August 22, 2006
Can We Gouge You Now? Good!
Sometimes The Onion is scarily prescient. Just yesterday I was browsing through the site on a whim and got a chuckle out of this story, titled "Verizon Introduces New Charge-You-At-Whim Plan". Then, while browsing through the local news, I came across WTOP's story about a new surcharge that Verizon is about to introduce. The stories even carry the same date. Like I said: scarily prescient.
But enough Onion-admiration; let's move on to the Verizon-bashing. The new fee affects DSL customers and will range from $1 to $3 per month, depending on your subscription plan. That much is irritating, but relatively humdrum. What's truly infuriating is the "coincidence" that correlates with the rate hike: the federal government is in the process of phasing out mandatory contributions to the Universal Service Fund by DSL customers, which previously cost customers — you guessed it — between $1 and $3 per month.
The USF was created to help ensure the availability of telecom services in rural areas that might not otherwise be served by the unregulated market. The government has decided that DSL is no longer subject to the fee (and, more recently, that VoIP service is). Cynics might suggest that the former USF money is now going straight into Verizon coffers rather than toward rural infrastructure. However, WTOP quotes a Verizon rep as saying that the new charge "is not related at all to USF". Color us skeptical.
If the rate hike truly is a coincidence, it's unfortunate, and a clearer explanation of why it's being introduced is warranted. If it isn't a coincidence, it's a shame to see Verizon treat their customers with such apparent contempt. For all of its DSL service's speed limitations, Verizon has at least been on the side of the angels with respect to arbitrary bandwidth caps and fighting for customer privacy (although their behavior on the municipal Wi-Fi issue has admittedly been deplorable). Respect for customers is the single, meager advantage that DSL offers over cable these days. Verizon would be well-served not to lose sight of that fact.
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Spekaing of which, just got my Comcast bill with a notice that adding MASN for the Nationals will cost all of us $2
So the feds mandate rural telecom service, but the feds didn't want to pay for it. So they tell Verizon to build the infrastructure. Is it any surprise that they pass the cost on to consumers? Did anyone really believe they would just pay for this out of the goodness of their hearts?
Verizon sucks. Vote with your wallet.
monkeyrotica: read more closely. The USF continues to exist, and draws funding from a number of different sources. DSL customers were previously obliged to pay it (this was a tax by the federal government -- it wasn't a mandate imposed on Verizon and "passed on" to consumers).
Now the government has stopped charging DSL customers this fee. So Verizon has taken the opportunity to raise their rates by almost the exact amount as the fee, presumably since customers have grown accustomed to paying their current monthly DSL bill amount.
The difference is that the USF actually does good for people who aren't Verizon shareholders. Its repeal was not intended as a subsidy for the DSL providers.
And my apologies if the post was unclear -- it's admittedly a somewhat obscure point. But that, presumably, is exactly why Verizon is going to be able to get away with the rate hike.
good post. it's somewhat odd that companies like verizon can squiggle out of being classified as common carriers, and thereby opening up their pipes for competition. instead, they are basically given a mompoly, but turn around anyhow and say if they are regulated in any way theywon't be able to build out our networks and roll out new services.
well i guess it isn't odd, just dumb.
This isn't going to help Johns break 10%.
Most consumers won't notice. If they're paying 29.99 a month now, they'll still pay 29.99 a month. It's just sort of a fact of life that prices go up and rarely down.
Governments and municipalities are notorious for adding on taxes to phone bills. The Federal 3% excise tax, originally set in 1898 to raise money for the Spanish-American War, is supposed to be repealed soon I think. On the other hand, cities like Alexandria slap on a tax on your cell phone bill.
Telecom laws and policy are insane. Sometimes I think a monopoly was much better.
I can't tell whether Comcast or Verizon is worse.
Wait Wait Wait Wait Wait - Respect for customers is the single meager advantage? I just moved recently so I had the opportunity to choose new services. I looked up DSL and I could get it for about $20, which is $20 less than the $40+ per month for comcast broadband. Admittedly there was a speed cut and a 1 year commitment, but if you are mostly web browsing, watching youtube clips, and perusing myspace, DSL should suit your needs just fine. I think you're overstating the deficencies of DSL. Not to mention Comcast's technical support consists of telling you to restart the cable modem a bazillion times before sending out a service operator.
Todd: I can understand why you feel that way. DSL has better promotional offers, in my recent experience, but once the bills settle down there isn't as much of a price difference as one might hope -- especially if you compare anything other than DSL's entry-level package, which isn't remotely competitive with cable in terms of speed.
Tech support varies. You're right that Comcast makes it a little easier to get a tech out to your house -- and that's a good thing. Verizon's tech folks may be more knowledgeable, but until a few years ago they wouldn't speak to you if you had a router connected to your LAN. And in many cases they still aren't a particularly tremendous help -- but perhaps I'm misjudging, given that I rarely have connection problems that are resolvable on my end, but I can't figure out without Verizon's help.
