20 million dollars extra a year for the company.
  • E911 — $.90 a month was added for emergency services and it is a profit center for Verizon. In 1991, then-New Jersey Bell showed a $13 million revenue increase from providing E911 services. It is clear that it was not up for bid and we could not find any more recent information about revenues in Verizon’s SEC filings.
  • 4/16/05 — Merged “Calling Areas”. Verizon merged four differently priced residential calling areas. The ‘cheapest area’ had a 15% increase.
  • 4/16/05 Verizon New Jersey had a $.65 cent credit on residential and small business phone bills which was eliminated in 2005. *Impact: Removing the $.65 cent credit yielded over $23 million annually in new profits. We are not sure when this credit was added to the bills.
  • 1/01/07 — The optional wire maintenance plan went from $4.25 up to $5.75.

Verizon Didn’t Count 8:      Business Rate Increases.

We note: Verizon’s quote is only for residential services, it would appear, as there were increases for small businesses.

  • 8/16/03 Verizon NJ (VNJ) eliminated the small business discount of $1.01/month on auxiliary (i.e., a second line or more) business lines associated with accounts with 2-4 lines. * Impact: Auxiliary business lines for small businesses with less than 5 lines went up approximately 10%.
  • 11/01/06 VNJ hiked statewide rates for multi-line business customers and introduced 2-year term plan.
  • 2/01/07 VNJ raised rates again. This was the second rate hike in 3 months, from $16 to $17, auxiliary business lines increased from $12 to $13.

Verizon Didn’t Count 9:  Post 2008: Just Some of the Increases

Starting in 2008, local residential service went go up 79%; Business services were up about 70%. Caller ID went up 38%, while non-published number rose 68%. Caller ID has profit margin of 5695% and a non-published number has a 36,900% profit margin. (The ‘costs’ listed were from a 1999 Florida Public Utility Commissioner report. It is obviously cheaper to offer these services in 2014.)

verizonincreases2008nj

And there have been more increases to some of these services since 2008.

 Total Local Service: Over 440% and Counting

By the end of 2013, if you just kept the same local service since 1982, you were paying about 440% more (not counting the phone rental).

njrateincrease2014Signs of a Monopoly: How Can Prices Go Up if there’s Competition?

Prices should have gone down, down, down. First, the copper networks have been written off—“fully depreciated”, so their value is nominal. Then they slowed down maintaining those wires over the last decade and more recently decline to repair the copper. And since Verizon cut staff over 70% since 1985, prices should have plummeted as the expenses were sliced. Also, there was supposed to be competition to lower prices further.

What about comparing this to the Consumer Price Index (CPI)? Why? The CPI is based on the assumption that the cost of goods goes up. Here, the cost of goods have been going down.

Bottom line: Prices didn’t remain ‘frozen’ from 1985 through 2008, much less after and it is clear that these extra fees were all part of the state’s deregulatory gifts to Verizon New Jersey. Problem is – these extra profits should have been used to upgrade the state infrastructure starting in 1993. Instead, they just increased the companies’ profits.

NOTE: Tom Allibone, president LTC Consulting, a New Jersey-based telecommunications auditing firm, worked on the analysis of the phone charges.

 

 

 

 

 

 

2014: The End Game in Telecommunications: The Perfect, Man-Made Storm

  • “Since deregulation, landline costs skyrocket. The monthly cost of measured AT&T phone service (in California) has soared more than 260% since 2008.” Los Angeles Times, Dec 6th, 2013
  • “Internet Service Providers Are Now the Most Hated Companies in U.S…” “ISPs received the lowest customer satisfaction ranking of any industry in America. And that’s saying something, considering ACSI (American Customer Satisfaction Index) typically surveys nearly 50 industries per year.” Huffington Post, May 22, 2013
  • “Fire Island Erupts Over Verizon’s Wireless Voice Link. Forget about not being upgraded to fiber optic services. Customers are ‘extremely disappointed,’ ‘horrified,’ ‘very frustrated,’ with ‘grave distress and dissatisfaction’ about Verizon’s plan to stop fixing their phone lines and giving them an inferior wireless replacement, Voice Link, which can’t handle basic services like fax, DSL or even reliable e911 service.” Huffington Post, July 3rd, 2013
  • “Killing Copper? Customers Say They Felt Pressured into FiOS.” “‘Consumers are filing complaints with us alleging that Verizon is engaged in deceptive marketing practices,’ said Eric Friedman, Director of Maryland’s Montgomery County Office of Consumer Protection.” NBC Washington, December 10th, 2013
  • America Is 32nd in the World in Broadband Download Speeds and 42nd in Upload Speeds, Net Index by Ookla, January 1st, 2014

As the above quotes demonstrate, America is not a happy camper with their phone companies, AT&T and Verizon (not to mention their cable companies). But, truth is, the year 2013 will be remembered as the year that, for the first time in telecommunications history, an incumbent utility phone company, Verizon, decided to not repair the customers’ wires after a major storm.

