V for Verizon? One Reporter's Telecom Vendetta
CNNâ€™s Allen Wastler recently dialed up pro-regulation rhetoric in a rant against Verizon (NYSE: VZ). â€śThese telecoms. Somebody ought to regulate them, huh?â€ť a nearly apoplectic Allen Wastler asked his colleagues as he began his August 26 tirade on â€śIn the Money.â€ť
Nowhere in his story did the CNN/Money.com editor mention the high cost government already imposes on phone customers with taxes and fees, or that the FCC voted recently to expand the reach of the â€śuniversal service feeâ€ť to voice-over-Internet and cell phone customers.
Wastler said that â€śonce upon a timeâ€ť the government required a â€śuniversal service feeâ€ť of DSL providers to finance rural telephone service that phone companies were reluctant to provide, but that the government stopped requiring the charge for DSL subscribers. Thatâ€™s misleading.
According to the FCC Web site, â€śall telecommunications companies that provide interstate telecommunications service contribute to the Universal Service Fund.â€ť While the FCC â€śdoes not require companies to recover their Universal Service contributions from their customer,â€ť â€śEach company makes a business decision about whether and how to assess charges to recover its Universal Service costs.â€ť
So whatâ€™s the problem? Well, Wastler complained that in lieu of a â€śuniversal service fee,â€ť Verizon is charging customers like him $2.70 a month in a â€śsupplier surcharge feeâ€ť at a â€ś13-cent savingsâ€ť over the universal service fee that was previously imposed. Wastler also savaged BellSouth (NYSE: BLS) for levying a â€śregulatory recovery fee because they have to deal with so many regulations.â€ť
A frustrated Wastler then exploded: â€śThey should deal with more as far as Iâ€™m thinking.â€ť â€śI got a brief glimpse of hope from down South,â€ť he added, noting that â€śa federal court in Atlantaâ€ť ruled that states â€ścan regulate telecoms for all those little extra charges and the fine print and stuff.â€ť
The business reporter later sniffed that if phone companies â€śweren't trying to stiff me out of money that belongs to me,â€ť they wouldnâ€™t have to deal with more regulation.
Yet nowhere in his story did Wastler consider how government taxes and regulations already â€śstiffâ€ť the consumer or how more government involvement in fee structures could hike consumersâ€™ costs.
A study by economists Thomas M. Lenard and Brent D. Mast said â€śthe typical wireless user faces a total tax rate (federal, state and local) of over 14 percent on wireless services,â€ť consumeraffairs.com reported in October 2003. Whatâ€™s more, New York state, where Wastler films â€śIn the Money,â€ť had the highest state excise tax on telephone service, according to the consumer news Web site.
And the tax bite has only gotten larger, reaching 17 percent in 2005, â€śan increase of three percentage points more than in 2003,â€ť Steve Largent, a wireless phone trade groupâ€™s president, noted in March 2005.
Whatâ€™s more, in June the FCC approved regulatory changes that should make it even harder for consumers to escape charges. It voted unanimously â€śto require all voice over Internet Protocol services that connect to the public-switched telephone networkâ€ť to pay into the Universal Service Fund, CNetNews.comâ€™s Anne Broache reported on June 21.
â€śThe same FCC order would also raise the share that cell phone providers must contribute to the pool,â€ť she added, which could impact consumers.