Actually I was trying to say that my experience with Comcast customer service amounted to doing the same thing 20 times and lo, not getting a fix and having a serviceman come out. Those 20 times were pretty frustrating. But you're right, they did send out tech support people at some point, and that was a good thing.
I don't see the promotional game so much as you observe, but maybe it is different out in the burbs. Also, I don't think that the lowest speeds are so slow. My mother in Jersey had the 64Kbps DSL, and it was plenty fasy for most work (including some off site computing with my internship) when I went home.
Full disclosure - I now have FiOS.
I'm glad this Verizon surcharge got reported--my reaction upon seeing the announcement email cynically realizing that Verizon is opportunistic. The explanation that it "helps Verizon to recover the cost of a local telephone line in situations where Verizon does not simultaneously provide both local voice and Internet services" doesn't work for me; why not tax just the people who don't subscribe to both phone service and DSL?
Someone should file a complaint with the FTC (not FCC) for fraudulent practices.
As transparent as this is, there's nothing illegal as far as I can tell.
Bell South is trying the same trick with a different lame excuse:
http://news.zdnet.com/2100-1035_22-6108471.html
"to offset costs incurred in complying with regulatory obligations and other expenses. The fee also recovers costs associated with additional systems necessitated by federal regulation, as well as costs associated with monitoring, participating in and complying with regulatory proceedings, and other network and servicing requirements."
I can't tell whether Comcast or Verizon is worse.
Truer words, never spoken . . .
This is the email I received concerning my Version DSL account
Effective August 14, 2006, Verizon Online will stop charging the FUSF (Federal Universal Service Fund) recovery fee. We will stop being assessed the fee by our DSL network suppliers. Therefore, we will no longer be recovering this fee from our customers. The impact of the FUSF fee is as follows: for customers of Verizon Online with service up to 768Kbps, the fee eliminated is $1.25 a month; for customers of Verizon Online with service up to 1.5 Mbps or 3Mbps, the fee eliminated is $2.83 a month (based on current FUSF surcharge amounts). On your bill that includes charges for August 14, 2006 you will see either a partial FUSF Recovery Fee or no FUSF line item at all, depending on your bill cycle.
Starting August 26, 2006, Verizon Online will begin charging a Supplier Surcharge for all new DSL customers, existing customers with a DSL monthly or bundle package, and existing DSL annual plan customers at the time their current annual plan expires. This surcharge is not a government imposed fee or a tax; however, it is intended to help offset costs we incur from our network supplier in providing Verizon Online DSL service. The Supplier Surcharge will initially be set at $1.20 a month for Verizon Online DSL customers with service up to 768Kbps and $2.70 per month for customers with DSL service at higher speeds.
But i'm going to get a $0.05 discount on my tax now. Ohh wai tthe new charge isn't a tax is money right into their bottom line...
This is the email I received concerning my Version DSL account
Effective August 14, 2006, Verizon Online will stop charging the FUSF (Federal Universal Service Fund) recovery fee. We will stop being assessed the fee by our DSL network suppliers. Therefore, we will no longer be recovering this fee from our customers. The impact of the FUSF fee is as follows: for customers of Verizon Online with service up to 768Kbps, the fee eliminated is $1.25 a month; for customers of Verizon Online with service up to 1.5 Mbps or 3Mbps, the fee eliminated is $2.83 a month (based on current FUSF surcharge amounts). On your bill that includes charges for August 14, 2006 you will see either a partial FUSF Recovery Fee or no FUSF line item at all, depending on your bill cycle.
Starting August 26, 2006, Verizon Online will begin charging a Supplier Surcharge for all new DSL customers, existing customers with a DSL monthly or bundle package, and existing DSL annual plan customers at the time their current annual plan expires. This surcharge is not a government imposed fee or a tax; however, it is intended to help offset costs we incur from our network supplier in providing Verizon Online DSL service. The Supplier Surcharge will initially be set at $1.20 a month for Verizon Online DSL customers with service up to 768Kbps and $2.70 per month for customers with DSL service at higher speeds.
But i'm going to get a $0.05 discount on my tax now. Ohh wai tthe new charge isn't a tax is money right into their bottom line...
has anyone ever been on the "chat" with the comcast folks? sweet lord, it takes them forever. apparently "analyst is typing" means "analyst is really IM'ing with his fantasy baseball buddies while taking 15 minutes to type 'can i have your name and address please'."
(full disclosure I have Verizon)
dcist adam,
What I have never been able to figure out is that the first thing the digital recordings ask in all these systems is 'What's your telephone number?' Then when you talk to a customer service rep, it is the first thing they ask. What the hell? Can't they get the system to do that for them and then ask us questions to make sure we are the right person on the line? It would cut at least a minute off most calls (if not longer) and allow me to get through so much faster.
Which gets me to my biggest gripe, why the hell does Verizon shut down their call centers at 6 PM? I know we are all supposed to oppose outsourcing but I cannot spend an hour on hold at work. I just can't just to have them fix something that I am paying an arm and leg for.
Not to drag up an topic but this is related and interested reading. Seems all of us in the US get screwed: http://news.yahoo.com/s/pcworld/20060823/tc_pcworld/126729