Unfortunately, all of this has just been a prelude to a reduction of business or residential customers’ rights and services throughout the US, regardless of whether the customer is using a wired or wireless phone or who wants broadband or cable competition in 2014.

And this is not about market forces or even technology driving change. This is a man-made storm to make more money and get rid of regulations. The major incumbent phone companies, which also own the largest wireless companies, and who also, with the cable companies, control most of broadband, Internet and cable services, are working together — a ‘cabal,’ a ‘trust,’ or some might call it — Mob Bell.

We are all for capitalism and making hefty profits in a free market. This ain’t that. The incumbent companies are utilities that control essential infrastructure and instead of competition they are now colluding in multiple ways and have figured out how to have the government protect them — as a group. It harms the U.S. economy and it harms every customer in multiple ways.

The Perfect, Man-Made Storm: The End Game in Telecommunications

The 2013 scorecard shows that America has been under attack by the companies, who are taking more and more control by erasing oversight, regulation and obligations.

  • Buying the Takeover of Telecom. In just three years, 2011-2013, five companies — AT&T, Verizon, Centurylink, Comcast and Time Warner, and the cable association, NCTA, spent an estimated $227 million dollars in federal lobbying and campaign financing. This is separate from the state lobbying, foundation grants or sponsorships. (Source of the basic data: Opensecrets.org)
  • 30 States have Stripped Away Some, if Not Almost All Basic Telecommunications Regulations, Obligations and Oversight. In Florida, the state commission was defunded in many areas and they can’t even ask the phone companies how many lines are in service. And the state law removed most of the obligations including ‘carrier of last resort’ — the obligation to make sure that customers have access to wireline phone service or that the company repairs the lines after a storm. It also allows the company to force customers onto their own wireless company-supplied service — or just dump the customer.
  • The Rise of ALEC, the American Legislative Exchange Council in Telecommunications. ALEC is a group designed to facilitate their corporate members, such as AT&T and Verizon, in creating ‘model legislation’ that is used by ALEC-member state legislators, many of whom are funded by these same corporations with campaign financing or ‘foundation grants’ for their districts.
  • 2014 Goal: The changes in the 30 states were based on ALEC’s model legislation and the 2014 goal is to finish the job in the remaining states.
  • NOTE: In December, 2013, FCC Commissioner Ajit Pai congratulated ALEC on its ‘model legislation’ that pushed the strip-mining of the regulations.
  • The AT&T-FCC IP Transition is in Full Swing at the FCC. This federal campaign is based on essentially the same AT&T conjured state-based model legislation. The FCC has created a Technology Transition Task Force to force this transition, even though it has little to do with technology and everything to do with AT&T’s plan to make more money and get rid of regulatory oversight.
  • The Telco Congressional Campaign has Started. With 30 states now swallowed by AT&T, Verizon and Centurylink’s strip-mining of regulations, there’s a new cry from telco-friendly Congressional politicians to start erasing the entire Telecommunications Act of 1934, updated in 1996.
  • 19 States Restricted Municipalities from offering Competitive Broadband. At last count, this other telco-cable-ALEC based model legislation and campaign helped to restrict, if not completely stop municipalities from offering competitive broadband services, even when the incumbents were never going to do it.
  • Hyped and Manipulated Data Are Now the Standard. From the ‘wireless only’ statistics, which only represent residential voice service and no data or business services, to the ‘access line accounting’ that doesn’t include the majority of data lines in service, such as DSL to U-Verse TV, the companies have skillfully been able to bring in reasonable sounding, but ‘distorted’ statistics to make their case.
  • No More Serious High Speed Wired Deployments or Cable Competition. Verizon announced that it is no longer going to expand its FiOS deployment outside of the current ‘footprint’. Meanwhile, AT&T has stated it will be building out some more of U-Verse, its ‘copper-to-the-home’ service, but in the end, AT&T will service less than 50% of their territory with TV capable services — in 22 states.
  • As noted, America is 32nd in broadband download speeds and it is going to get worse due to this slowdown in upgrading the wired networks.
  • The Wireline-Wireless-Cable Collusion. Verizon’s wireless company isn’t competing with the wireline company and Verizon has a deal with the cable companies to bundle their cable services with wireless in areas they aren’t upgrading. Moreover, customers can’t get competitive broadband, Internet or cable services over the wires coming into their homes

