Home » verizon communications » Recent Articles:

Big Cable, Telcos Spent $42 Million In 2013-2014 Lobbying for Deregulation, Against Net Neutrality

AT&T, Comcast, Verizon, Time Warner Cable and the cable industry’s chief lobbying group spent $42.8 million during the 2013-2014 election cycle to weigh in on issues including burying Net Neutrality, outlawing community broadband competition, winning tax breaks for themselves, and avoiding consumer protection regulations.

A Common Cause analysis of data from the Center for Responsive Politics and the Institute for Money in State Politics shows that the usual suspects poured money into political coffers on the state and federal level to influence lawmakers.

2014-contributions-from-net-1

On the federal level, murky party committees received the largest individual checks: a total of $862,223 for House and Senate Republicans and $552,605 for Democrats. Individual members of Congress also received their own contributions, including Republican House Speaker John Boehner ($98,175 from Comcast) and Democratic Senator Mark Pryor ($88,650 from Comcast, TWC, and National Cable and Telecom. Assn.) Pryor will need to spend his contributions quickly. He was de-elected by Arkansas voters last Tuesday.

Net Neutrality is a major topic on the minds of the cable and telco companies, as is ongoing deregulation and decommissioning rural landline service, and pushback on revelations AT&T and Verizon were only too happy to turn over your phone records to the federal government.

In the states, the bigger the issues coming up in the legislature, the bigger the campaign checks. In Florida, AT&T is the state’s single largest source of political donations, giving $1.53 million to state lawmakers in the past year and another $660,000 to Gov. Rick Scott (R) and his appointed heads of state agencies. AT&T is lobbying for eliminating Florida’s telecommunications tax, win the right to place cell towers wherever they wish without much interference from local officials, and further deregulation. Most of AT&T’s money goes into the hands of the state’s Republicans.

In New York and California, Democrats got a major chunk of money from Comcast and Time Warner Cable — New York Governor Andrew Cuomo received $60,800 each from both Comcast and Time Warner Cable (totaling $121,600). California Governor Jerry Brown received $54,400 from Time Warner Cable and $27,200 from Comcast. Both states are reviewing the merger of the two companies this year. AT&T and Verizon are also major donors – AT&T wants to dismantle the rural telephone network in California and Verizon is trying to convince the New York legislature to approve its own rural landline replacement – Voice Link. It also wants reduced scrutiny of its landline performance in New York and more access to New York City buildings where it faces resistance from property owners who want compensation from Verizon to install FiOS.

2014-contributions-from-net

Wall Street Investors Suckered By Broadband, Wireless Myths on Usage Pricing, Network Investment

verizon-protestBig Telecom companies like Verizon and AT&T use phony numbers and perpetuate myths about broadband traffic and network investments that have conned investors out of at least $1 trillion in unnecessary investments and consolidation.

Alexander Goldman, former chief analyst for CTI’s American Recovery and Reinvestment Act grants, is warning Wall Street and investors they are at risk of losing millions more because some of the largest telecom companies in the country are engaged in disseminating bad math and conventional wisdom that relies more on repetition of their talking points than actual facts.

Goldman’s editorial, published by Broadband Breakfast, believes the campaign of misinformation is perpetuated by a media that accepts industry claims without examining the underlying facts and a pervasive echo chamber that delivers credibility only by the number of voices saying then same thing.

Goldman takes Verizon Communications CEO Lowell McAdam to task for an editorial published in 2013 in Verizon’s effort to beat back calls on regulators to oversee the broadband industry and correct some of its anti-competitive behavior.

McAdam claimed the U.S. built a global lead in broadband on investments of $1.2 trillion over 17 years to deploy “next generation broadband networks” because networks were deregulated.

Setting aside the fact the United States is not a broadband leader and continues to be outpaced by Europe and Asia, Goldman called McAdam’s impressive-sounding dollar figures meaningless, considering over the span of that 17 years, the United States progressed from dial-up to fiber broadband. Wired networks have been through a generational change that required infrastructure to be replaced and wireless networks have been through at least two significant generations of change over that time — mandatory investments that would have occurred with or without deregulation.

