In the darkness of night, Congress on Tuesday handed some of America’s largest telecom companies a huge tax windfall allowing many to continue taking a special 50% depreciation bonus that slashes their tax bills on new equipment purchases, winning substantial reductions in their federal tax bills.

CenturyLink had been heavily lobbying House Speaker Paul Ryan (R-Wis.) and other House leaders to extend a “temporary tax provision” that was designed to stimulate corporate spending on capital investments during the height of the Great Recession. Stimulus programs like these have allowed corporations like AT&T and Verizon to pay virtually no federal taxes at all for multiple years in a row. AT&T was the second biggest tax provision/corporate welfare recipient in the country, Verizon was fifth according to Citizens for Tax Justice. Between 2008-2012 taxpayers effectively covered the $19.2 billion in federal tax not paid by AT&T and $11.1 billion not paid by Verizon.

The two words that make it possible are: Accelerated Depreciation

Telecom companies, particularly those with wireless assets, are benefiting from the “temporary” stimulus program introduced by President George W. Bush in the last year of his second term because most are capital-intensive, spending regularly to expand, maintain, and upgrade their networks. CenturyLink has taken advantage of accelerated depreciation to invest billions in fiber network expansions to reach cell towers and businesses and on residential broadband speed upgrades the company claims would not have come so quickly without the tax savings.

Mobile companies like AT&T and Verizon Wireless are some of the largest beneficiaries of the stimulus program, using accelerated depreciation to write off expenses for cell tower expansion, network densificiation, and deployment of services like 4G LTE. In most cases, “accelerated depreciation” is technically a tax deferral, but because these companies maintain constant investment in network development and upkeep, the tax man never actually arrives at the door to collect.

Heavy lobbying from beneficiaries not only succeeded in getting the program’s expiration date extended, the Obama Administration agreed to expand it at the end of 2013. Companies slashed tens of billions off their tax bills as a result. A report from the Congressional Research Service, reviewing efforts to quantify the impact of depreciation breaks, found that “the studies concluded that accelerated depreciation in general is a relatively ineffective tool for stimulating the economy.”

Citizens for Tax Justice added:

Combined with rules allowing corporations to deduct interest expenses, accelerated depreciation can result in very low, or even negative, tax rates on profits from particular investments. A corporation can borrow money to purchase equipment or a building, deduct the interest expenses on the debt and quickly deduct the cost of the equipment or building thanks to accelerated depreciation. The total deductions can then make the investments more profitable after-tax than before-tax.

The latest budget bill, passed Dec 15-16, extends the tax breaks until 2018 when the bonus drops to 40%, 30% in 2019, and zero in 2020.

Despite cost savings expected to run into the billions from the combination of AT&T U-verse and satellite TV provider DirecTV, AT&T isn’t sharing any of their savings with you and has announced a nationwide rate hike for early 2016.

For the latest round of price increases, AT&T is focusing on its U-verse TV and telephone services, blaming “increased programming costs” and “service delivery expenses.”

All customers not on a promotional rate contract will be affected, starting with billing statements issued after Jan. 28, 2016.

• AT&T’s Voice 1000 plan is increasing to $30 a month and the Voice 250 plan will rise by $2, to $27 per month;
• U-family and U-family All-In tiers increase $2 a month;
• U100, U200, U200 All-In, U200 Latino and U200 Latino All-In up $3 a month;
• U300, U300 All-In, U300 Latino, U300 Latino All-In, U400, U450, U450 All-In, U450 Latino and U450 Latino All-In rise $4 a month;
• Non DVR-TV receivers increase $1 per month;
• Regulatory Video Cost Recovery Surcharge: up 1¢ per month;
• Broadcast TV Surcharge: increasing $1 per month (except 46¢ in Detroit, Biloxi, Miss., and Wilmington, N.C.)

AT&T claims its services remain a good value at the higher price because the company’s TV Everywhere service now allows mobile/tablet customers access to more than 270 live channels while inside the home and more than 205 channels when on the go.

Customers appear not to be impressed. AT&T admitted 92,000 U-verse customers left AT&T for good during the last quarter and analysts expect further customer losses during this quarter as AT&T refocuses its value conscious customers on cheap and easy to install DirecTV instead of U-verse, which can be costly to get up and running.

