We get to keep all the money!

AT&T has begun charging U-verse television customers a new monthly fee to cover the cost of an FCC charge now extended to IPTV providers like AT&T that used to be paid only by cable operators.

AT&T’s “Regulatory Video Cost Recovery Charge” is defined by AT&T as a new “monthly fee that is charged to each U-verse TV subscriber’s bill to recover the regulatory fee imposed on providers of Internet Protocol Television (IPTV) Service.”

The new fee is reportedly set at $0.24 a month. AT&T will collect $2.88 a year from 5.7 million television customers annually beginning June 1, 2014.

Cable operators have paid similar fees all along but have generally considered them part of the cost of doing business. AT&T wants to pass the cost directly on to its customers.

But a review of the FCC’s 2013 Fiscal Year fee schedule shows a major discrepancy between the amount AT&T intends to collect from customers and the actual cost of the fee AT&T will have to pay the FCC.

While AT&T will bank $2.88 annually from each television customer, it only has to pay the FCC $1.02 a year per subscriber — a difference of $1.86. That doesn’t sound like much until you factor in the number of AT&T U-verse TV customers. AT&T will pocket $10,602,000 a year in “regulatory cost recovery” charges it will apparently keep for itself.

That suggests AT&T has imposed another hidden rate increase on customers who already pay a range of surcharges and fees. AT&T has created so many fees, surcharges, and other ancillary charges, it has published a Billing Glossary explaining them for the benefit of confused customers. AT&T usually keeps all the money associated with these fees — most are not taxes, although some fund state initiatives.

Here are some customers may already be acquainted with:

Activation Fee
A one-time fee charged when you activate new service. It is billed in full on your first bill.

Bill Statement Fee
The Bill Statement Fee is to cover the expenses associated with providing your AT&T Long Distance charges as part of your local phone company bill.

Broadcast TV Surcharge
This surcharge is to recover a portion of the amount local broadcasters charge AT&T to carry their channels.

CA Advanced Services Fund (CASF) (California Only)
The fund is used to spur deployment of broadband facilities in un-served and underserved areas of California. Funding for the CASF program will not increase total surcharges, since the CASF surcharge will be offset by an equal reduction of the High Cost Fund-B surcharge. For billing purposes, the CASF surcharge may appear as a separate item on a bill or may be combined with the CHCF-B surcharge if the item is renamed to reflect both the “CHCF-B and the CASF.”

CA CHCF A and CA CHCF B [High Cost Fund (CHCF) Surcharges A and B] (California Only)
These surcharges subsidize basic rates for local telephone companies servicing rural areas and compensate carriers for providing basic residential service in areas where the cost exceeds the CPUC determined statewide average.

CA Relay Service and Communications Devices Fund (California Only)
A surcharge utilized by the state to provide telecommunications devices to deaf or hard of hearing consumers.

CA Teleconnect Fund (California Only)
This surcharge provides discounts on telecommunications services to qualifying schools, libraries, community-based organizations, county-owned hospital and health clinics.

All these fees and surcharges…

Carrier Cost Recovery Fee
This fee helps recover costs associated with providing state-to-state and international long distance service, including expenses for national regulatory fees and programs, as well as connection and account servicing charges.

Change Fee
A charge applied if a TV service or package is downgraded or cancelled within the first 30 days of ordering.

Chicago Amusement Tax (City of Chicago Only)
A tax imposed by the City of Chicago on amusement services (i.e. paid television programming, recreational activities, etc.) provided within the city limits.

Convenience Fee
A fee applied when a customer payment is processed by a customer service representative. This fee does not apply for payments made online or through our automated phone system.

CT Community Access Support Fee (Connecticut Only)
Fee required to be imposed by AT&T upon its customers by Connecticut General Statutes in order to support community access operations.

CT Public Programming Gross Earnings Tax Recovery (Connecticut Only)
Connecticut fee imposed to support Public, Educational and Governmental (PEG) programming.

CT Video Provider Gross Earnings Tax Recovery (Connecticut Only)
Connecticut fee imposed on U-verse video service.

…and their advertised price was so low.

DEAF Surcharge
This surcharge shall be identified on the telephone bill as the “CA Relay Service and Communications Devices Fund.”

Early Termination Fee
A fee associated with early termination of one or more of your services before the end of the associated service plan term.

Federal Subscriber Line Charge
This charge was instituted in 1984 to cover the costs of a portion of the local phone network.

HD Technology Fee
A monthly fee for access to high-definition (HD) U-verse television service.

High Speed Internet Equipment Fee
A monthly fee for customers who have U-verse TV and Internet equipment.

Infrastructure Maintenance Fee (IMF)
All telecommunications carriers on a customer’s bill must collect this fee. The funds for the state IMF help to support the costs of providing and maintaining utility rights of way. Revenue from the IMF is dedicated for Personal Property Replacement Tax (PPRT) and is disbursed to all taxing districts.

