AT&T continues its quest to make landline service a really bad deal with the introduction of a new bill-padding fee that wireless customers will not have to pay.

AT&T’s $1.99 “Tennessee Regulatory Inspection Fee” appeared on customer bills in March, much to the surprise of customers.

“My regular service is only 22 bucks,” Charles “Buck” Meyer told the Chattanooga Times Free Press. “If they add $2 to it, that’s almost a 10 percent increase. I’ve been on the fence about switching off my landline for some months, and this could be the thing that pushes me over the edge.”

AT&T says it is entitled to recoup the money it pays to the Tennessee Regulatory Authority. The $1.99 fee appearing on March bills is a “one-time” fee until AT&T figures out how much it plans to charge customers on an ongoing basis. Most companies subject to TRA fees build them into the monthly cost of the service. AT&T is the only phone company in the state to break the fee out on the bill and collect the money separately.

In 2009, when the company lobbied for widespread deregulation of phone bills in Tennessee, it claimed deregulation would not bring about increased rates.

Meyer does not see it that way. He considers AT&T’s new fee a stealth rate hike.

“Slip a little line item on there that’s just a couple bucks and is a one-time deal,” he told the newspaper. “Then pretty soon it’s on there every month.”

The new fee is permitted because of a 2009 change in Tennessee’s statutes that now allow companies to pass along regulatory fees on customer bills.

Companies like AT&T heavily lobbied for statewide deregulation of telephone bills that year, and spent $180,000 in campaign contributions to lawmakers, their political action committees or party organizations. AT&T hired at least 20 lobbyists to help push deregulation through the Tennessee legislature. Critics of the bill warned its passage would lead to rate increases, something AT&T denied at the time.

AT&T Tennessee president Geoff Morton told the Times Free Press back in 2009, “the company needs to compete with rivals and is not interested in raising rates.”

AT&T refused to say how much it will collect from the new fee, but Morton said the company is now lobbying for another law that would gut the fees AT&T pays to the TRA to oversee the quality of phone service in the state.

“In the previous administration, telecommunications inspection fees increased despite a dramatic decrease in telecommunications services regulated by the commission,” AT&T spokesman Bob Corney told the newspaper. “We are hopeful that legislation will pass this session to reduce the regulatory burden on landline telephone customers in Tennessee.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WMC Memphis ATT Mystery Fee 3-21-13.mp4[/flv]

WMC’s “Ask Andy” segment has some non-answers from AT&T about their new $1.99 “regulatory authority inspection fee.” When the Memphis consumer reporter called AT&T, the company said, “no comment.”(1 minute)

Residents of some cities north of Dallas are in the unique position of being able to choose between two phone companies and at least one cable operator for television, phone, and broadband service.

AT&T U-verse competes head to head with Verizon’s advanced FiOS fiber to the home service in communities like Allen, Plano, and Frisco, Tex.,  because of franchising agreements that opened to door for both companies to compete in overlapping territories.

The aggressor was Verizon, which took advantage of Texas’ statewide video franchise law to “overbuild” its FiOS fiber operation into AT&T’s landline territory, particularly in affluent Frisco and Allen.

Verizon got interested in the area in 2008 because of the population boom and housing growth in North Texas. It was easy to lay fiber in the large housing developments under construction. When the economy crashed along with the housing market during the Great Recession, Verizon’s investment and interest in expanding FiOS declined. Today, some areas have access to both Verizon FiOS and U-verse from AT&T, as well as at least one cable operator. Other areas, especially in unfinished planned neighborhoods, only have access to only one provider, AT&T.

Verizon’s decision to overbuild and face AT&T was a decision to target investment into some of the richest areas in the Dallas-Ft. Worth Metroplex. Lower income areas often have neither service, as Verizon has focused efforts north of the city and AT&T U-verse is still not available in certain areas of downtown Dallas.

A Financial Times blog post has started a buying frenzy for Vodafone Group Plc on news AT&T and Verizon Communications are about to bid for the British mobile phone giant, despite denials from Verizon it is involved in any deal to acquire the British mobile phone company.

