Phone Companies Bill Public for Nonexistent Equipment

Srinivasan Ramakrishnan writes "Forbes has an eye-opening article on the scam that lets the Bells scoop $5 billion every year from the consumer with the sanction of the FCC. The FCC Line charge that appears on every phone bill is a vestige of a deal that was struck by the FCC with the Bells. The deal was touted by the FCC as a historic win that saved $3.2 Billion a year for the consumer - Forbes takes a closer look at the deal."

Comments

Nationalize local phone access!

[autopr0n]

Or, something. I mean seriously, when was the last time you heard about one of these companies actually offering anything beneficial to anyone? They seem to only exist as local monopolies and to rip off the consumer and limit choice every time they get.

If you ask me, any kind of 'infrastructure' system should be run by the government, like the highway system, and companies should only be allowed access to things they can't have exclusive control over.

Re:Nationalize local phone access!

[AvitarX]

"Yeah. So when was the last time the government did anything efficiently or cost-effectively?"

This moring I sent a letter to the middle of nowhere over 1000 miles away for under 40 cents.

Does that count?

Re:Nationalize local phone access!

[Bluesman]

One thing we don't realize is that the cost really doesn't change much. It just changes forms. Your taxes hid a lot of the cost before, now there is more direct cost to send mail.

The reason it really sucks is that when the U.S. government, for example, privatized the post office, there was no corresponding tax cut. ("Hey, my $5 post office tax went down...") They just spend it on something else.

In theory, privatizing the post office should have little to no effect on price, but in reality, government spending insures we'll never see the money that previously went to the post office.

Itemized taxation and making people pay a tax bill every year, instead of deductions from pay each month, are the answer.

Re:Nationalize local phone access!

[Reziac]

Oh yeah, just like property taxes... so you get hit with a bill for thousands of dollars every year, that too many people wouldn't have sense enough to save up for. (Check the delinquent property tax rolls in your county to see how large that number really is.) Imagine getting hit with an income tax bill for $10,000 or so... that's why we have withholding, so people don't wind up in debt to pay their taxes, even if thru lack of foresight.

Tho I wonder how much interest the IRS makes on withholding tax even before they have to refund most of it to average taxpayers. We could just as well be making that ourselves with forced savings deposits from every paycheck, except then they'd raise our taxes to make up their budget loss, and tax us on the interest income from the savings accounts...

Re:Nationalize local phone access!

[Cpt_Kirks]

You're hitting all around it, but still missing the point.

If people got hit with *HUGE* tax bills, say around the end of October, the income tax would either go away or be largely reduced.

Convenience is the enemy of tax reform. Nothing radically changes unless many people get very pissed off.

Hmmm...

[superdan2k]

Sounds vaguely like what I suspect will happen here in Minnesota with other stuff. Right now, we have a pretty large ($4 billion) deficit, and a lot of programs are getting cut. Roads are a problem here because of the huge amounts of population growth we've had in the last 20 years... Right now, our state legislature is talking about allowing private companies to add additional lanes to existing roads and then charge money to use those lanes so that they can recoup the cost of building them, plus make a "reasonable profit", after which time, the cost of using those lanes would be reduced. I heard about this on the news last night, and the first thing I thought of was the telecomms and all the extra bullshit they tack onto our bills.

You and I both know that the cost of using those lanes would NEVER go down. They'll always find a way to charge more for what they've built, simply because people become so adjusted to things (like telephones) that they become a "necessity" instead of a "luxury" and people pay them blindly for the service. Look at cable TV -- how many of the channels you get in your huge bundle do you actually watch?

Monopoly

[whig]

The problem, fundamentally, is the local loop monopoly.

I'm no advocate of government regulation, but in economic terms, there is only one workable solution to prevent this sort of abuse. If the FCC and state regulators would get out of the way and let communities implement this, the cost and quality of phone service would improve to accurately reflect a competitive market value.

1. The community should purchase the network: all the last mile copper and rights of way should be owned by the commons and not monopolized by any private entity.

2. Any company (including the Baby Bells) can bid to rent the use of the network for the provision of any service (dialtone, DSL, etc.) to any customer. These rents should be for a term that allows for regular adjustment as the market changes.

With this approach, the Baby Bells would be in a good position to maintain a dominant market position in the near term, but not a monopoly which they can abuse. And if other firms can enter the market and do a better job of providing value to consumers and businesses, they will take market share away from the Bells.