In-State Connection Fee
The In-State Connection Fee helps to cover the costs AT&T is charged by your local phone company to provide you access to local phone lines.

Local Connectivity Charge
This fee helps recover increased connectivity costs associated with providing local service in your state.

Local Number Portability (LNP) Charge
A charge permitted by the FCC to recover costs of upgrading the network to provide customers the ability to keep their phone numbers when changing local service providers.

Local Video Facilities Fee
A state or local government fee to support Public Educational and Governmental (PEG) programming.

Local Video Service Franchise Fee
Fee imposed by state or local government on U-verse video service.

Minimum Monthly Usage Charge
A charge to an account that does not meet a specified minimum total amount for a particular service.

Municipal Charge
A charge to cover costs of installing telephone poles and lines, manholes, and other telephone items on public property such as city streets.

NV Universal Service Fund Surcharge (Nevada Only)
A fee imposed by the Public Utilities Commission of Nevada that supports telecommunication needs of low-income households, consumers living in high cost areas, schools, libraries, and rural hospitals. This surcharge will be based on a percentage of intrastate long distance charges associated with your U-verse Voice service and will be modified as needed to stay consistent with any required changes in fund contributions.

Number Portability Service Charge
A charge permitted by the FCC to recover costs of upgrading the network to provide customers the ability to keep their phone numbers when changing local service providers.

Receiver Fee
A monthly charge for additional U-verse receivers (set top boxes).

Regulatory Video Cost Recovery Charge
The Regulatory Video Cost Recovery Charge is the monthly fee that is charged to each U-verse TV subscriber’s bill to recover the regulatory fee imposed on providers of Internet Protocol Television (IPTV) Service.

Restoral Fee
A charge to restore service that was suspended or disconnected.

State Cost-Recovery Fee (Texas Only)
Fee/Surcharge imposed by AT&T to recover franchise costs imposed on the company by Texas law.

State Infrastructure Maintenance Fee
All telecommunications carriers on a customer’s bill must collect this fee. The funds for the State IMF help to support the costs of providing and maintaining utility rights of way. Revenue from the IMF is dedicated for Personal Property Replacement Tax (PPRT) purposes and is disbursed to all taxing districts.

Universal Connectivity Charge
The Universal Connectivity Charge is the monthly fee that is charged to each residential customer’s phone bill to recover the expenses associated with AT&T’s payments into the Universal Service Fund.

Customers now paying $99 a year for Amazon Prime will get a little more for their money starting today with the introduction of Prime Music – a new service letting customers stream or download music without limits or advertising.

The service, available now on Amazon’s website, features more than one million tracks across tens of thousands of albums as well as hundreds of specially created Prime Playlists based on your mood, preferred music genre, artist or activity. Users can create their own playlists, get recommendations from the service and other members, and download music to almost any portable device.

“We want to go where our customers are going,” said Amazon’s vice president for digital music Steve Boom. “Ultimately we’re creating lifelong relationships with our customers that makes them better customers of Amazon (who) use our services more frequently.”

That includes buying music. Although Prime Music is likely to whet the appetite of Amazon Prime members, it is unlikely to pose any threat to competitors like Pandora, Amazon Play Music, Spotify, and Apple. Although more than one million songs sounds like a lot, Amazon’s music store has 25 million tunes available for download or purchase and Spotify customers can select from more than 20 million songs.

In a brief sampling of the service, we found the experience similar to using Amazon’s Prime Instant Video — there were many more titles available only to buy than there were those accessible for free. To avoid frustration, search only from within the Prime Music section. If you search more generally, you will quickly discover Prime Music offers a lot less than you hoped.

Prime Music also has other restrictions:

• Amazon lacks a deal with music industry giant Universal Music. That leaves out a lot of popular artists;
• Amazon Prime Music embargoes the newest releases for an undisclosed waiting period (earlier speculation suggested six months after release) to prevent the free side of the music business from cannibalizing Amazon’s paid music offerings;
• A number of independent labels, where a great deal of artist creativity trumps mainstream music, are woefully underrepresented;
• Integration with Amazon’s music app needs work.

Prime members in the U.S. can start listening to Prime Music today at www.primemusic.com. Kindle Fire HD/HDX devices will get Prime Music in an automatic, over-the-air update. You can also download the latest Amazon Music app in the Android and iOS appstores.

[flv]http://www.phillipdampier.com/video/CNBC What Amazon Prime Music is all about 6-12-14.mp4[/flv]

CNBC explores what Amazon Prime Music is all about. Is it a Spotify killer or just a music service for those who enjoy songs from the 90’s? (1:58)

Britt

The former chairman and CEO of Time Warner Cable Glenn Britt lost his battle with cancer and died early this morning at his New York home. Britt was 65 and retired from Time Warner Cable at the end of December, 2013.