The Times Alphaville blog quotes unnamed sources deemed “usually reliable people” who claim Verizon and AT&T are working together on a blockbuster $245 billion takeover deal for one of the world’s largest wireless carriers. After the story appeared, Vodafone shares were up 6.1 percent.

Verizon is interested in buying out Vodafone’s part ownership in its Verizon Wireless venture and AT&T is looking to overseas markets for future wireless revenue opportunities that are harder to find in the United States.

The sources told the Times they expect the deal will initially merge Vodafone and Verizon into a single entity, but only briefly. Verizon would promptly sell Vodafone’s extensive international assets to AT&T at a premium. Verizon would end up the sole owner of Verizon Wireless, and AT&T would acquire Vodafone’s enormous wireless operations in Europe, Asia, Africa and the Middle East.

Barclays Plc is working on putting together the potential transaction, Alphaville said today.

Informal talks have reportedly been underway between AT&T, Verizon and Vodafone since December according to Bloomberg News. The biggest impediments seem to be among the company’s top executives arguing over who ends up in the leadership and where the combined companies will be located — in the UK or the USA.

Vodafone has been a tolerated partner in Verizon Wireless since 1999 when Bell Atlantic and Vodafone merged their respective mobile ventures into Verizon Wireless. Vodafone has held tightly to their part-ownership of Verizon’s wireless network, which has proven an enormous earner in an American wireless marketplace considered less competitive than in Europe. The talks indicate Verizon is willing to pay a premium price to disconnect the British wireless company from its American operations. Allowing AT&T to help finance the largest wireless takeover in years makes it more likely a deal can be done, assuming regulators on both sides of the Atlantic agree.

Cable operators and publicly owned utilities in Tennessee are battling for control over the prices companies pay to use utility poles, with facts among the early casualties.

The subject of “pole attachment fees” has been of interest to cable companies for decades. In return for permission to hang cable wires on existing electric or telephone poles owned by utility companies, cable operators are asked to contribute towards their upkeep and eventual replacement. Cable operators want the fees to be as low as possible, while utility companies have sought leeway to defray rising utility pole costs and deal with ongoing wear and tear.

Little progress has been made in efforts to compromise, so this year two competing bills have been introduced by Republicans in the state legislature to define “fairness.” One is promoted by a group of municipal utilities and the other by the cable industry and several corporate-backed, conservative front groups claiming to represent the interests of state taxpayers and consumers.

Some background: Tennessee is unique in the pole attachment fee fight, because privately owned power companies bypassed a lot of the state (and much of the rest of the Tennessee Valley and Appalachian region) during the electrification movement of the early 20th century. Much of Tennessee is served by publicly owned power companies, which also own and maintain a large percentage of utility poles in the state.

Some of Tennessee’s largest telecom companies believe they can guarantee themselves low rates by pitching a case of private companies vs. big government utilities, with local municipalities accused of profiteering from artificially high pole attachment rates. Hoping to capitalize on anti-government sentiment, “small government” conservatives and telecom companies want to tie the hands of the pole owners indefinitely by taking away their right to set pole attachment rates.

The battle includes fact-warped editorials that distort the issues, misleading video ads, and an effort to conflate a utility fee with a tax. With millions at stake from pole attachment fees on tens of thousands of power poles throughout the state, the companies involved have launched a full-scale astroturf assault.

Grover Norquist’s Incendiary “Pole Tax”

Conservative Grover Norquist, president of Americans for Tax Reform wrote that the pole attachment fee legislation promoted by public utilities would represent a $20 million dollar “tax increase” from higher cable and phone bills. Even worse, Norquist says, the new tax will delay telecom companies from rushing new investments on rural broadband.

In reality, Americans for Tax Reform should be rebranded Special Interests for Tax Reform, because the group is funded by a variety of large tobacco corporations, former clients of disgraced lobbyist Jack Abramoff, and several wealthy conservative activists with their own foundations.

