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Verizon Wireless Shoots Itself in the Foot With $2 “Convenience Fee,” Now Rescinded

Verizon Wireless became the Bank of America of late 2011 when it attempted to impose a $2 “convenience fee” on select customers who prefer to pay their monthly phone bills online or through an automated telephone attendant.  It’s just the latest experiment in customer gouging — the same kind of toe-in-the-water strategic experimenting that unleashed ubiquitous baggage fees on airlines, low balance fees on checking accounts, and the increasingly-common practice of charging customers extra to mail them their monthly bill.

An entire industry of consultants pitch their creative talents to companies like Verizon who want “a little extra” from captive customers.  These specialists sell their expertise identifying the most vulnerable (and least likely to leave), who will grin and bear just about any kind of abuse heaped on them. Many income and resource-challenged consumers are left feeling powerless to protest and reverse unwarranted extra charges.

The consultant gougers-for-hire made millions for large banks when they figured out how to score the biggest bounced check and overdraft fees (simply pay the biggest check first, opening the door to $39 bounced check fees for all the little checks that follow).  Verizon’s $2 fee targeted customers who couldn’t afford to let the company automatically withdraw their monthly payment, or didn’t trust the company to do it correctly.  Even more, Verizon’s fee would target more desperate past-due customers who needed to make a fast payment to avoid service interruption.  Consumer advocates wondered if Verizon was successful charging these customers more, would they expand the fees to cover all online or pay-by-phone payments?

We’ll never know because the public outcry and intensive media coverage during a slow holiday week combined to force Verizon into a fourth quarter revenue retreat, rescinding the fee 24 hours after announcing it.  But Verizon may be pardoned if they feel they were unfairly singled out.  That is because other telecommunications companies have been charging certain customers bill payment fees of their own for years:

Verizon's evolved position on the $2 convenience fee (Courtesy: WTVT)

  • Stop the Cap! reader Larry writes to share TDS Telecom, an independent phone company, charges a $2.95 “third party processing fee” when accepting payments by phone.  “In its place you either have to revert to U.S. Postal Service, or agree to electronic billing for on-line payment access.”
  • AT&T charges a $5 bill payment fee for “certain customers.”
  • Sprint/Nextel not only has its own $5 bill payment fee for those paying at the last minute,  it also forces customers with spotty credit to sign up for auto-pay to avoid a mandatory surcharge.  Want a paper bill?  That’s $2 extra a month.
  • Comcast charges a $5.99 payment fee, but only in certain states.
  • Time Warner Cable charges fees ranging from an “agent assisted payment” fee ($4.99) to a statement copy fee ($4.99) in some locations.

While Verizon has agreed to drop its latest new charge, the company’s carefully-named bill-padding extra fees attached to monthly bills remain.  In addition to breaking out and passing along all government fees and surcharges, Verizon also bills customers administrative and regulatory recovery fees that, for other companies, would represent the cost of doing business.  These latter two go straight into Verizon’s pocket, despite the implication they are third party-imposed mandatory surcharges.

Had Verizon called their new $2 “convenience” fee a “business efficiency accounting recovery fee,” would they have snookered enough consumers to get away with it?

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WTVT Tampa Verizon cancels planned 2 bill-pay fee 12-30-11.mp4[/flv]

WTVT in Tampa says Verizon did a complete 180 on its $2 bill payment “convenience fee.”  (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Verizon Dumps Fee 12-30-11.flv[/flv]

CNN hints the FCC’s potential involvement in Verizon’s business may have had something to do with the quick shelving of the $2 fee.  (2 minutes)


TDS Telecom: Losing 5.5 Percent of Its Landline Customers Every Year

Phillip Dampier August 9, 2011 Broadband Speed, Competition, Consumer News, Rural Broadband, TDS Telecom Comments Off on TDS Telecom: Losing 5.5 Percent of Its Landline Customers Every Year

TDS Telecom, the Madison, Wisc. independent telephone company serving about 1 million landline customers in rural and suburban communities in 30 states, is losing 5.5 percent of those customers every year, as consumers increasingly drop their landline telephone service.

In second quarter financial results reported to investors this week, TDS noted it is increasingly dependent on selling DSL broadband and managed data services to stabilize long term revenues and minimize line losses.  Like many independent phone companies, TDS’ largely rural service areas offer the opportunity of delivering broadband service to areas unserved by cable broadband, and unlikely to find robust cell phone or wireless data coverage.

Vicki Villacrez, TDS’ chief financial officer, reports the phone company now has a 60 percent penetration rate for residential landline customers taking DSL service.

TDS is losing more than 5% of their landline customers a year, which limits potential growth.

“High speed data subscribers grew 6% year-on-year.” Villacrez said. “We continue to attract healthy levels of new customers and they are taking higher speed. Over 80% of our data subscribers are taking speeds of three megabits or greater and 16% are taking greater than 10 megabit speeds.”

