Why Your Phone Bill Keeps Increasing -- And The Information You Need To Stop The Bleeding

You may be under the impression that the relationship between the telecommunications industry and its regulators is tough-minded and adversarial. The truth, however, is the relationship between the regulators and the regulated can sometimes get downright cozy.

There’s empathy. Understanding. And a soft-hearted desire to lend a helping hand when a corporate behemoth hits a rocky patch by increasing prices on consumers and businesses. To see how this works, let’s look at the relationship between Verizon’s New York subsidiary and the New York State Public Service Commission. There’s a long and mind-numbing history of Verizon requesting and receiving rate increases. You might have expected state regulators to deny Verizon’s tariff revision request with the Federal Communications Commission in July 2006. Instead, the commission offered a compromise. In order to justify allowing a ten-percent rate increase for services to businesses, the commission cited Verizon’s reportedly precarious financial health. The practice of relying on Verizon’s assertions about the critical condition of its New York business to justify rate increases for both residential and business customers would become a hallmark of the commission’s response to a stream of Verizon requests to increase its charges. An investigation into the circumstances surrounding the deterioration of Fire Island’s phone system after Hurricane Sandy could cause real problems for Verizon. In a filing with the commission, public interest groups in New York assert that Verizon was contriving to transfer customers from the wireline to the wireless division by asking the New York Public Service Commission to provide terms under which the company could discontinue landline service to the resort community, when the company proposed to replace the copper wireline with a wireless service called Voice Link.

Bruce Kushnick, Executive Director of New Networks, an advocacy group that has just published a new report on the issues of cross subsidies between Verizon’s wireline and wireless businesses, said Verizon could do more to counter the civic groups’ allegations of “systematic and long-term diversion of monies needed for copper system maintenance to the FIOS system” by releasing the data of its expenditures for wireline maintenance and records that showed the source of funding for wireless network buildouts. “But Verizon isn’t going to release the data,” Kushnick predicted. “My feeling is if we had this data, it could lead to a divestiture”—the wireline company would separate from the wireless company once and for all. For the public, a divestiture could put the kibosh on rate increases and lead to lower bills overall. But the chances of that happening, realistically, seem slim.