“Glenn left us with a legacy of innovation, integrity and inclusion,” Rob Marcus, Time Warner Cable’s current chairman & CEO, said in a statement. “We were guided for many years by his strong belief that a company must be willing to reinvent itself to be successful; his commitment to saying what you mean and doing what you say; and his conviction that a richly diverse workforce – diverse in ethnicity, culture, beliefs, perspectives, experiences and lifestyles – is necessary to best serve our diverse customers and communities.”

Although Britt’s leadership of Time Warner Cable was not always in the best interests of customers, he stood alone among major cable providers in supporting the availability of an unlimited use tier for broadband service. Britt presided over the company’s messy test of usage-based billing in the spring of 2009, but was willing to shelve the idea after customers protested. Britt’s idea of testing optional usage based plans attached to discounts helped expose the unpopularity of usage pricing after only a few thousand customers showed any interest.

Britt also complained loudly about increasing programming costs and threw a handful of networks off the lineup when they demonstrated a lack of value for money. But with so many programming contracts tied to carriage of other, less popular channels, Britt’s hands were effectively tied in dropping expensive sports and niche networks.

Despite our disagreements with Time Warner Cable, we are sorry to hear Britt has passed away and send our wishes to his family.

Phillip “Time Warner Cable ironically debunked Lyons’ advocacy of usage-based billing” Dampier

As part of the broader push to drive support for the merger between Comcast and Time Warner Cable, academics with ties to corporate-funded think tanks and the cable industry are trotting out nearly identical guest editorials appearing in newspapers around the country that attempt to educate the masses about the wonders of cable industry consolidation.

Daniel Lyons, who has written several papers supporting and endorsing the cable industry’s business agenda, is back with his helpful advice:

Consumers have more video options than ever before. Technology has eroded the lines between hardware, content and media companies. Today, Comcast’s biggest competitive threat is not other cable and satellite providers but new entertainment sources not even imaginable a decade ago. Netflix streams video online and is responsible for one-third of all Internet traffic during peak times. Apple is transforming itself from a device manufacturer into an entertainment company that delivers music, video and games instantly through a seamless customer interface. Google has expanded beyond Internet search to video services and even broadband data networks. Verizon, a traditional telephone company, recently bought the rights to stream NFL games to smartphones. Even Walmart has entered the streaming video business.

It is a challenging transaction, one that antitrust regulators should review carefully. But they should avoid rushing to judgment merely because Comcast is consolidating its position over a stagnant cable sector. Some consolidation may be necessary for cable to avoid Blockbuster’s fate and instead compete effectively in this rich, dynamic and increasingly competitive video landscape.

It is especially hard to take Mr. Lyons seriously when he claims with a straight face the cable industry is “stagnant” and on the verge of following Blockbuster into irrelevance. The only product in the cable bundle seeing flat growth is cable television. But that has not presented a difficult financial challenge because cable operators are shifting their priorities towards broadband. Just to make sure they are covered, broadband providers have raised prices and introduced equipment fees that have more than made up the difference. Despite Lyons’ prediction of doom and gloom, industry observers still find the cable business “comically profitable.”

Lyons

In fact, the cable industry now dominates the American broadband marketplace and is well positioned to deal with any competitive threat looming on the horizon. All of the competitors Lyons mentions depend on companies like Comcast and Time Warner Cable to reach customers. Cord-cutting looks much less tenable if companies like Comcast return to a regime of usage caps on their broadband accounts. Netflix, Apple, and Google cannot sustain video streaming businesses if customers fear using these services will put them over their monthly usage allowance. Sony’s forthcoming 4K video service for its video player could consume between 40-60GB per movie. Even with Comcast’s “generous” allowance of 300GB per month in its usage-capped test markets, as few as 10 movies a month will put customers over the limit, before they do anything else with their broadband connection.

Despite the threat of Internet stagnation, Lyons is a prolific writer of pro-usage cap and usage-billing studies. In at least one of those papers, he was joined by Michigan State University Professor of Information Studies Steven Wildman, also then an adviser at the Free State Foundation. Wildman was more forthcoming about where the money comes from for these studies – the National Cable and Telecommunications Association (NCTA), the largest cable industry lobbying and trade group in the United States.

Unfortunately for the Free State Foundation and the NCTA, Time Warner Cable inadvertently proved Lyons and Wildman’s theories wrong.

“Pricing experimentation may also help narrow the digital divide,” Lyons wrote. “By recovering more fixed costs from heavier users, firms may have more freedom to extend service at a lower rate to light users who are unable or unwilling to pay the unlimited flat rate. There is evidence that these opportunities are beginning to emerge from companies engaged in usage-based pricing.”

