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Phone Companies' $100 Billion Rip-off -- Where Is That Hidden $6 a Month Going in Our Phone Bills?

The phone companies are soaking all of us for a good chunk of money every month, and they're allowed to conceal it in the fine print of your monthly bill.

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Adding insult to injury, New York wireline customers, for example, pay over 30 percent for an assortment of taxes, including the Universal Service Fund set at 15.2 percent.   

As phone bill fees have steadily gone up, the cost of offering service has dropped - and, over the last two decades, the telecom companies have become enormously profitable.  First, they cut employees-per-line costs by an estimated 65 percent and, over most of the last decade, they cut new construction costs by half.  Second, since 1991, the original phone networks that were given to the Bell companies have been written-off and these companies continue to write-off more new construction than they replace.   

The telecom's profitability is not simply an example of gouging the customer, but has social consequence: it is harming the economy. Excess profits are one of the reasons that the U.S.'s high-speed broadband and wireless services are inferior to that of the other developed countries.   

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The FCC adopted the SLC fee through the CALLS process, a very dubious procedure.  At the time, former FCC commissioner Harold Furchtgott-Roth raised serious questions about the proceedings under which the charges were accepted.  As he wrote in his dissent: 

    In the early part of [2000], [the FCC] held a series of meetings with a select group of some - but by no means all - of the parties with interests in this proceeding. And a number of parties with interests in the outcome of this proceeding, including the Ad Hoc Telecommunications Users Committee, Time Warner Telecom, and the Association for Local Telecommunications Services,  (ALTS, the competitive carrier association) were not allowed to participate. 

    [I]t is undeniable that the [SLC] proposal was a product of the negotiations that took place between the Commission and those parties that were allowed to participate in the negotiations - that is, members of the Coalition and some groups that purport to represent the interests of residential and small-business consumers. 

Commissioner Furchtgott-Roth's suspicions only get darker when assessed against the FCC's assurance that it would initiate and complete before July 1, 2002, a cost review to ensure that consumers were not overpaying for their telecom services.  In 2002, FCC Commissioner Michael Copps identified the inherent problems associated with the SLC:  

    I am troubled that consumers will face an increase in the line charge of their local bill without the Commission undertaking a thorough analysis of forward-looking cost data.    The Commission [has] failed to conduct its own independent analysis of the cost data. By failing to undertake the thorough analysis of cost data that was promised in the access reform order, we are neglecting our obligation to consumers.  

Now, a decade later, the FCC has yet to conduct a cost review and the telecom companies have continued to pocket billions of dollars. Rumors are circulating that, under the FCC's new National Broadband Plan, the SLC fee will rise to $10.00 a month. 

Next time you open your phone bill, check out the list of taxes and surcharges you pay every month.  Ask yourself two questions: What are these charges for and why do I continue to pay them?  If you feel ripped-off, focus your anger at the telecom companies, the regulators and the paid shills who promote corporate interest as the public good.   

In a time of economic crisis, consumer interests should take priority over those of unearned corporate profits.  And to meet the public good, telecommunications companies should once again become public utilities.   

[Note: New Networks and Teletruth have filed multiple complaints pertaining to truth-in-billing violations of the FCC Line Charge:

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