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.

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.