Over the past 17 years, the industry has gotten more of its numbers wrong than right. An explosion of fiber construction in the late 1990s based on predictions of data tsunamis turned out to be catastrophically wrong. University of Minnesota professor Andrew Odlyzko, the worst enemy of the telecom industry talking point, has been debunking claims of broadband traffic jams and the need to implement usage-based pricing and speed throttling for years. In 1998, when Wall Street was listening intently to forecasts produced by self-interested telecom companies like Worldcom that declared broadband traffic was going to double every 100 days, Odlyzko was telling his then-employer AT&T is was all a lot of nonsense. The broadband traffic emperor had no clothes, and statistics from rival telecom companies suggested Worldcom was telling tall tales. But AT&T executives didn’t listen.

fat cat att“We just have to try harder to match those growth rates and catch up with WorldCom,” AT&T executives told Odlyzko and his colleagues, believing the problem was simply ineffective sales, not real broadband demand. When sales couldn’t generate those traffic numbers and Wall Street analysts began asking why, companies like Global Crossing and Qwest resorted to “hollow swaps” and other dubious tricks to fool analysts, prop up the stock price and executive bonuses, and invent sales.

Nobody bothered to ask for an independent analysis of the traffic boom that wasn’t. Wall Street and investors saw dollars waiting to be made, if only providers had the networks to handle the traffic. This began the fiber boom of the late 1990s, “an orgy of construction” as The Economist called it, all to prepare for a tidal wave of Internet traffic that never arrived.

After companies like Global Crossing and Worldcom failed in the biggest bankruptcies the country had ever seen at the time, Odlyzko believes important lessons were never learned. He blames Worldcom executives for inflating the Internet bubble more than anyone.

A bubble of another kind is forming today in America’s wireless industry, fueled by pernicious predictions of a growing spectrum crisis to anyone in DC willing to listen and hurry up spectrum auctions. Both AT&T and Verizon try to stun investors and politicians with enormous dollar numbers they claim are being spent to hurry upgraded wireless networks ready to handle an onslaught of high bandwidth wireless video. Both Verizon’s McAdam and AT&T’s Randall Stephenson intimidate Washington politicians with subtle threats that any enactment of industry reforms by the FCC or Congress will threaten the next $1.2 trillion in network investments, jobs, and America’s vital telecom infrastructure.

Odlyzko has seen this parade before, and he is not impressed. Streaming video on wireless networks is effectively constrained by miserly usage caps, not network capacity, and to Odlyzko, the more interesting story is Americans are abandoning voice calling for instant messages and texting.

8-4WorldcomCartoonThat isn’t a problem for wireless carriers because texting is where the real money is made. Odlyzko notes that wireless carriers profit an average of $1,000 per megabyte for text messages, usually charged per-message or through subscription plan add ons or as part of a bundle. Cellular voice calling is much less profitable, earning about $1 per megabyte of digitized traffic.

Wireless carriers in the United States, particularly Verizon and AT&T, are immensely profitable and the industry as a whole haven’t invested more than 27% of their yearly revenue on network upgrades in over a decade. In fact, in 2011 carriers invested just 14.9% of their revenue, rising slightly to 16.3 percent in 2012 when companies collectively invested $30 billion on network improvements, but earned $185 billion along the way.

While Verizon preached “spectrum crisis” to the FCC and Congress and claimed it was urgently prioritizing network upgrades, company executives won approval of a plan to pay Vodafone, then a part owner of Verizon Wireless, $130 billion to buy them out. That represents the collective investment of every wireless provider in the country in network upgrades from 2005-2012. Verizon Wireless cannot find the money to upgrade their wireless networks to deliver customers a more generous data allowance (or an unlimited plan), but it had no trouble approving $130 billion to buy out its partner so it could keep future profits to itself.

Odlyzko concludes the obvious: “modern telecom is less about high capital investments and far more a game of territorial control, strategic alliances, services, and marketing, than of building a fixed infrastructure.”

