V for Verizon? One Reporter's Telecom Vendetta
CNNâs Allen Wastler recently dialed up pro-regulation rhetoric in a rant against Verizon (NYSE: VZ). âThese telecoms. Somebody ought to regulate them, huh?â a nearly apoplectic Allen Wastler asked his colleagues as he began his August 26 tirade on âIn the Money.â
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 âuniversal service feeâ to voice-over-Internet and cell phone customers.
Wastler said that âonce upon a timeâ the government required a âuniversal service feeâ 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. Thatâs misleading.
According to the FCC Web site, âall telecommunications companies that provide interstate telecommunications service contribute to the Universal Service Fund.â While the FCC âdoes not require companies to recover their Universal Service contributions from their customer,â âEach company makes a business decision about whether and how to assess charges to recover its Universal Service costs.â
So whatâs the problem? Well, Wastler complained that in lieu of a âuniversal service fee,â Verizon is charging customers like him $2.70 a month in a âsupplier surcharge feeâ at a â13-cent savingsâ over the universal service fee that was previously imposed. Wastler also savaged BellSouth (NYSE: BLS) for levying a âregulatory recovery fee because they have to deal with so many regulations.â
A frustrated Wastler then exploded: âThey should deal with more as far as Iâm thinking.â âI got a brief glimpse of hope from down South,â he added, noting that âa federal court in Atlantaâ ruled that states âcan regulate telecoms for all those little extra charges and the fine print and stuff.â
The business reporter later sniffed that if phone companies âweren't trying to stiff me out of money that belongs to me,â they wouldnât have to deal with more regulation.
Yet nowhere in his story did Wastler consider how government taxes and regulations already âstiffâ 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 âthe typical wireless user faces a total tax rate (federal, state and local) of over 14 percent on wireless services,â consumeraffairs.com reported in October 2003. Whatâs more, New York state, where Wastler films âIn the Money,â 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, âan increase of three percentage points more than in 2003,â Steve Largent, a wireless phone trade groupâs president, noted in March 2005.
Whatâs more, in June the FCC approved regulatory changes that should make it even harder for consumers to escape charges. It voted unanimously âto require all voice over Internet Protocol services that connect to the public-switched telephone networkâ to pay into the Universal Service Fund, CNetNews.comâs Anne Broache reported on June 21.
âThe same FCC order would also raise the share that cell phone providers must contribute to the pool,â she added, which could impact consumers.