What actually emerged from Time Warner Cable’s tests of discounted usage pricing is a repudiation of Lyons’ theories. Time Warner Cable admitted its usage-based pricing options were so unpopular with customers, only a few thousand out of 11 million broadband customers signed up — hardly a ringing endorsement. Even income-challenged customers preferred unlimited Internet over a usage cap. Time Warner Cable give customers a choice between a cap or no cap. The others, including Comcast, don’t offer an unlimited option and repeatedly claim usage cap tests have met with little resistance from customers, as if they had a choice.

Short Title: Total Deregulation

Other members of Free State Foundation’s Board of Academic Advisors, including Richard A. Epstein, Justin (Gus) Hurwitz, Daniel Lyons, James B. Speta, and Christopher S. Yoo advance the cable industry agenda in other ways too.

Speta submitted an Amicus Brief: ‘In the Matter of Comcast Corporation v. FCC,’ that basically argued the Federal Communications Commission “does not have jurisdiction to address most Internet regulatory issues, because whatever expansive readings such ancillary jurisdiction has received in the past are no longer tenable.”

In fact, the Free State Foundation unabashedly supports near-total deregulation of the telecommunications industry and an elimination of most FCC powers to oversee it. In comments before the House Energy & Commerce Committee, the foundation’s Board of Academic Advisers recommended:

• Updating the Communications Act by wiping it out — a clean slate approach is needed to adopt a “replacement” regime – a new Digital Age Communications Act, which is another way of saying near-complete elimination of all current oversight and enforcement powers exercised by the FCC;
• Lyons, among others, supports eliminating regulation designed around the concept of “in the public interest” with a near-complete deregulation of telecommunications oversight, letting marketplace competition check any bad behavior. The only regulatory activities permitted would require the FCC to show the resulting harm from lack of sufficient competition;
• The group supports disallowing the FCC from issuing rules to prevent anti-competitive or abusive behavior until such behavior has been proven to have taken place. Any rules that result would automatically expire after a fixed number of years;
• States would be prohibited from regulating telecommunications services in instances where states feel federal regulation is inadequate.

Ironically, some of the biggest supporters of the group’s ideas to restrict states from writing telecommunications laws seem to have no problem letting states write laws that ban community broadband networks.

And finally, how could we forget to mention Mr. Yoo, who testified in recent hearings in the Senate Judiciary Committee enthusiastically supporting the merger deal, while not bothering to mention his employer, the University of Pennsylvania law school, has close ties to Comcast. In fact David Cohen, the Comcast executive who is the company’s leading voice in Washington and was the first witness at the hearing, is chairman of the trustees of the University of Pennsylvania.

Cruz Control

A group of Republican senators are warning the chairman of the Federal Communications Commission he’d better not touch statewide bans on community broadband networks.

In a letter sent to FCC Chairman Tom Wheeler, Republican Sens. Deb Fisher, Ron Johnson, Ted Cruz, Mike Enzi, John Barrasso, Pat Roberts, Lamar Alexander, John Cornyn, Tom Coburn, Tim Scott and Marco Rubio slammed Wheeler for his willingness to override or ignore state laws co-written by cable and telephone companies that banish municipal broadband from providing any competition.

“The insinuation that the Federal Communications Commission will force taxpayer-funded competition against private broadband providers — against the wishes of the states — is deeply troubling,” said the senators. “Inserting the commission into states’ economic and fiscal affairs in such a cavalier fashion shows a lack of respect for states’ rights,” they said.

Comcast, AT&T, Verizon, Time Warner Cable, and other operators are among the campaign contributors of the nine senators.

Echoing the sentiment of the cable and phone companies, the Republicans called community owned broadband “an unnecessary and risky government liability” and warned Wheeler there would be consequences if he was serious about ignoring the state laws, many enacted with the assistance of the American Legislative Exchange Council (ALEC).

“State political leaders are accountable to the voters who elect them, and the Commission would be well-advised to respect state sovereignty,” said the senators. “We look forward to your timely response, and we hope you will think critically about the Commission’s role and how it can more appropriately interact with our state authorities.”

Community broadband has largely been the only wired competitor facing off against cable and phone companies. Consumers have a much bigger chance of seeing a municipal provider in their community than Google Fiber or another overbuilder.

“Those are nine senators that moonlight for Comcast and AT&T I won’t be voting for,” says Stop the Cap! reader Tom Resden who shared the story. “Municipal broadband balances a playing field that has favored big cable and phone companies for years. These are the same type of senators that 100 years ago would have opposed municipal power and co-ops, willing to leave people in the dark rather than allow a player that answers only to customers get traction. It’s not a state rights issue when the corporations wrote the legislation their well-funded lackeys in statehouses around the country helped hurry into law. What we are really talking about is the corporate right to suppress competition.”