from the 'completely-fraudulent-surcharge' dept
In telecom policy circles, there’s an army of “experts” who twist themselves into pretzels trying to pretend U.S. telecom is a healthy, normal, vibrant market. Blinded by partisan loyalties, sector financial links, or ideologies embedded decades ago in grad school, they’re incapable of even acknowledging that Americans pay too much money for spotty, substandard service with historically terrible customer support. They’re even less likely to acknowledge the corruption, regulatory capture, and lack of competition that made this dysfunction possible. If it is acknowledged, it’s downplayed to a comical degree.
As in the Ma Bell days, at the heart of U.S. broadband dysfunction sits phone companies. Providers that have long refused to upgrade their aging DSL networks despite millions in taxpayer subsidies, yet lobby for state laws that ensure nobody else can deliver broadband in these neglected footprints either. These are companies that have a bizarre disdain for their paying customers, delivering the bare minimum (slow DSL) at the highest rates they can possibly charge without a full-scale consumer revolt. It’s not surprising, then, that many telco DSL customers are fleeing to cable, assuming they even have a second broadband option.
The poster child for U.S. telecom dysfunction is Frontier Communications. Frontier has repeatedly been busted in a series of scandals involving substandard service and the misuse of taxpayer money. Frontier-related graft and corruption in many states (like West Virginia) is so severe, state leaders have buried reports detailing the depth of the problem, and, until recently, a Frontier executive did double duty as a state representative without anybody in the state thinking that was a conflict of interest.
In many states, regulatory capture ensures that Frontier’s behavior never sees so much as a wrist slap. That was particularly noticeable when Frontier was recently busted charging users a $10 monthly “rental” fee for modems that the users owned. Frontier, like many big ISPs, has also been given free reign to impose all manner of additional sleazy and misleading fees, usually used to help broadband and TV providers falsely advertise a lower rate.
Even in states where consumer protection is a little tougher, the penalties aren’t routinely damaging enough to deter bad behavior. The latest case in point: Washington State Attorney General Bob Ferguson reached a settlement with Frontier last week (pdf) in which Frontier will pay a $900,000 fine for years of imposing bullshit fees on the company’s customers. One such fee, dubbed the “Internet Infrastructure Surcharge,” imposed an additional $4 monthly on user bills:
“Ferguson began investigating Frontier in 2018 after receiving more than 600 complaints and “focused on Frontier Northwest’s failure to adequately disclose fees during sales of cable, Internet and phone services since 2016,” Ferguson’s announcement said. “For example, the company charged as much as $3.99?nearly $50 per year?for an ‘Internet Infrastructure Surcharge,’ without adequately disclosing the surcharge in its advertising.”
Note that Frontier has 3,735,000 broadband subscribers, each paying $4 a month in completely erroneous surcharges. That’s nearly $15 million in bullshit charges in just one month, or $180 million in fraudulent revenue every year. While the $900,000 fine is semi-helpful, it’s far from a deterrent — especially considering that the ISP’s settlement with the state doesn’t require they stop charging the bullshit fee, just that they make it clear to consumers on their bill. $900,000 is chump change to these regional monopolies.
Keep in mind that Washington is one of the most “aggressive” states in the country at consumer protection, which admittedly isn’t saying much. Also keep in mind that this is just one ISP. Numerous ISPs routinely engage in this same or worse behavior, usually with absolutely no penalty whatsoever from state or federal regulators like the FCC. It’s the exact sort of behavior that’s only made possible by two things: a lack of competition in the broadband market, and feckless, captured regulators who are more worried about campaign contributions than outright fraud.
All ignored, in turn, but a laundry list of telecom policy experts who’ve made entire careers out of pretending that the US telecom sector is healthy and immensely innovative. In reality, the closest many of these companies get to innovation is in coming up with ethically dubious surcharges.