CEO Randall Stephenson also warned customers should expect a harder line on pricing due to the company’s ‘new focus on profitability.’ AT&T has cut back on promotional pricing and is especially reluctant to extend deals to customers with a “propensity to churn.” That means AT&T does not want to extend lower pricing to customers threatening to leave who are unwilling to pay the regular price after their deal ends. The company noted price sensitive customers often bounce back and forth between providers just to secure new customer pricing.

When a CEO tells customers they should just get used to data caps and stop being paranoid about them, it would not a stretch to assume the top executive of the nation’s largest cable company has no interest in hearing the views of his customers on the matter and has stopped listening.

But just how many took complaints about usage-billing above the head of Comcast CEO Brian Roberts to the Federal Communications Commission has been a mystery, until today.

A website that promotes cord cutting filed a Freedom of Information Act request with the FCC that now reveals at least 13,000 (and counting) Comcast customers took time to file formal complaints with the federal regulator about what CutCableToday calls Comcast’s unethical practice of imposing data caps.

A review of the complaints shows the FCC was generous in its response, including a significant minority of complaints that had nothing to do with data caps. But among the majority that did consider data caps to be unjust, it was common to see Comcast described as an “extortionist,” a “monopoly,” and “abusive” to customers.

Roberts

“Comcast should be performing damage control, but the corporation considers itself too powerful for that,” says David Mumpower of CutCableToday. “They wouldn’t ‘win’ so many competitions as the Most Hated Company in America if they cared what customers thought. The power brokers of the cable industry believe that they can charge whatever they want for Internet access because people can’t function effectively in society without it.”

Last week, Roberts claimed only 5% (8% and rising Comcast later admitted) of Comcast customers exceed what is usually a 300GB usage allowance before paying an overlimit fee of $10 for each additional allotment of 50GB. But CutCableToday’s efforts easily turned up several bill shock horror stories from customers stuck with hefty bills after Comcast unilaterally implemented data caps as part of a seemingly-endless “trial” that has spread to a growing number of its service areas.

One Nashville customer got the shock of his life when he discovered he owed a total of $400 in overlimit fees, the same amount he typically pays for six months of Internet service from Comcast.

“Comcast just surprised me with a bill that shows that I owed $180 for over cap surcharges,” the customer wrote in his complaint. “I called the same day I got the bill, and they also let me know that I owe another $220 for over cap surcharges. (That’s right, a surprise $400).”

Despite Comcast’s claims that practically nobody would be affected by their data cap, more than ten thousand went the extra mile, learned how to file a complaint with the FCC, and followed through, further eroding Comcast’s already poor reputation.

A customer in Plantation, Fla., which became subject to Comcast’s data capping this fall, called it like he saw it:

“I object to this new policy of forcing customers to pay more for exceeding pre-established data caps by this greedy corporation. The caps will be exceeded even by moderate users of the Internet due to forced video ads on pretty much every single web page that one loads into a browser. This is not right. These cable companies are already charging us too much for Internet service. Now Comcast wants to charge us a $30 av month fee to prevent them from charging us even more fees. This is a rip off. The government needs to do something to stop this practice of capping. If they are going to meter our internet usage like an electric power company then we should be charged only for data that we call up. This means a ban on all forced Internet advertising. PLEASE do something. We have no one to protect us!”

The volume of complaints has been so great, CutCableToday notified the FCC it would consider its FOIA request adequately fulfilled after nearly 2,000 complaints were initially made available in response. The group put those 1,929 complaints together into four huge PDF files you can download and review yourself:

• Comcast Data Cap Complaints Part 1
• Comcast Data Cap Complaints Part 2
• Comcast Data Cap Complaints Part 3
• Comcast Data Cap Complaints Part 4

Despite the volume of complaints, Roberts has continued to reassure investors that customers are “neutral to slightly positive” about Comcast’s data caps, a claim that might run afoul of Securities and Exchange Commission rules requiring frank admissions about company practices that could affect shareholders’ investments in company stock.

Roberts’ claims could lack credibility as the company has offered no verifiable evidence that customers are even slightly positive about having their Internet usage put on an allowance.

Based on the FCC’s bulging file of complaints, it is more likely most customers either don’t know or understand Comcast’s data caps and as one Knoxville customer who did know described it: It is more of “their f***-you level of customer service.”

“The data caps that Comcast is putting into place are going to end up making people choose between enriching their lives and learning more, and paying more money to a local monopoly,” the customer added.

“This corporate arrogance – some would say malfeasance – has driven many broadband users to the breaking point,” writes Mumpower. “At best, the choices for Internet service are oligopoly sized; at worst, a monopoly exists. How can customers expect their viable complaints to be taken seriously if they have no leverage? That’s why it’s imperative that you file a complaint to make your voice heard.”

