An AT&T Logo is pictured on the side of a building in Pasadena, California, January 26, 2015. REUTERS/Mario Anzuoni

Editor’s Note: Stop the Cap! learned in May from a well-placed source that the FCC would “get serious” about data caps if Comcast moved to further expand them in its service areas across the country. It appears that day has arrived although it is too early to tell what direction the FCC will move in. Comcast’s data cap program has grown the most controversial, triggering at least 13,000 consumer complaints from what the company continues to claim is only a limited “trial.” But wireless providers’ growing interest in exempting certain data from counting against a customer’s allowance — a practice known as “zero rating” — has also attracted interest because of its potential impact on Net Neutrality policies.

WASHINGTON (Reuters) – The Federal Communications Commission said on Thursday it has asked major Internet providers to discuss innovative data policies in the wake of the government’s Net Neutrality rules.

FCC chairman Tom Wheeler told reporters Thursday that commission staff sent letters on Wednesday to AT&T, Comcast and T-Mobile “to come in and have a discussion with us about some of the innovative things that they are doing.”

Wheeler said the letters are focused on data policies.

T Mobile has introduced a new “Binge On” policy that does not count some digital video services against data limits.

Comcast is rolling out its own live streaming TV service called “Stream TV” that would not count usage against data caps if using Comcast services.

AT&T has had “sponsored data plan” programs that allow content providers to subsidize users wireless data.

Wheeler said the commission wants to welcome innovation in its open Internet order. He said the commission wants to “keep aware” of what is going on.

On Dec. 4, a U.S. appeals court heard arguments on Friday over the legality of the FCC’s Net Neutrality rules, in a case that may ultimately determine how consumers get access to content on the Internet.

The fight is the latest battle over Obama administration rules requiring broadband providers to treat all data equally, rather than giving or selling access to a so-called Web “fast lane.”

(Reporting by David Shepardson; Editing by Chizu Nomiyama)

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.

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.

On Monday, AT&T announced 38 additional cities that will eventually have access to its gigabit broadband offering – AT&T U-verse with GigaPower, but the company remains coy about the number of customers that can actually order the service today across the 56 metro areas that will eventually be served by AT&T’s fiber to the home network.

“Nearly two years ago, we successfully launched the first AT&T GigaPower metro in Austin, Tex.,” AT&T wrote in its press release. “This launch led to a major expansion in multiple metros beginning in 2014. Recently we marked a major milestone deploying the AT&T GigaPower network to more than 1 million locations, and we expect to more than double availability by the end of 2016.”

Stop the Cap! asked AT&T for information about its claim of offering service to more than “one million locations” and received a response that this number may not reflect strict availability of the gigabit service, but rather the likely number of potential customers served by a central office/exchange where GigaPower was enabled. In reality, not every customer within a central office immediately qualifies for U-verse service, as many customers have complained.

At the current rollout rate of about one million customers per year, it will take AT&T at least 12 years to achieve its goal of more than 14 million residential and commercial locations, probably in the year 2027.

The 38 metro areas that AT&T will be entering, starting with the launch of service in parts of the Los Angeles and West Palm Beach metros today, are:

• Alabama: Birmingham, Huntsville, Mobile and Montgomery
• Arkansas: Fort Smith/Northwest Arkansas and Little Rock
• California: Bakersfield, Fresno, Los Angeles, Oakland, Sacramento, San Diego, San Francisco and San Jose
• Florida: Pensacola and West Palm Beach
• Georgia: Augusta
• Indiana: Indianapolis
• Kansas: Wichita
• Kentucky: Louisville
• Louisiana: Baton Rouge, Shreveport–Bossier, Jefferson Parish region and the Northshore
• Mississippi: Jackson
• Missouri: St. Louis
• Michigan: Detroit
• Nevada: Reno
• North Carolina: Asheville
• Ohio: Cleveland and Columbus
• Oklahoma: Oklahoma City and Tulsa
• South Carolina: Charleston, Columbia and Greenville
• Tennessee: Memphis
• Texas: El Paso and Lubbock
• Wisconsin: Milwaukee

For more information on where the AT&T GigaPower network is and will become available, visit att.com/gigapowermap.