That is why there is no money for Verizon FiOS expansion but there was plenty to pay Vodafone, and its executives who walked away with executive bonuses totaling $89.6 million.

As long as American wireless service remains largely in the hands of AT&T and Verizon Wireless, competition isn’t likely to seriously dent prices or profits. At least investors who are buying Verizon’s debt hope so.

Goldman again called attention to Odlyzko’s latest warning that the industry has its numbers (and priorities) wrong, and the last time Odlyzko had the numbers right and the telecommunications industry got its numbers wrong, telecommunications investors lost $1 trillion in the telecommunications dot.com bust.

As the drumbeat continues for further wireless consolidation and spectrum acquisition, investors have been told high network costs necessitate combining operations to improve efficiency and control expenses. Except the biggest costs faced by wireless carriers like Verizon are to implement strategic consolidation opportunities like the Vodafone deal, not maintain and grow their wireless network. AT&T is putting much of its spending in a proposed acquisition of DirecTV this year as well — at a cost of $48.5 billion. That could buy a lot of new cell towers and a much more consumer-friendly data plan.

Voice to text substitution (US)

year voice minutes billions texts billions
2005 1,495 81
2006 1,798 159
2007 2,119 363
2008 2,203 1,005
2009 2,275 1,563
2010 2,241 2,052
2011 2,296 2,304
2012 2,300 2,190

Cell phone network companies (if you can believe their SEC filings) are incredibly profitable, and are spending relatively little on infrastructure:

year revenues in $ billions capex in $ billions capex/revenues
2004 102.1 27.9 27.3%
2005 113.5 25.2 22.2
2006 125.5 24.4 19.4
2007 138.9 21.1 15.2
2008 148.1 20.2 13.6
2009 152.6 20.4 13.3
2010 159.9 24.9 15.6
2011 169.8 25.3 14.9
2012 185.0 30.1 16.3

Redbox Instant by Verizon Shutting Down Oct. 7; Customers Worry About Purchased Digital Media

Phillip Dampier October 6, 2014 Competition, Consumer News, Online Video, Verizon 1 Comment
The death certificate will be signed on Oct. 7.

The death certificate will be signed on Oct. 7.

As expected, Redbox Instant by Verizon will stop operations on Tuesday (Oct. 7) after failing to attract enough interest from customers in the Netflix-dominated online video marketplace.

IMPORTANT SERVICE SHUTDOWN NOTICE

Thank you for being a part of Redbox Instant by Verizon. Please be aware that the service will be shut down on Tuesday, October 7, 2014, at 11:59 p.m. Pacific Time.

Information on applicable refunds will be emailed to current customers and posted here on October 10. In the meantime, you may continue to stream movies and use your Redbox kiosk credits until Tuesday, October 7 at 11:59 p.m. Pacific Time.

We apologize for any inconvenience and we thank you for the opportunity to entertain you.

Sincerely,
The Redbox Instant by Verizon Team

Customers that purchased digital copies of movies Redbox Instant offered for sale may not be able to retrieve them from Verizon’s digital storage locker after the service shuts down, but the company says it is “exploring options” for those affected.

“The service is shutting down because it was not as successful as we hoped it would be. We apologize for any inconvenience and we thank you for giving us the opportunity to entertain you,” the company said as part of its shutdown notice.

Paying customers will receive a refund for one month of service and have just 24 hours to redeem any Redbox kiosk rental vouchers included with their subscription.

Something Extra from an Indiana Verizon Wireless Store: Unlimited Meth, Paraphernalia Upgrades

Phillip Dampier July 30, 2014 Consumer News, Verizon No Comments
Sellers (Photo: Dubois County Security Center)

Sellers (Photo: Dubois County Security Center)

A now former Verizon Wireless store manager has been arrested and charged with multiple felony counts after customers complained they were offered something more than a data plan upgrade and a new phone case: illegal prescription drugs, meth, marijuana, and assorted drug paraphernalia.