Because TDS customers are migrating to faster speeds, where available, the company’s average revenue per subscriber has remained stable at $37 per month.  That comes from a combination of the higher prices some customers pay for better service minus line losses, customer defections and retention offers delivering discounts to those threatening to switch providers.

TDS is also adopting similar strategies other phone companies are trying to hang onto customers: marketing their own triple play package of voice, broadband, and television service.  Like most smaller phone companies, TDS delivers voice and data over their existing copper wire network and relies on a resale arrangement with DISH Network to provide satellite television.

About 26 percent of TDS customers are enrolled in the company’s triple play package, up 2,700 customers in the quarter.

But the company’s cost control measures also signal TDS’ unwillingness to invest noticeably in expanding their DSL footprint to additional customers, or dramatically improve their existing network.  The company admits it plans to limit investment in new residential customers, and consolidated cash expenses were down 2.1% for the period, reflecting reduced spending.

Where is TDS willing to invest?  In data center assets and future acquisition opportunities.  TDS intends to broaden its presence in managed hosting and will continue to explore mergers and acquisition opportunities with other small, independent phone companies.

Water Tower Fire Wipes Out WiMAX and Cell Phone Service on Madison, Wisconsin’s West Side

Phillip Dampier May 20, 2010 Consumer News, TDS Telecom, Video 1 Comment

This empty water tower in Madison, Wis. caught fire Friday as workers began painting preparations, disrupting wireless communications services on the city's west side for months. (Photo: WMTV Madison)

A water tower fire on Madison’s west side has wiped out WiMAX broadband service for at least 150 fixed wireless broadband customers, leaving them cut off for so long, provider TDS Telecom is canceling their service and assisting customers in switching providers.

A Madison utility manager said workers Friday were preparing to paint the 100,000-gallon tower in the 2700 block of Prairie Road when insulation around communications cables caught fire.  Smoke was visible from the empty water tower for miles, and several nearby homes had to be evacuated because of fears of a potential collapse.

City engineers have since deemed the tower safe, but the real impact will be several months of interrupted broadband and cell service from several area providers who depended on the tower as an antenna site.  The tower was particularly crucial to TDS Telecom, which depended on its strategic location to deliver its wireless broadband service in western Madison.  It will take several months to restore service.

“Based on our discussions with the City, we anticipate it could take a very long time to repair the damaged tower,” states DeAnne Boegli, TDS National Public Relations Manager. “Since this is the only viable tower location TDS can use to serve these homes, and because temporary solutions are not available, our customer’s best option is to select another facilities-based communications provider.”

TDS will assist all 147 impacted customers in changing their service without penalty and remove the equipment from customer homes at their request and convenience. The company is also providing the customers a month’s service credit.

“Unfortunately, this accident has left us with no reliable or timely restoration options. TDS understands communications services are critical to our customers and we want to get them transitioned as quickly as possible, even though it means they must select another provider,” said Boegli.

Affected cell phone companies are trying to establish temporary cell tower sites to improve service in the area while repairs get underway.

[flv]http://www.phillipdampier.com/video/WMTV Madison Water Tower Fire Wipes Out WiMAX 5-14-10.flv[/flv]

WMTV-TV in Madison broke into regular programming to deliver a special report on the fire.  We’ve also included some raw video of the fire.  (11 minutes)

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Recent Comments:

  • Paul Houle: I can believe in AT&T's plan, but not Comcast. For better or worse, AT&T is going "all in" on video and is unlike other major providers in ...
  • Phillip Dampier: Yes, that battle with Northwest Broadcasting, which also involved stations in Idaho-Wyoming and California, was the nastiest in recent history, with s...
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  • Phillip Dampier: Digital video TV channels occupy next to nothing as far as bandwidth goes. Just look at the huge number of premium international channels loading up o...
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  • Alex sandro: Most of the companies offer their services with contracts but Spectrum cable company offer contract free offers for initial year which is a very good ...
  • John: I live in of the effected counties, believe it or not our village is twenty three miles from WSKG Tower, approxiamately eighty miles from Syracuse, WS...
  • Wilhelm: I'm in the Finger Lakes where Spectrum removed WROC-8 last Fall, but we still get other Rochester channels, WHAM-13, WHEC-10 and WXXI-21. I have to wo...
  • dhkjsalhf: "Another classic case of businesses being much smarter than governments." I don't know whether this was sarcastic or not, but I feel it's a sentiment...
  • New Yorker: It makes no sense. I wonder sometimes if raising the limits on how much money rich people giving to candidates could make it more expensive to buy of...
  • New Yorker: Will New York go through with the threat? As an upstater I have seen infrastructure projects drag on in cost and time (eg. 1.5 yrs to repair a tiny b...
  • Matthew H Mosher: Another classic case of businesses being much smarter than governments....

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