Entry for February 07, 2007

A chart from Teletruth‘s February 7 report “AT&T and MCI-Verizon Harvesting prepared by Bruce Kushnick (bio, email) Executive Director of New Networks Institute founded in 1992 to examine the breakup of AT&T and Tom Allibone (bio, emaill), President of LTC Consulting, a phone bill auditing service. Teletruth began in 2002 as a national advocacy group for telecom and broadband customers.

The above chart from Teletruth shows that while the FCC claims that long distance service went from $.09 in 2000 to $.06 in 2004, AT&T’s basic rate increases went from $.19 in 2000 to $.42, excluding increases to Minimum Usage, Single Bill Fee, Cost Recovery fee and questionable charges.

On February 1, the Senate Committee on Commerce, Science and Transportationchaired by Daniel K. Inouye (d-HI), heard from the five FCC Commissioners in a hearing , “Assessing the Communications Marketplace: A View from the FCC,” (webcast–requires Real Time Player)

In his opening statement Inouye said,

In three years we have seen the mergers of the two largest Bell companies with the two largest long-distance companies. This was immediately followed by AT&T’s acquisition of BellSouth. Meanwhile, technology has fueled change, and single-purpose networks have given way to new multi-purpose platforms that can support all measures of applications and services, including voice, video, and email services.

But the communications revolution does not come without risk. As public servants, both here in Congress and on the Commission, we must be vigilant in our oversight to ensure that the communications industry evolves in a manner that does not harm consumers.

Consumers must have confidence that dialing 911 means getting emergency help whether that call is made over a traditional phone line, a wireless phone, or a Voice-over-Internet-Protocol service. They must be confident that their private, personal information will be protected from abuse. Further, consumers should be assured of evenhandedness from network operators so that consumers reap the full benefits of competition.

In reviewing the testimony, commissioners concentrate on new media, such as roadband and cell phones, not on landline telecom, despite Inouye’s mention of the mergers. According to the FCC’s AT&T-SBC merger order:

Harvesting refers to AT&T’s increasing price increases to encourage customers to discontinue service.

In 2001, AT&T and MCI had 62% of households using their long distance service. The Teletruth’s report reveals that the new-AT&T and MCI-Verizon are intentionally harvesting customers and asks

Is it collusion and is it being done with the FCC’s permission?

In his prepared remarks at the Phoenix Center US Telecoms 2006 Symposium December 6, 2006, FCC Chairman Martin claims price of telephone service is falling:

Since 1996 the prices of every other communications service have declined while cable rates have risen year after year after year.

Teletruth’s report, based on actual phone bills, phone company tariffs and FCC data reveals that while the mergers of AT&T with SBC, and MCI with Verizon were supposed to make the new companies strong competitors, the 30-40 million customers who have stayed with their original providers, especially seniors and low volume customers, have suffered increases for long distance of 200%+ since 2000, and millions are paying $.50-$1.00 a minute.• “Basic” long distance rate for AT&T is $.42 a minute (day rate) and does not include increases or new fees: Minimum Usage, Monthly Fee, Cost Recovery, Single Bill Fee, In-state Connection fees and increases to the Universal Service Fund since 2000.

In a March 30, 200o letter to the FCC, AT&T, had made commitments in 2000 to supply long distance service basic service at $.19 for a year with no monthly fees or minimums for five years.

The FCC knew that these companies were not going to compete in the consumer market. AT&T would not take on MCI, and SBC and Verizon were not going to enter each other’s markets, even though Verizon and SBC had made prior commitments to compete.

The report adds,

Both SBC and AT&T as well as the FCC knew that AT&T’s basic rate customers
were mainly seniors and low volume users who were loyal customers who didn’t
shop around, don’t have a lot of options, and couldn’t read their phone bills.

Teleturth’s report, however shows the following:

  • The FCC’s data addresses only “high-volume” users, and provides no accurate information about the effect of rate increases on low volume users, including seniors. Additionally, the FCC no longer collects accurate data and gives out ‘astroturf’ groups’ information as “accurate” sources.
  • No brand names are selling stand alone local or long distance
    competitive service. VOIP (Voice Internet Protical) requires broadband, and packages require the purchase of two or more services. Worse the advertised price can leave out 35%-45% of the actual costs, or the companies’ prices are a ‘gimme’, a soon-to-leave
    promotional price.
  • Wireless is also not a competitive option for low volume customers.
  • Post merger, AT&T and Verizon let each Bell rule their own territories without competition and raise rates for local and long distance service to drive customers into more expensive packages.
  • AT&T is playing loyalty and name
    -brand recognition.

Teletruth has the following recommendations:
• Congress should immediately investigate what happened to AT&T and MCI customers.
• Congress should immediately investigate the failure of the FCC to collect accurate data to be used to make clearheaded policies.
• The Court should break up the AT&T-SBC, Verizon-MCI mergers.

Maybe it’s time to write the FTC Commissioners (listed above) and the members of the Commerce Committee?

For more about Teletruth’s phone bill work see: http://www.newnetworks.com/phonebillissues.htm

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