Daviess County, Ind. police arrested 45-year-old Jennifer Sellers of Elnora Friday on a warrant for possession of a range of illegal drugs. The arrest came after an investigation from the Dubois County Sheriff’s Department, sparked by complaints that drugs were being sold inside of the Verizon Wireless store at 3780 North Newton Street in Jasper.

On June 30, while customers shopped for new phones, the county’s narcotics officer, K-9 unit and Jasper police showed up to begin looking for drugs.

Store owner Moorehead Communications, the largest Verizon Premium Wireless Retailer in the United States, manages over 800 Verizon Wireless reseller locations across 28 states, usually under the name “The Cellular Connection.”

Embarrassed by the allegations, Moorehead officials promptly fired Sellers and issued a statement condemning the alleged drug operation.

“We take the safety of our employees and customers very seriously, and in light of these allegations, we are conducting a full investigation,” said the statement. “TCC will not publicly comment on ongoing legal matters but will continue to cooperate with legal authorities.”

That cooperation may prove important as officers also uncovered unusual pseudoephedrine purchases by other people associated with Sellers at the business. This chemical, found in non-prescription cold remedies, is used in large quantities to produce methamphetamine.

Your Unlimited, Off-Contract Verizon Wireless Web Experience Will Be “Optimized” (Throttled) Oct. 1

throttleVerizon Wireless’ ongoing campaign to get rid of its grandfathered unlimited data customers continues this week with news the carrier will begin throttling speeds of off-contract customers still hanging on to their uncapped data plans starting Oct 1.

Verizon doesn’t call the enforcement of speed reductions a “throttle,” but rather “Network Optimization”:

Verizon Wireless strives to provide its customers with the best wireless experience when using our network. In 2011, Verizon Wireless launched Network Optimization, which slows the data speeds of its unlimited data subscribers with 3G devices who are in the top 5% of data users when they connect to a cell site experiencing high demand.

Effective October 1, Verizon Wireless will expand its existing Network Optimization policy to include its unlimited data subscribers using 4G LTE devices who have fulfilled their minimum contract term. Based on your plan and recent data usage, one or more lines on your account may experience a reduction in data speeds when connected to a cell site experiencing high demand. Customers on MORE Everything or other usage-based data plans are not subject to Network Optimization. For more information about our Network Optimization, please refer to www.verizonwireless.com/networkoptimization.

Verizon Wireless customers on the company’s 3G network have been subject to speed throttling for several years if Verizon deems them a “heavy user,” but the company’s 4G LTE network avoided the speed noose until now. Customers who find themselves subjected to Verizon’s speed limiter report it is a very unpleasant experience.

610px-Verizon-Wireless-Logo_svg“My phone has been throttled and is now essentially unusable for the very things it is marketed for,” reports one customer sentenced by Verizon’s “Network Optimization.”  “I can send texts, emails, and view basic websites but any sort of streaming is now out of the question for the remainder of the billing cycle and possibly the next cycle as well.”

The throttle effectively limits speeds to well under 300kbps, and in most urban areas where cell tower usage is higher, punished customers have to live with speeds of around 50kbps — the same as dial-up.

Verizon’s logic and consistency about its “Network Optimization” faced customer scrutiny as well.

“This is not about equal opportunity bandwidth, it’s about Verizon realizing they can increase their revenue stream, otherwise, wouldn’t those tiered folks be getting throttled as well if they ‘abused’ and used ‘inordinate’ amounts of data?  Oh no, of course not, Verizon just bills them more.  This scenario is as ridiculous as charging $20/month for text messaging, which, by the way, is also data.”

What makes you speed-throttling-worthy? According to Droid Life, which broke the story, anyone using more than 4.7GB of data per month on a busy cell tower is likely to end up on a speed diet.

Verizon claims its “Network Optimization” is designed to protect the usage experience among all of its customers, and suggests the speed reductions will only occur when a heavy user is connected to a “high demand” cell site.

“Once you leave that site and attach to a new cell site without high demand, your speeds return to normal,” claims Verizon. “Other carriers often throttle you no matter what throughout the end of a billing cycle.”