And the Implications Are Pretty Horrific. The Apparent AT&T and Verizon Plan:

  • Let the copper wiring degrade — which appears to have been the plan for the last decade. Then they can claim it has ‘chronic problems.’
  • Close down the copper wiring in areas they don’t want to serve and push these customers onto wireless — which they also own.
  • Close down the copper wiring in areas that are considered the ‘upgraded’ networks — Verizon’s FiOS or AT&T’s U-Verse — and force customers to migrate to ‘upsell them’.
  • ‘Harvest’ all customers who don’t want to switch with continuous rate increases — or until they scream uncle.
  • Get the state and federal regulators to allow them to do these actions without any regulations or push-back.
  • Keep competitors and business segments that depend on copper off the networks and take over their clients. This includes the remaining competitors, companies offering cloud services, and the alarm industry.
  • ‘Vertically integrate,’ meaning allow only the companies’ broadband, Internet, phone or cable affiliates to use the wires and give them advantages to harm competition of any sort.

How Many People are Impacted by All of these Maneuvers?

Regardless of what the companies say, using their own data, closing whole areas of the U.S. will impact everyone including small businesses, residential customers, schools, libraries, municipalities, among others. And this won’t be only in rural areas. We found:

  • AT&T’s U-Verse is probably 99 percent copper-to-the-home. Out of 76 million locations, AT&T only has 5 million U-Verse TV locations–less than 7 percent.
  • AT&T could be abandoning 57 percent of customers,
  • Verizon also only 5 million households have FiOS TV out of 27 million households in its territories–only 18 percent of households. 82 percent of the wires are still copper.
  • Verizon could be abandoning 47 percent of customers.

Not a Fair Fight: There’s No Level Playing Field.

With a cabal of companies and their associations spending $227 million on federal lobbying in just three years — that over $70 million a year, (and as mentioned, this doesn’t including state lobbying and campaign financing, foundation grants or sponsorships) and our side spending… well, squat, there is no even playing field.

The Creation of Mob Bell: The Return of Humpty Dumpty.

In 1984, the original AT&T was broken up because it blocked competition. Seven ‘Baby Bells’ were created, each controlling specific states. And there were also independent local companies, such as GTE.

AT&T became a ‘long distance’ company, and there was also the maverick MCI. In 1996, the Telecom Act was created to open up the wires to all forms of competition –phone or broadband or Internet or even video service. AT&T and MCI entered the local phone markets, as did thousands of independent Internet Service Providers and CLECs (Competitive Local Exchange Companies).

(NOTE: Every ‘triple play’ still has a ‘long distance’ charge for ‘interstate’ calls, i.e., calls made across state lines, and there are separate related taxes, fees and surcharges.)

During the 1980’s and 1990’s, AT&T, MCI and the other competitors acted as a ‘balance’ to the force. By 2007, the Baby Bells married each other, the FCC removed requirements to let competitors use the networks and AT&T and MCI were bought. Three mega-Bells were formed– AT&T, Verizon and Centurylink — that don’t compete for wireline services, even though every merger was predicated on them going at it.

Today, there aren’t any deep-pocket companies who currently act as a balancing force. Google, Microsoft and Apple and many other Tech companies have deals with the network providers so they aren’t going to stand up for the public. And with the recent rash of the telco-ALEC bills defunding the state commissions, severely limiting their oversight, and a dysfunctional FCC, there is no balance for the public interest.

How can AT&T in California raise rates 260% over the last few years, with similar rate increases happening throughout the US, for example, if there was real competition?

Conclusion: The Squeeze Play Is On.

The public is totally unaware of these issues and much of the press appears to simply parrot the corporate press releases. However, as the opening quotes detail, customers may have started to notice the problems when it impacts them.

The question is: Will the telcos be able to buy the changes they want and fool the public and politicians and thus have carte blanche to simply raise rates, shut off customers, force-migrate them to their own affiliate wireless companies or onto their other services they don’t want, with no force to compel them to upgrade ALL of the utility customers?

Don’t Get Mad: Get Even.

Over the next few weeks, we will be offering our own plan for the future.