Motorola NVG589 gateway

AT&T customers offered free broadband service upgrades are discovering “free” means at least $7 a month in new equipment charges for some, even when the customer owns the equipment.

Jim Grant has been an AT&T ADSL 2+ customer for almost a decade, happy to get 12Mbps broadband service from the phone company while maintaining an account with DISH Network for satellite television. As part of AT&T’s expansion effort, Grant’s neighborhood recently became U-verse capable, which led to an onslaught of new customer promotions offering upgrades for broadband-only customers and packages of television, telephone, and broadband service for everyone else.

“An AT&T salesman offered me 18Mbps VDSL service for the exact same price I’ve been paying for 12Mbps, claiming the newer single-pair circuit would work more reliably than the bonded pair service I receive today,” Grant tells Stop the Cap! “What he and the installation guy failed to mention is that this ‘free upgrade’ would cost me $7 a month in equipment fees, even though I bought and own the RG (residential gateway) they now want to charge me for using.”

Grant’s Motorola-manufactured router/modem did not need to be replaced. It was always capable of supporting ADSL2+ and VDSL broadband service. Only his bill has changed.

It turns out AT&T changed its policies that used to allow certain customers to avoid modem fees by buying their own equipment. Starting Jan. 11, 2015, AT&T’s modem rental fee for customers using the company’s equipment remained $7 a month. But customers who own their own equipment in a U-verse upgraded area are also charged the same $7, only AT&T doesn’t consider it a modem rental fee. Instead, it is a combination equipment charge and extended warranty.

AT&T claims this change actually saves customers money once their purchased modems go out of warranty. AT&T used to charge $99 for a service call to a home with customer-owned equipment and a $100 replacement charge if the modem turned out to be defective. AT&T says the $7 monthly equipment and warranty fee protects customers from both charges if something goes wrong.

Modem fees apparently don’t apply if you are lucky enough to qualify for a promotion like this one offered in Austin in 2013 for AT&T’s GigaPower service.

AT&T’s explanation didn’t go over well with Grant, who only found out about the charge once the bill arrived.

“I was promised repeatedly my bill would be exactly the same and since I owned my own equipment, there was no way I should be charged a fee like this,” Grant explained. “AT&T is charging me the same $7 it would any customer using AT&T-supplied equipment.”

Most customers affected by this charge discover it after upgrading their service or when technicians replace older equipment, often accompanied by a promise there would be no extra charges or fees, something customers learn isn’t always true after their next bill arrives.

Abhijit accepted an AT&T offer to boost his U-verse Internet speed to 24Mbps. Along for the ride was a brand new U-verse gateway.

“I was told specifically that there would be no additional charge,” Abhijit complained on AT&T’s customer support forum. “After first month’s bill, I am seeing an additional $7.00 Internet equipment fee.”

Another customer in Texas was also misinformed by AT&T’s salespeople about the modem fees.

“I was informed that this $7 fee was for leasing a modem/wireless Router/Residential Gateway (RG),” wrote the customer. “However, if I have my own compatible modem, there will be no additional charge. I have purchased my own compatible modem and now AT&T service says [it will charge a] ‘$7 service fee’ instead of [the $7] equipment rental.”

Modem fees are a lucrative source of revenue from AT&T, earning the company potentially more than $84 million a month.

Some customers report success receiving service credits or other fee waivers after complaining about the undisclosed fees in complaints to the FCC.

Frontier Communications had to be chased by West Virginia Attorney General Patrick Morrisey to improve broadband speeds for at least 28,000 DSL customers who thought they were buying 6Mbps DSL service but ended up with maximum speeds of 1.5Mbps or less.

Frontier today agreed to a settlement with state officials to spend an extra $150 million to boost DSL speeds for rural customers around the state and offer deep discounts for affected customers until they can receive at least 6Mbps service. Today’s settlement has no impact on a separate class action lawsuit brought by Frontier customers who accuse the company of throttling broadband speeds to save money and reduce traffic on its network.

The agreement is the largest, independently negotiated consumer protection settlement in West Virginia history and is expected to improve broadband service over the next three years.

“This agreement is a game changer for the Mountain State,” Morrisey said. “The settlement helps consumers receive the high-speed service they expected, while directing significant monies to help fix connectivity issues that consistently keep our state from achieving economic success.”