But Verizon’s gesture isn’t as generous as it first suggests.

Once a customer is suspected of being a data hog and forced to endure Verizon’s speed throttle, they can stay in Verizon’s speed prison for up to 60 days after being sentenced. The result is dramatically reduced data speeds when a customer happens to travel through a busy cell site area, regardless of whether they are using a lot of data at the time or not.

Network congestion problems may be a result of too many customers connected to a single cell site at any one time, several customers concurrently engaged in high bandwidth traffic exchanges through a cell site, or Verizon’s inadequate capacity to meet even the reasonable needs of its wireless customers.

But regardless of the cause, only one group will be punished for their usage-excess: unlimited data plan customers who are now mostly off-contract (Verizon requires most customers signing a contract renewal that includes equipment discounts to migrate off their unlimited plan, which stopped being sold to new customers in June, 2012.)

Customers can get out of speed jail permanently simply by agreeing to give up their unlimited data plan. Then they can use (and abuse) Verizon’s limited wireless bandwidth, whether it slows every other customer down or not.

Major Verizon FiOS Speed Upgrade: Upstream Speed Now Equals Downstream

Phillip Dampier July 21, 2014 Broadband Speed, Competition, Consumer News, Verizon No Comments

faster fiosVerizon Communications today announced its FiOS Internet customers will be getting free speed upgrades that match upload and download speeds — the only provider in FiOS markets to offer speed equality.

Verizon will start transitioning qualifying current residential customers to higher upload speeds for free throughout the coming months, but we can help get you higher on the upgrade list if you keep reading. Later this year, existing and new FiOS small-business customers also will receive this upgrade.

“Faster upload speeds means better sharing experiences,” said Mike Ritter, Verizon’s chief marketing officer for consumer and mass business. “All Internet sharing – whether videos, large photo files or gaming – starts with uploading. FiOS all-fiber-optic technology offers a unique opportunity to enhance our customers’ Internet experience on a mass scale by increasing our upload speeds to equal to our industry-leading download speeds. As the Internet of Things becomes a reality, equal download and upload speeds will become essential.”

Verizon’s upgrade also lets the company point out a shortcoming of most of its cable competitors, upstream speeds lag far behind downstream speeds. Many cable operators still only offer no better than 5Mbps upload speeds, even while offering 50, 100, or 150Mbps for downloads.

Verizon says it noticed upload activity has been on the increase for some time, and with the upstream speed upgrades, it expects double the upload activity it sees today by 2016.

“Verizon’s decision to give every FiOS Internet customer upload speeds that mirror its industry-leading download speeds is a step forward for U.S. digital consumers – and unique among the major U.S. broadband Internet providers,” said Matt Davis, program director of consumer multiplay and broadband services research for IDC. “Because the upgrade is free, it delivers tremendous value to FiOS subscribers and strongly positions Verizon to meet the growing demand for upstream Internet speed.”

Verizon FiOS also lacks usage caps or consumption billing, giving customers a worry-free Internet experience that does not carry the risk of surprise charges on a future bill.

Here are Verizon’s new speed tiers:

140720_BenefitsofFast_432x315

  • 15/5Mbps is now 15/15Mbps
  • 25/5Mbps is now 25/25Mbps
  • 50/25Mbps is now 50/50Mbps
  • 75/35Mbps is now 75/75Mbps
  • 150/65Mbps is now 150/150Mbps
  • 300/65Mbps is now 300/300Mbps
  • 500/100Mbps is now 500/500Mbps

The free speed upgrades will begin with customers enrolled in Verizon’s My Rewards+ program. You can get on the upgrade list today by enrolling in the rewards program on the My Rewards+ websiteMy Rewards+ is Verizon’s free loyalty program that rewards customers for paying a bill online, renting or buying videos on demand, or in recognition of a birthday, service anniversary or other event. My Rewards+ members can use earned points for Visa Prepaid Cards or other gift cards good at participating merchants such as Starbucks Coffee, L.L. Bean, Panera Bread, Target, Amazon, Dunkin’ Donuts, Staples and others. Customers can also choose to donate their rewards to a charity of their choice.

