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Can't understand your phonebill, but you know that there's something very wrong with all those little charges? Do worry. You're not alone. But it does bring up a serious question --- When you add up all of the charges and all of the profits, and compare it to the Bell companies Annual Reports, the Bell companies have become some of the richest companies in America--- all from those pennies, nickels, dimes and quarters on customers phonebills.

How is it possible that the local phone monopolies, BellSouth, SBC, Verizon (GTE) and Qwest, which are supposed to be regulated companies , and are still monopolies, have become some of the most profitable companies in America? Using information published by the Business Week in their annual "Scoreboard" (2/26/01) and other sources, including Bell company annual reports a new study by New Networks Institute (NNI) "Bell Profits are Outrageous", has found that:

Overall Bell Profits Are 250+% Above America's Best Companies. The Business Week Corporate Scoreboard (2/26/01) ranked American companies for revenues and profits. The Bell companies had overall profit margins 170% above the Top 9 companies, 256% above the Business Week 500, and 212% above other Business Week "Utilities".

Top 9 includes: EXXON, GM, Ford, Enron, GE, Wal-Mart, IBM, AT&T, Citicorp.

The study's conclusion: Bell profits violate every state and federal "fair and reasonable" statute, from the Telecom Act of 1996, to virtually every state constitution, and the there should be an investigation into the excess profits. The Telecom Act of 1996 states:

"...Consumer Protection: The Commission and the States should ensure that universal service is available at rates that are just, reasonable, and affordable."

NNI estimates that the Bell companies (including GTE) are making some $17.1 billion over 'fair and reasonable' earnings---- about $200 dollars per household in 2000. This is made up of billions of pennies, nickels, dimes and quarters---- the charges on the customers' phonebills.

"The Bell companies are still monopolies. They control the wiring into customers' homes and offices and therefore have a captive customer base. Even competitors have to purchase services from them. Therefore, their profits are supposed to be "fair and reasonable".
However, with profit margins 250% above the Business Week 500 and over 200% above their utility brethren, the Bells are ripping off customers--- Big time," stated Bruce Kushnick, Executive Director of New Networks Institute.

Some of the other report findings:

  • Some Bell Products Have Profit Margins Approaching 50,000%. The
    Florida Public Service Commission found the profit margin on Bell South's Call Waiting
    feature was 48,680%. Caller ID, which costs the customer $7.50 per month,
    had a 3,264% profit margin.
  • Some states still charge for Touchtone service,which has no costs.
  • The Majority of Bell Profits Comes From Their Monopoly Customer,
    Not From Other Businesses. Bell South's "Wireline" and "Directory"
    business (for 2000) was 73% of the total revenue but over 92% of all profits.
    In fact, the Wireline and Directory business has paid for almost all of the other
    endeavors, including International sales.
  • Prices To Competitors For Use Of The Phone Networks Are Outrageous And Harmful To Competition. From Internet Providers offering DSL, to competitors trying to compete in local phone services, Bell practices and prices are anti-competitive.
  • Some Charges, such as Portability, are just rediculous. In New York, if you want to just keep your phone number when you move, it costs $558. plus $96. a month!

    "It is clear that the promise of the Telecom Act to lower prices through
    competition and deliver broadband services is still a mirage. The findings
    from this report indicates that the prices to competitors, from competitive
    local phone companies (CLECs) to Internet Providers are inflated.
    Competition can't and won't fix the problems. Ironically, competition is actually
    helping the Bells put competitors out of business,"

How did it Bell profits get this way?

In a related report "How the Bells Stole America's Digital Future": published byNetAction in 2000, NNI found that the Bells received massive financial incentives, known as state "alternate regulations", to rewire America with fiber-optics. By 2000 half of America was supposed to have a
fiber-based broadband connections, replacing the still in use copper wiring. None
of these plans were fulfilled, yet the Bells collected and continue to collect an
estimated $50 billion in excess fees.

    "It is ironic that there is bill in Congress, (HR1542), presented by Rep.
    Tauzin and Dingell, which is now seeking to give the Bells more money
    for broadband, totally disregarding the billions of dollars already
    collected in the name of broadband. Congress should be going after
    the obscene profits from past Bell broadband boondoggles, not coming
    up with creative ways to give the monopolies more money."

There are also a host of other customer and competitor issues this report brings up.

    • How many times was the copper network wiring written-off? More than once?
    • Are the Bells "cross-subsidizing" DSL using ratepayer funds to pay for their rollout?
    • Why do the profits claimed by the Bell never match the profits from Business Week?
    • Have customers been paying for the wiring of schools and libraries twice in some states?
    • Did Verizon Lie to The New York Times about its profits?
    • And how the hell can Verizon charge $558 plus $96 a month just to let the customer keep their phone number when they move in Manhattan, NY?

The report's conclusions: Congress, the FCC and the state commissions should immediately:

    • Explain how the Bells overall profits are 200+% above America's best companies.
    • Examine the charges to competitors for 'fair and reasonable".
    • Refund $200 per household for the year 2000 and investigate past overcharging, including monies collected for failed broadband service rollout.
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