Is your phone company shaking you down in Uncle Sam's name?
Remember when you signed the contract for your business phone service or broadband Internet service? Remember how you were promised a certain price for the service you used over the course of the contract? Remember how you checked it the first couple invoice cycles and decided you were getting what you promised?
What about the "taxes" and "surcharges"?
Many business phone and Internet customers think there's nothing to be done about the "taxes" that are on their business phone bills or wide area data network invoices. And that's exactly what the phone and Internet companies want you to think.
If you call the customer service department of your phone company and ask them to explain all your "taxes and fees" you'll likely be left with the impression that your humble phone company is nothing more than the middle man collecting all those fees and then remitting all those fees to the government.
But are they?
Is more than 10% of your total phone bill needless "junk fees" that the phone company is keeping?
How do you know? You need to ask an
Pull out your most recent phone or Internet bill and come up with the total for all the usage, equipment and "line charges" you contracted for in your signed agreement. Everything else is "taxes, fees and surchrges" that are likely not mentioned in your signed agreement.
If "everything else" is less than 15% of your total then you're most likely doing OK. If the total "junk" is more than 15% then you need to ask your provider some hard questions like:
1. What's a "high cost area", "PIC-C" or "non-RBOC" fee?
2. Which of these surcharges or fees are not mandated by some government entity?
3. For each tax, fee or surcharge, what percentage is passed onto the government?
4. Of the fees or surcharges that you retain for "overhead", which were detailed in my agreement?
5. Does your tariff state you can add any fee or surcharge you want even in the middle of my term agreement?
The "Real" Taxes
What are the "real" taxes that you really can't get out of paying? Following are the top three. Click here for the FCC's explaination of what you really have to pay.
1. The Universal Service Fund or USF - Click here to read the Wikipedia explanation of this non-usage charge on your phone bill. Click here to view the FCC page that stipulates what this charge will be on your phone bill. A decade ago this non-usage fee was under 6% of your total phone bill. Today it's a 14.9% tax charged against your interstate and international usage. (But not your intrastate usage).
2. Federal Excise Tax - Click here to read a Wikipedia history of this tax. It used to be 3% of your interstate. It's been repealed for interstate usage on your long distance phone bill. (Many phone providers replaced this mandatory tax with their own non-mandatory surcharge.)
3. State and Local Taxes - Same state and local governments add a lot to your phone and data bills while others add very little. To know what's stipulated in your state, you need to consult your state's Public Utilities Commission web site. Click here to see what's applicable in California. Click here to find your state's public utility web site.
Up to 10% or more of your phone or data bill might be non-usage "junk fees" that you can argue away or avoid paying by switching phone or data providers.
It's not that unusual for upwards of 30% or more of a phone bill to be "taxes, surcharges and fees" when the business next to you, with almost the same exact service, is only paying 15%.
Where Do You Start? Talk to an Independent Telecom Agent
If you want to do all the homework yourself, click here for the FCC's explaination of all the non-usage phone charges on your phone bill and then look at your own state and local government's charges.
The best way to get rid of the most junk fees with the minimum of aggravation, especially if you have to switch carriers to do it, is to use a professional telecom agent. The sales and customer service people employed by your carrier are powerless to change the junk fees. They'll say, "There's nothing to be done."
A competent independent telecom agent will let you know which carriers will waive or junk lower fees to get a good account. The agent will also let you know if it's worth the risk to switch to another carrier you may not have heard of in order to avoid fees.
Finally, a good telecom agent will also introduce you to the "VoIP" carriers that may not charge any of the same regulatory fees that the older local phone carriers feel compelled to pass on the the customer. Many of the newer VoIP business phone service providers have engineered their networks to avoid having to charge their business phone customers these fees.
Which new phone or VoIP carriers should you take a look at? Your local independent telecom agent will know.
I've personally worked with the following very respected telecom service providers that intimately understand how to compete in the area of taxes, fees and surcharges. I've sent them copies of very large, multi-location customer phone bills and they've been able quickly show what fees are minimally required by law and which are pure junk. When needed, to win the right business, these companies will produce a "no junk fees" proposal. Give them a call and say, "Dan said you're not crooks!"
I'm sure there are many other phone providers that will come squeaky clean on their junk taxes. I'll add their names to this list when someone I trust vouches for them with me.
Verizon Pays $93.5 Million to U.S. to End Overcharging Case Business Week It will be interesting to see if the US Justice Department accords the same courtesy to non-governmental phone contracts.
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Your Next Step?
Call us at 951-251-5155. We'll get the "junk" out of your technology invoices.
This BPN013 blog post is copyright protected by Telecom Association.