Verizon is running several promotions (until 9/20/2014) for new customers who want in on the new FiOS speeds. The most popular Triple Play promotion is their 25/25Mbps Internet service, which also includes Preferred HD TV and nationwide home phone service (equipment rental required). This includes a two-year price guarantee for $89.99 per month when ordered online and $99.99 per month otherwise (not including equipment charges, taxes and fees). In addition, new customers can receive a free LG G Pad 8.3 LTE or up to $200 off any other tablet available from Verizon Wireless if they are willing to take out a new, two-year service agreement. This part of the promotion is less attractive to us because the offer requires the tablet be activated on the Verizon Wireless network, which means ongoing charges.

CenturyLink Unfazed by AT&T/Verizon’s Rural Wireless Broadband; ‘Caps Too Low, Prices Too High’

centurylinkCenturyLink does not believe it will face much of a competitive threat from AT&T and Verizon’s plans to decommission rural landline service in favor of fixed wireless broadband because the two companies’ offers are too expensive, overly usage-capped and too slow.

Both AT&T and Verizon have proposed mothballing traditional landline service in rural areas because both companies claim wireline financial returns are too low and ongoing maintenance costs are too high. In its place, both companies are developing rural fixed wireless solutions for voice and broadband service that will rely on 4G LTE networks.

CenturyLink does not traditionally compete against either AT&T or Verizon because their landline service areas do not overlap. But as both AT&T and Verizon Wireless continue to emphasize their nationwide wireless networks, independent phone companies are likely to face increased competition from wireless phone and broadband services.

CenturyLink isn’t worried.

“About two-thirds of our customers can get access to 10Mbps or higher [from us and] that continues to increase year by year,” CenturyLink chief financial officer Stewart Ewing told attendees at Bank of America Merrill Lynch’s 2014 Global Telecom & Media Conference. “Our belief is that with the increasing demands customers have for bandwidth — the Netflix bandwidth requirement — just the increasing amount of video that customers are watching and downloading over their Internet pipes, we believe will drive customers to using a provider that basically has a wire in their home because we believe you will get generally higher bandwidth and a much better experience at lower cost.”

Ewing

Ewing

CenturyLink customers consume an average of slightly less than 50GB of Internet usage per month, and that number is growing. Ewing said that CenturyLink has long believed that as bandwidth demand increases, wireless becomes less and less capable of providing a good customer experience.

“At this point, we don’t really have any concerns because people on the margin — the folks that don’t use much bandwidth — probably use a wireless connection today to download,” Ewing said. “But as the bandwidth demands grow, the wireless connection becomes more and more expensive and that could tend to drive people our way. So as long as we have 10Mbps or better to the customers, we don’t really think there is that much exposure.”

CenturyLink does not measure the difference in Internet usage between urban and rural residential customers, but the company suspects rural customers might naturally use more because alternative outlets are fewer in number outside of urban America.

“Folks in rural areas might actually can use Internet more for buying things that they can’t source [easily], but it’s hard to really count,” said Ewing. “I think our customers in the rural areas probably are not that much different from folks in urban areas.”

Prism is CenturyLink's fiber to the neighborhood service, similar to AT&T U-verse. It is getting only a modest expansion in 2014.

Prism is CenturyLink’s fiber to the neighborhood service, similar to AT&T U-verse. It is getting only a modest expansion in 2014.

CenturyLink’s largest competitor remains Comcast, which co-exists in about 40% of CenturyLink’s markets. The merger with Time Warner Cable won’t have much impact on CenturyLink, increasing Comcast’s footprint in CenturyLink territory by only about only 6-7%. CenturyLink believes most of any new competition will come in the small business market segment. Comcast’s residential pricing is unlikely to attract current CenturyLink customers in Time Warner Cable territory to consider a switch to Comcast if the merger is approved.

