How Big Phone and Internet Companies Pull the Wool Over Your Eyes

posted on December 30, 2009

From the beginning, phone companies (and you know who they are) have assessed charges to their clients large and small with very little if any information being provided to the customer. In fact, they are very crafty about it, and most companies and individuals don’t even know what they are paying for. If you’ve been searching for a better long distance rate or broadband service, we’d like you to be fully informed before you buy.
 
Here are the top tricks Big Phone and Internet don’t want you to know.
 
The Billing Increment
Big Phone and Internet (BPI) round up charges for long distance, so if you are paying a $.05 rate, the effective charge for many calls will actually be much higher. For example, if made a call that lasted a minute and 5 seconds, you’ll pay either 1 minute and 30 seconds or 2 minutes. This practice allows BPI to increase revenue at your expense by 50-95 %!
 
The Invoice Format
Have you ever noticed how difficult the billing statements are to read? This is by design. Phone companies design and implement their own custom billing systems so they have total control over the format and presentation of the bill. Making their invoices complex helps reduce scrutiny and allows them to run roughshod over your pocketbook.
 
Fees and Taxes
Although surcharges have been around for a while, they have been growing and more consumers are complaining that such fees have become a back door way for phone companies to raise prices while keeping advertised rates low.
 
If you think the “FCC Subscriber Line Charge” (SLC) goes for funding the FCC, think again. Local telephone companies assess the SLC to recover interstate costs associated with the local loop that are not recovered elsewhere. Sounds reasonable, but here’s the problem. Since 1999 the
FCC Line Charge has increased from $3.50 to $6.50 In fact, based on estimates of what an efficient company’s “line charges” should cost customers, the current FCC Line Charge should be reduced by almost 85%, not increased to $9.00.
 
The FCC Line Charge has Federal, state and local, Universal Service Fund charges, and ‘surcharges’ applied, adding between 27% and 18% to the bill. In effect, this is a quadruple tax! Phone companies even add the “Spanish American War Tax” (known as the Federal Excise Tax) that was originally added to phone bills in 1898 to fund the war and was never removed.
 
The taxes and surcharges on Verizon packages adds 36% to the total advertised price. Another example is the cost of call waiting is less than a penny, yet the companies charge retail of $4.00 — $5.30 a month. “Property tax allotment” charge, for instance, is nothing more than the property taxes that the carrier pays. The “carrier cost recovery fee” is a catch-all for many kinds of operating expenses; the “single bill fee” charges subscribers who want a single bill for wireless and land line phone service.
 
A Dirty Little Secret
Speaking of extraneous charges, here’s another one the large companies don’t want you to know about. Texas allows a tax break for internet connectivity of up to $25.00 a month per customer, (Senate Bill 441) but Big Phone and Internet don’t pass this on to you. Instead they ignore it and pocket the money.
 
Intentionally Bad Customer Service
Why do you suppose BPI has such lousy customer service? If you think they simply don’t know how to improve, I’ve got some swampland to sell you. They deliberately make customer service difficult because they know that the majority of people will simply get frustrated and give up. Over time, this is less expensive then actually solving customer problems. For example, have you ever talked to the same person twice at Big Phone?
 
It certainly doesn’t happen often, and in most cases, customers get rerouted all over the place (maybe even India) depending on the time and number of calls that they’re fielding. The problem is, that you are rarely going to talk to someone that is familiar enough with your account to have some background and you end up explaining your issues over and over again. For most callers, this alone is enough to simply give up. This is why it is important to have someone review your phone bill and see if something can be done about it with relatively little pain. You might be surprised at how much money you’re throwing away.
 
It may seem like you have no choice but to pay BPI – but there are a number of ways you can cut your phone and Internet bills.
 
Choose an unlimited plan
 
Most company’s offer unlimited calling plans that include broadband, cellular and data for one price (be sure to figure in all the charges, taxes and other monetary puffery to get a true total fee).
 
Try an alternative provider
BPI isn’t the only game in town. There are resellers, like PrismNet, that do business completely differently than Big Phone and Internet – usually eliminating fees and taxes (except sales tax) and offering flat rate bundles and far better customer support.
 
Go VOIP
Voice over Internet Protocol transmits calls over the Internet. Recent technological breakthroughs have solved many of the sound quality and reliability issues of early VOIP, making this option a viable option for business telecom.

Author: Chris Bombela

Categories: B2B, Business, Commercial Real Estate, Computer Networking, Consulting, Entrepreneur, Information Technology Services, Internet, Management, Technology, Telecommunications