Norquist’s pole “tax increase” does not exist.

The Federal Communications Commission (FCC) provides guidelines and a formula for determining pole attachment rates for privately owned utilities, but permits states to adopt their own regulations. Municipal utilities are exempted for an important reason — their rates and operations are often already well-regulated.

Stop the Cap! found that pole attachment revenue ends up in the hands of the utility companies that own and keep up the poles, not the government. Municipal utilities stand on their own — revenue earned by a utility stays with the utility. Should a municipal utility attempt to gouge other companies that hang wires on those poles, mechanisms kick in that guarantee it cannot profit from doing so.

A 2007 study by the state government in Tennessee effectively undercut the cable industry’s argument that publicly owned utilities are overcharging cable and phone companies that share space on their poles. The report found that “pole attachment revenues do not increase pole owners’ revenue in the long run.”¹

The Tennessee Valley Authority, which supplies electricity across Tennessee, regularly audits the revenues and costs of its municipal utility distributors and sets end-user rates accordingly. The goal is to guarantee that municipal distributors “break even.” Any new revenue sources, like pole attachment fees, are considered when setting wholesale electric rates. If a municipal utility overcharged for access to its poles, it will ultimately gain nothing because the TVA will set prices that take that revenue into account.

Freedom to Distort: The Cable Lobby’s Astroturf Efforts

Another “citizens group” jumping into the battle is called “Freedom to Connect,” actually run by the Tennessee Cable Telecommunications Association (TCTA). Most consumers won’t recognize TCTA as the state cable lobby. Almost all will have forgotten TCTA was the same group that filed a lawsuit to shut down EPB’s Fiber division, which today delivers 1,000Mbps broadband service across the city and competes against cable operators like Comcast and Charter Cable.

One TCTA advertisement claims that some utilities are planning “to double the fees broadband providers pay to the state’s government utilities.”

In reality, cable companies have gone incognito, hiding their identity by rebranding themselves as “broadband providers.” No utility has announced it plans to “double” pole attachment fees either.

TCTA members came under fire at a recent hearing attended by state lawmakers when Rep. Charles Curtiss (D-Sparta) spoke up about irritating robocalls directed at his constituents making similar claims.

“What was said was false,” Curtiss told the cable representatives at the hearing. “You’ve lost your integrity with me. Whoever made up your mind to do that, you’re in the wrong line of work.”

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TCTA Pole Attachment Fees Ad 3-13.flv[/flv]

TCTA — Tennessee’s cable industry lobbying group, released this distorted advertisement opposing pole attachment fee increases.  (1 minute)

The Chattanooga Free-Press’ Drew Johnson: Independent Opinion Page Editor or Well-connected Activist with a Conflict of Interest?

In its ad campaign, the TCTA gave prominent mention to an article in Chattanooga’s Times-Free Press from Feb. 27: “Bill Harms Consumers, Kills Competition.”

What the advertisement did not say is it originated in an editorial published by Drew Johnson, who serves as the paper’s conservative opinion editor. Johnson has had a bone to pick with Chattanooga’s public utility EPB since it got into the cable television and broadband business.

That may not be surprising, since Johnson is still listed as a “senior fellow” at the “Taxpayers Protection Alliance,” yet another corporate and conservative-backed astroturf group founded by former Texas congressman Dick Armey of FreedomWorks fame.

Johnson’s journalism credentials? He wrote a weekly column for the conservative online screed NewsMax, founded and funded by super-wealthy Richard Mellon Scaife and Christopher Ruddy, both frequent donors to conservative, pro-business causes.

TPA has plenty to hide — particularly the sources of their funding. When asked if private industry backs TPA’s efforts, president David Williams refused to come clean.

“It comes from private sources, and I don’t reveal who my donors are,” he told Environmental Building News in January.

Ironically, Johnson is best known for aggressively using Tennessee’s open records “Sunshine” law to get state employee e-mails and other records looking for conflicts of interest or scandal.