Ewing also shared his thinking about several other CenturyLink initiatives that customers might see sometime this year:

  • Don’t expect CenturyLink to expand Wi-Fi hotspot networks. The company found they are difficult to monetize and is unlikely to expand them further;
  • Any change in the FCC’s definition of minimum broadband speed to qualify for federal broadband expansion funds would slow rural broadband expansion. Ewing admitted a 10Mbps speed minimum is considerably more difficult to achieve over DSL than a 4 or 6Mbps minimum;
  • Don’t expect any more merger/acquisition activity from CenturyLink in the Competitive Local Exchange Carrier business. CenturyLink shows no sign of pursuing Frontier, Windstream, FairPoint, or other independent phone companies. It is focused on expanding business services, where 60% of CenturyLink’s revenue now comes;
  • CenturyLink fiber expansion will primarily be focused on reaching business offices and commercial customers in 2014;
  • CenturyLink will only modestly expand PrismTV, its fiber-to-the-neighborhood service, to an additional 300,000 homes this year. The company now offers the service to two million of its customers, with 200,000 signed up nationwide. Last year, CenturyLink expanded PrismTV availability to 800,000 homes.

The Invisible Rate Hike: Verizon Introduces New $0.99 “Because We Can” FiOS Voice Surcharge

Unsimplify

Unsimplify

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.

Verizon’s Idea of a “Modest Rate Increase” in New Jersey: 440%; $15 Billion Collected for Phantom Fiber

Verizon-logoWhile the New Jersey Board of Public Utilities was able to quickly settle its differences with Verizon by granting the phone company’s wish to walk away from its commitment to offer 45Mbps broadband across the state, New Jersey ratepayers are out $15 billion in excess phone charges levied since 1993 for promised upgrades many will never get.

The Opportunity New Jersey plan the state government signed with Verizon was supposed to expand advanced broadband across the state in return for “a modest amount of pricing flexibility” in the fees Verizon charged customers in New Jersey. But Verizon is not a modest company and a new report shows the phone company used the agreement to boost rates as much as 440% — primarily through ancillary surcharges including inside wire maintenance, wire investment, an investment recovery fee, a local number portability surcharge, merged local calling area charge, and various other charges for phone features including Caller ID, Call Waiting, etc.

Tom Allibone, the president of LTC Consulting joined forces with New Networks’ Bruce Kushnick to analyze more than 30 years of Verizon New Jersey phone bills and discovered when it comes to tallying up rate increases, Verizon’s addition skills are akin to taking out a bag of M&M’s and only counting the yellow ones.

“This Verizon New Jersey bill from April 2002 […] 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,” Kushnick writes. “The FCC Line Charge (it has many 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.”

verizonnjrateincreaseAfter adding up various other surcharges, Kushnick’s bill increased a lot.

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

“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 these ancillary charges and taxes in their sale pitch,” he added.

Verizon raised local residential service rates 79% in 2008, according to Kushnick. Business customers paid 70 percent more. Caller ID rates increased 38% — remarkable for a service that has a profit margin of 5,695%. But Verizon did even better boosting the charge for a non-published number by 38% — a service that has a 36,900% profit margin as of 1999 — the services are even cheaper to offer now.

Telephone service is one of those products that should have declined in price, especially after phone companies fully depreciated their copper wire networks — long ago paid off. Companies like Verizon have cut the budgets for outdoor wire maintenance and the number of employees tasked with keeping service up and running has been reduced by over 70 percent since 1985, dramatically reducing Verizon’s costs. But Verizon customers paid more for phone service, not less.

The cost of service might not have been as much of an issue had Verizon taken the excess funds and invested them in promised upgrades, but that has not happened for a significant percentage of the state and likely never will. Instead, they just increased company profits. More recently, Verizon has directed much of its investments into its more profitable wireless division.

Even though Verizon achieved total victory with the Christie Administration-dominated BPU, the company is still making threats about any future plans for investment.

“It’s important that regulators and legislators support public policies that encourage broadband growth in New Jersey rather than ones that could jeopardize the state’s highly competitive communications industry, or risk future investments by providers like Verizon,” wrote Sam Delgado, vice president of external affairs.