For at least two years, Frontier customers sent Morrisey’s office complaints stating they were not getting the speed and performance Frontier advertised for its DSL service. While the company told both customers and investors it had blanketed West Virginia with speeds “up to 6Mbps,” many customers discovered the phone company locked their modems to receive no better than 1.5Mbps.

Attorney General Morrisey

Frontier denied any allegation of wrongdoing and says it entered into the settlement to resolve disputed claims without the necessity of protracted and expensive litigation. But it will cost the company at least $150 million in additional upgrades, not including the $180 million Frontier already earmarked for broadband expansion in West Virginia, partly subsidized by the ratepayer-funded Connect America Fund.

About 28,000 customers identified by Frontier with modems the company provisioned for service at speeds of 1.5Mbps or lower will begin seeing an ongoing credit applied to their bills beginning Jan. 25, 2016, reducing the price of Frontier’s DSL service to $9.99 a month.

Affected customers can verify if they are included in the settlement on a special website Frontier has set up for its West Virginia customers.

The discounts will continue individually for each customer until the company can demonstrate it can deliver the 6Mbps speeds customers in West Virginia paid to receive. New Frontier DSL customers with speeds no better than 1.5Mbps will also qualify for the discount. Those with modems locked at speeds above 1.5Mbps but still getting less than 6Mbps will not benefit from this settlement, but may still get relief from a separate class action lawsuit covering customers in the state being heard in Lincoln County.

Last week, Lincoln County Circuit Judge Jay Hoke rejected an effort by Frontier to have the class action case dismissed. The company insisted its terms and conditions forbade customers from taking Frontier to court, requiring them to pursue arbitration instead.

Judge Hoke rejected Frontier’s arguments, finding the phone company “buried” the arbitration clause in fine print on its website and on the last pages of customer billing inserts. Hoke also ruled Frontier was attempting to retroactively apply its arbitration clause years after customers initially signed up for broadband service.

“We are finally going to get our day in court,” Michael Sheridan, a Frontier customer in Greenbrier County and Stop the Cap! reader told the Charleston Gazette. Sheridan is suing Frontier over its poor performance in West Virginia. “We think this lawsuit is the best chance we’ll ever have of bringing real Internet to rural West Virginia.”

Frontier argued if customers were dissatisfied with its DSL service, they could have canceled but never did. The company did not mention many of the affected customers have no other options for broadband service except satellite Internet, which receives poor reviews.

“We respectfully disagree with the court’s ruling,” said Frontier spokesman Andy Malinoski. “In our view, arbitration provides for fair resolution of consumer concerns that is quicker, simpler, and less expensive than lawsuits in court. We plan to appeal.”

Frontier’s decision to appeal might take longer and cost more than addressing problems for at least some of the affected customers.

Judge Hoke also took a dim view of Frontier’s style of disclosing changes to its terms and conditions.

‘On the website, computer users must scroll to the bottom of the page and click on a “Terms & Conditions” link that’s “buried among 25 other links,” then click on two other links to find the arbitration provision that denies customers’ rights to a jury trial,’ Hoke wrote in his order. ‘There’s no button to click or box to check that allows customers to agree to Frontier’s terms. In monthly bills, the arbitration clause shows up one time on the “fourth and last page” of an insert and another time in “miniscule font,” Hoke found.

Customers would have to be psychic to guess Frontier had important news restricting their right to take a dispute to court.

“There is no reason whatsoever for a customer to turn to the last page,” Hoke wrote. “Additionally, the bills contain no prompting that customers should flip to the last page for information concerning Frontier’s desire to alter the customer’s right to a jury trial.”

While Frontier pursues its appeal at the state Supreme Court, Frontier is expected to lose million in revenue from the settlement with the Attorney General.

“The reduced rate gives Frontier a strong incentive to raise speeds for these customers,” Morrisey said.

Another provision in the settlement requires Frontier to pay $500,000 to the state’s Consumer Protection Fund. That payment will offset investigative and monitoring expenses in addition to helping defray the costs of transitioning consumers to higher Internet speeds.

Frontier spokesman Andy Malinoski said the company had planned to address the issues all along. He said the settlement will accelerate the improvements.

West Virginians seeking more information about the maximum speed their modem is provisioned to receive can call Frontier at 1-888-449-0217 for more information.

Those with further questions can contact the Attorney General’s Consumer Protection Division at 800-368-8808 or visit the office online at www.wvago.gov.