Newspaper readers may want to ask whether Johnson represents the newspaper, an industry-funded sock puppet group, or both.  They also deserve full disclosure if the TPA receives any funding from companies that directly compete with EPB.

The Institute from ALEC: The Institute for Policy Innovation’s Innovative Way to Funnel AT&T and Comcast Money Into the Fight

Another group fighting on the side of the cable and phone companies against municipal utilities is the Institute for Policy Innovation. Policy counsel Bartlett D. Cleland claimed the government is out to get private companies that want space on utility poles.

“The proposed new system in HB1111 and SB1222 is fervently supported by the electric cooperatives and the government-owned utilities for good reason – they are merely seeking a way to use the force of government against their private sector competitors,” Cleland said. “The proposal would allow them to radically raise their rates for pole attachments to multiples of the national average.”

The facts don’t match Cleland’s rhetoric.

In reality, the state of Tennessee found in their report on the matter in 2007 that Tennessee’s pole attachment fees are “not necessarily out of line with those in other states.”²

In fact, some of the state’s telecom companies seemed to agree:

• EMBARQ (now CenturyLink) provided data on fees received from other service providers in Tennessee, Virginia, South and North Carolina. In these data, Tennessee’s rates ($36.02 – $47.41) are similar to those in North Carolina ($23.12-$52.85) and Virginia ($28.94 – $35.77). Rates were lower in South Carolina.
• Cable operators, who have less infrastructure on poles than telephone and electric utilities, paid even less. Time Warner Cable provided mean rates per state showing Tennessee ($7.70) in the middle of the pack compared to Florida ($9.83) and North Carolina ($4.86 – $13.64).

In addition to his role as policy counsel, Cleland also happens to be co-chair of the Telecommunications and Information Technology Task Force of the American Legislative Exchange Council (ALEC). Members of that committee include Comcast and AT&T — Tennessee’s largest telecom companies, both competing with municipal telecommunications providers like EPB.

¹ Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.23

² Analysis of Pole Attachment Rate Issues in Tennessee, State of Tennessee. 2007. p.12

AT&T is accelerating the demise of its own landline business with a new wireless home phone product that is cheap for voice calls but could spell the end of your DSL service in certain cases.

AT&T Wireless Home Phone service provides contract-free unlimited nationwide voice calling for $20 a month ($10 if you are already an AT&T wireless phone customer sharing your Mobile Share minutes).

The service includes a base station ($99.99 prepaid or free with two-year contract) that receives AT&T’s wireless signal and integrates with your existing home telephones. The landline replacement includes caller ID, call waiting, three-way calling and voice mail. There is a $36 activation fee, a “Regulatory Cost Recovery Charge” of $1.25 per month and all the local taxes and surcharges that go with your current landline. Unless choosing the prepaid option, an early termination fee up to $150 applies. The restocking fee for customer returns is up to $35.

In certain cases, forfeiting your landline could mean the end of your DSL service if you do not remind the phone company you want to keep your broadband service intact. If you don’t AT&T and other phone companies might disconnect all of your services.

There are other caveats:

• Call quality is only as good as AT&T’s network and reception in your home;
• Caller ID only includes the calling party’s number. No name information is provided;
• Emergency 911 calls lack exact geographic information, which could make locating a caller more difficult;
• The service is unregulated and has no local or state government oversight to guarantee call quality and reliability;
• If power fails, an internal backup battery can keep the system running for up to 36 hours or 3.5 hours of talk time;
• The service cannot be used with home security systems, fax machines, medical alert systems, credit card terminals, dial-up Internet, or other data services.

Verizon Wireless offers their own version of this service: Wireless Home Phone Connect, for about the same price. It gets mixed reviews from owners because of complaints about call quality.

[flv width=”640″ height=”372″]http://www.phillipdampier.com/video/ATT-Wireless-Home-Phone 3-27-13.flv[/flv]

AT&T’s product promotion of its wireless home phone service. The pricing information in this video was intended primarily for existing AT&T wireless customers and is slightly outdated. (1 minute)