Two Wrongs Don’t Make a Right: Comcast/Time Warner Cable “Worst Companies in U.S.”

Another satisfied customer

Comcast and Time Warner Cable have achieved new lows in the most important customer satisfaction survey in the United States, winning bottom honors as the two most despised companies in the United States.

The American Customer Satisfaction Index found Comcast and Time Warner Cable the only two companies in the country that scored below 60 on the ACSI’s 100 point scale. Comcast fell 5% to 60, while Time Warner Cable plunged 7% to 56, its lowest score to date.

“Comcast and Time Warner assert their proposed merger will not reduce competition because there is little overlap in their service territories,” says David VanAmburg, ACSI director. “Still, it’s a concern whenever two poor-performing service providers combine operations. ACSI data consistently show that mergers in service industries usually result in lower customer satisfaction, at least in the short-term. It’s hard to see how combining two negatives will be a positive for consumers.”

Broadband service seems to be a significant issue for customers. High prices, slow data transmission, and unreliable service drag satisfaction to record lows, as customers have few alternatives beyond the largest Internet service providers. Customer satisfaction with ISPs drops 3.1% to 63, the lowest score in the Index.

Verizon FiOS is the one bright spot in the survey, managing to grab a 71 score, beating AT&T U-verse, CenturyLink, and other providers. Cable broadband providers continued to score lowest. The best of the lot was Cox Communications, which isn’t saying much. It only managed a 6% fall to 64.

Customer satisfaction is also deteriorating for all the largest pay TV providers. Viewers are much more dissatisfied with cable TV service than fiber optic and satellite service (60 vs. 68). Though both companies drop in customer satisfaction, DirecTV (-4%) and AT&T (-3%) are tied for the lead with ACSI scores of 69. Verizon Communications FiOS (68) and DISH Network (67) follow. DISH Network may be the lowest-scoring satellite TV company, but it is better than the top-scoring cable company, Cox Communications (-3% to 63).

Among wireless carriers, things have not changed much this year.

Verizon Wireless achieved first place after climbing 3% to 75. T-Mobile (69), Sprint (68) and AT&T Mobility (68) are tightly grouped behind. As smartphone adoption continues to grow, network demands increase along with costs to the consumer, each contributing to stagnant customer satisfaction.

Search This Site:

Contributions:

Recent Comments:

  • Dawson Fiberhood: fjfdybvfgj, I want to agree with you about the customer service, but I just can't. First of all, Google is notoriously hard to get ahold of and second...
  • Tom M: 5/1 in SE Austin for free will be a godsend to the low income households in that area. People in Austin (me included) are very happy TWC is finally ge...
  • Oscar@SA: Come over to San Antonio, we have bacon!! \o/...
  • The Kin: I would gladly pay $70 for G.fiber. My DSL here in KY is only a 1.5 down and I pay 67 a month for it. With some of the bills I've seen when working fo...
  • fjfdybvfgj: Don't know how ATTs service can be considered competitive knowing that it has a data cap and that you won't ever see the gigabit speed. Hell even thou...
  • Austintx: Yay! we'll be able to order next month... But, no telling when installation will be. One thing still needs to be said, though; 5/5 (or 5/1-ugh!)Mbp...
  • fjfdybvfgj: Its a good thing that the merger will never be accepted as its heavily against the public interest and no politician would want to commit political su...
  • fjfdybvfgj: I remember when I lived in Maryland and Comcast tried to say that nothing over 10mbps existed and that it was top of the line for $150/month. I moved ...
  • ROGER: I manage my father and my accounts for Uverse and recently was informed our fully loaded rates (includes all taxes and rentals) for u300 and Max inter...
  • BobInIllinois: This is really funny! In our area, back in 2008 when Comcast took over from Insight cable a few years back, Comcast started closing their service...
  • Jen: John did your service ever get better? Mine just started throttling about a month ago and they are telling me the tower that worked best for me is off...
  • Mike Queen: Where do I sign up? I'm in Lewis County. I complain, they offer to disconnect me. I need the Internet to work as well. I've paid for high speed for...

Your Account: