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Telecom Rip-Off: The Hidden Fees in Your Wireless and Phone Bills

The telecom industry is squeezing more money out of customers without delivering any new or improved service.

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Federal fees are not the only charges subscribers are required to pay on their telecom services. In New York State, like all other states, a host of hidden taxes and fees are added to a subscriber’s bill. A subscriber is required to pay the Federal SLC that is a direct subsidy to the telcos. Even more scandalous, resident subscribers are required to pay a “New York State Gross Revenue Tax Surcharge.” The tax is described as follows:

This surcharge recovers telephone company expenses associated with mandated New York State Transportation and Transmission Corporation Franchise Taxes (Section 184 Tax) and Excise Taxes on Telecommunications Services (Section 186E Tax). This surcharge is not required by the Commission.

Basically, this “surcharge” is imposed on subscribes to cover the taxes that the telcos would traditional have to pay for revenue generated from the SLC. It is, in effect, a “pass-through tax,” meaning it is being charged to the company, e.g., Verizon, but the company gets to pass it directly to the customer. This is but one of the many pass-through taxes imposed to subsidies companies in New York and other states.

The USF adds 15 percent to the SLC as it’s considered an “interstate” transaction. Adding further insult to injury, state and local governments add taxes and surcharges onto the charge. So, in 2011, in New York City these charges added $8.72 to a telco subscriber’s bill.

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These are but a handful of the growing number of fees, taxes and surcharges that federal, state and local regulators are piling onto telecom subscribers’ wireline and wireless bills.

Cable subscribers are not currently subject to federal USF requirements. According to the industry trade association, the National Cable Television Association (NCTA), cable operators “do not separately offer telecommunications to end users, but rather only use telecommunications to provide cable modem service to end users.”

However, NCTA is in discussion with the FCC to find ways to “expand the contribution base” of the USF. To this end, subscribers who sign up for new cable digital packages will soon likely see new taxes and fees added to their bills. These charges will cover everything from broadband Internet, texting and VoIP services (such as Skype and Google Voice) to even “web based enterprises that place substantial burdens on networks” (i.e., movies) such as offered by Amazon, YouTube and Netflix. (By the way, NCTA’s head is none other than Michael Powell, Colin’s son and former head of the FCC under Pres. George Bush.)

The small, popular victory against Verizon’s convenience fee, like that against Bank of America’s debt card fee, is a valuable lesson. But truthfully, the $2 fee was really chump change when measured against the host of other fees, taxes and surcharges subscribers current pay and, most disturbing, will likely pay over the coming years.

Sadly, there has been little outrage from consumer groups, minority groups and other non-profit organizations against the mounting fees being imposed by the FCC and the Communications Trust. Part of the reason for this is the effective way the FCC and the trust have captured many of the leading non-profit groups. And this is most evident in NBP.

The FCC’s plan established the “Connect to Compete” initiative to increase broadband adoption in rural and disadvantaged communities. It pulled together a coalition of groups including the National Association for the Advancement of Colored People, League of United Latin American Citizens, National Council of La Raza, National Urban League and the National Association of the Deaf. The telecom trust has long cultivated moderate non-profits to create a false popular groundswell to influence regulatory and legal actions. This strategy was evident in AT&T’s failed effort to acquire T-Mobile and Comcast’s successful effort in 2010 to acquire NBC-Universal. (See " Shills R Us: Organizations That Get AT&T Cash Endorse its Mega-Merger with T-Mobile" and "The Comcast-NBC Merger & the Future of Internet Video.")

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