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When is a rate increase not a rate increase? When it is an “administrative surcharge” of course!
Verizon FiOS phone customers will soon find the company’s latest innovation in the form of a new line on their June bill, along with a $0.99 surcharge.
Notice of Price Increase
Effective May 17, 2014, Verizon will apply an FDV Administrative Charge of $0.99 per FiOS Digital Voice line. This monthly surcharge helps defray account servicing costs associated with providing voice services. This is a Verizon surcharge, not a tax or governmental fee. Visit verizon.com for more information.
Instead of simply raising the advertised price of the service, Verizon added a new opaque charge which they admit is nothing more than an effort to increase revenue. Prospective customers will still see Verizon’s attractive promotional pricing, but only later discover the final bill is higher once taxes, fees, and other surcharges are tacked on.
In fact, Verizon’s new FiOS Digital Voice fee is subject to taxes as well, so for some the true cost of the rate increase is $1.21.
Some angry Verizon customers are switching to Ooma, a service that asks customers to pay upfront for the hardware but offers basic telephone service for free (customers pay well under $10 a month to cover taxes that Ooma does not pocket itself.) A more deluxe option including more phone features runs around $10 a month.
One annoyed customer considers the fee an end run around consumer contract law:
My concern [is] with a regulated utility’s ability to get around a contract price by labeling an increase as an “administrative charge.”
I called their customer service line to discuss/complain. When I asked what would prevent Verizon from using this as a vehicle to increase prices by $10 or $15, assuming Time Warner/AT&T/DirectTV raised their prices as well, he admitted that he was not aware of any restrictions. Neither am I.
I can’t find anything in my contract with Verizon that lets them increase my price by instituting back-end increases. I’m pursuing with government regulators and encourage you all to do so as well. If this gets through, there will be more.
In fact, one of the reasons why Verizon loves their digital voice product so much is because it is unregulated and not subject to government oversight. They can set rates at will and their current contract allows for the addition of administrative fees without violating any “price lock” agreements. So far, most companies implementing these fees have kept them low enough to avoid provoking government scrutiny, but the number of them and their respective amounts have increased over time.
Customer recourse? Complain and ask for a credit for the administrative fee or cancel service.
Phil, do you have any subscribers at fcc.gov? Just wondering.
There is no easy way for me to know. We do have a lot of visits from state utility commissions, Wall Street, various telecom companies and journalists. I hear from all of them.
I’d have to analyze traffic because our “subscribe” feature is an RSS feed, except for commenters following the articles they respond to. On average we have about 85,000 unique visitors a month, growing by a few thousand each month.
Definitely complain to your state PUC and the FCC (although I doubt there is much they can do), and complain as well to your state Attorney General and to the FTC (who can probably do more if you think this charge violates your service agreement).
fcc? they are sticking you with a lot more than .99/month, such as their usf they have tripled, as they have decreed broadband to be an entitlement for their favored beneficiaries.
Your column is one of the most informative out there; and I scan 30-40 daily and monitor another 300-400 twitter feeds across 10 topical groupings as best I can. 4 people at the FCC at a minimum who should be receiving it: Gigi Sohn Henning Schulzrinne Jonathan Chambers Tim Brennan Just an FYI, you do sometimes come across as pedantic and having an ax to grind. That’s the problem I had with Captive Audience, in that it didn’t give credit where credit is due. As well, many of the historical facts were incorrectly understood or applied. I know, because I… Read more »
I agree Phillip’s is one of the best consumer telco blogs out there. I don’t always agree with him, but he’s been unfailingly courteous in his dealings with me, even when I’ve not always reciprocated.
If the information cannot stand up to scrutiny, it is a disservice to publish it, so I always appreciate those with different views sharing them here.
I appreciate your comments. I try and sort out any considerable editorializing by labeling those articles with the tag “Editorial & Site News” so readers know when it’s me spouting off versus someone else or more straight reporting. One of the reasons why there are fewer articles here than on other sites is that I try to be very careful about sourcing/linking information and double-checking it for accuracy. I am also very uncomfortable writing on topics where I feel I lack a good understanding and some sense of authority. That means people can agree or disagree, but at least there… Read more »
Phillip, speaking for myself, the reason I keep coming back is because you publish good stuff. And anytime I have a difference of opinion with you, just remember it’s not personal. I try to stick to the facts, as you do.