Dear LA County: Investigate the Real Shockeroo; America’s Egregious Broadband Rates vs the EU 27 Prices.

Read: First lA County Open Letter

The prices for communications and information services, including everything from broadband and internet to wireless and even basic phone service, are out of control and this is the primary reason given by households as to why they don’t go online and thus this is one of the primary causes of the Digital Divide. But there is nothing to indicate that LA County and/or the state of California will properly address this issue.

Anyone who wants a real shockeroo about America’s egregious prices has only to compare our high-speed broadband internet and wireless rates with the rest of the world.

The Triple Play vs 3 strikes, you’re out.

How can America’s prices for the stand-alone, double and triple play — (phone, cable TV and ISP-broadband) be 5–10 times more when comparing data from other countries, as highlighted in the European Union Commission’s recent report, published July 2022 for the year 2021? And, as the report details, even basic stand-alone high speed broadband prices overseas are a fraction of what we’re paying in the US. (We rounded the numbers.)

  • America’s “Double play” — high speed broadband and phone service — is being overcharged, on average, almost $75 a month — a whopping $900 a year.
  • The “Triple play” is being overcharged by $180 a month on average; this comes to overcharged, over $2,200 for the triple play.

The current triple play in America, after the promotional prices end, is now around $220.00 a month, yet overseas, the average was around $35 a month. However, in some countries, it can be as low as $23.00 for 200 Mbps or more; only $15 for the double play.

And this is an enormous amount of overcharging of all households that have broadband and/or the triple play.

According to the EU report, we’ve even been beaten out by Bulgaria, Romania and let’s not forget Slovakia:

But when the EU report says prices are “attractive”, we are talking $10–12 bucks a month for stand-alone broadband and $20–23 for the triple play, with speed of 200 Mbps or more.

NOTE: The dollar and the euro are almost even in value; so, in the numbers we are using, the euro is almost identical to what it would cost in dollars.

NOTE: Bulgaria does get Netflix and their Top 10 shows are close to America’s viewing.

Affordability is at the top of the list for why households are not online.

Full stop. The first step of fixing the Digital Divide is to make prices affordable and there is nothing in any of the government’s plans that is going to fix this. If America’s prices were at this lower level for broadband, one of the largest issues surrounding a lack of broadband — a lack of affordable broadband — would go away.

This chart details a survey done by LA County pertaining to the lack of internet connectivity. “Too expensive” is by far the largest reason that homes are unserved or underserved.

How is it possible that America’s Triple Play is $150-$200 a month over what is being charged overseas? That’s over $2,200.00 a year ‘extra’ being charged to families — including low-income families and fixed income seniors. This is on top of the fact that there could be only one or no providers of high-speed services in the rural regions or in low-income neighborhoods of cities.

It would be one thing if it was a small differential between the overseas EU group and others price of service, but this is a difference that is too large to be ignored.

But, what we quote are averages of the advertised prices, or a nationwide collection of communications bills. An op-ed in the Benton Foundation titled What’s wrong with LA’s internet? throws more disturbing details about what is really happening on the ground.

America’s Wireless Prices Are Out of Control as Compared to the Rest of the World.

We wrote a summary of the wireless expenses detailed by Rewheel Research for the second quarter, 2021 and they found that overseas, customers can get 100 Gigs for a fraction of the costs we pay in America. The Rewheel Research survey of wireless services, including the ‘lowest cost for wireless’ from around the world, presents some disturbing facts.

At the time, the Euro was ranging from $1.15 to $1.12 dollars. As we pointed out, as of November, 2022, the Euro is now trading as even with the US dollar.

The article also detailed that Spectrum cable, which is reselling Verizon Wireless, was offering a plan for $14.00 per Gig — and while there are different plans, with bundles, etc, in the end, there are few plans supplying 100GB in the US. But overall, with the cost differential — $.08 or $.09 cents as compared to $14.00 — this is as egregious as it can get.

Wireless Overcharging: Jn 2021 we estimated that there is a range for larger plans where customers are being overcharged $30-$75 a month, $360-$900 per phone, a year, per household; it can even be overcharging the overall wireless account, or even per phone, depending on which service is being used.

There are plans in LA County to put in wireless to solve the Digital Divide, mostly in low-income areas, but there is no plan to investigate why America’s wireless prices are out of control as compared to overseas.

Our new book, Violations & Egregious Acts was written, in part, to reveal the multiple subplots of how Big Telecom and Big Cable were able take over America’s communications agenda for their Corporate Interests and how the government failed to halt or even understand the various ways we’ve been deregulated and overcharged,

Let’s discuss some of the underlying issues, the subplots that most don’t see.

No Serious Competition to keep market forces and rate increases at bay. First, AT&T et al. failed to show up with high-speed competition to keep the cable companies, the other group of providers that use a wired connection, in check. As we detailed in the first open letter, in CA, AT&T-Pac Bell had obligations to bring fiber optic broadband throughout the state and our maps showed that much of AT&T’s entire LA region had been left to deteriorate and not upgraded as promised with fiber optic infrastructure.

Made-up Fees and surcharges are out of control. — One of the sleaziest practices in the US has become the addition of made-up taxes, fees and surcharges that are not mandated or government sanctioned. This is being done so that the companies can quote a price that is missing 20–40% of the total costs,

Made-Up Taxes, Fees, Surcharges

  • Broadcast and Sports surcharge: $15–24.00 a month
  • Cost Recovery Fee: 1.99–2.99
  • Admin Fees: $1.49-$2.99 per month
  • Pass-through taxes, Gross receipts tax, telecom taxes

The largest and most egregious added fee is now the Sports and Broadcast surcharge, which is really 2 separate charges that have been merged in many cases.

Made-up, Broadcast-Sports Fees Up 820%; Overcharging $250+ a Year — then Quintuple-Taxed, Fee’d and Surcharged.” — This article was written in December 2021, and along the way there have been increases bringing the total charge on the Spectrum NY June 2022 bill to $23.70 — a month.

This one fee on the Spectrum NY Triple play bill is more than the entire charges for a triple play in many overseas EU countries.

  • Quadruple Taxed, Fee’d and Surcharged. — If the increases to this one fee is not enough, there are made-up taxes, fees and surcharges being applied to this fee as it is considered ‘revenue’ to the company and is taxed as such. And some of these surcharges are actually tax pass-throughs where the company gets to have the customer pay the company’s taxes.
  • It is impossible to calculate the exact tax assessment as there is no ‘Rosetta Stone’ to be able to unravel how each tax, fee and surcharge is applied.

But, considering that basic telecom taxes can be 12–20% depending on the city and state, if a 15% tax is applied, that would add an additional $3.55 more per month.

  • Not included in the advertised price: To add irony to obfuscation, this fee is never included in the advertised rates, nor is it added completely in the promotional price, making the increases after the promotion even more egregious.
  • Not included in the EU statistics for the US Triple Play, etc. — Ironically, the EU informed us that they do not include the extra charges and fees in the US because — well, the other countries only have a VAT (Value Added Tax), and not the made-up fees.
  • No Oversight, No Audits; Regulators Failed US. — The idea that a state-franchised cable service or the Holding Companies that control the state telecommunications public utility can just make up fees and add them to bills with no one asking for a cost analysis or some other justification to raise this make-believe charge, should have the peanut gallery screaming.
  • Public has Amnesia — No one knows who these local telecom companies are or what they’ve been able to get away with. And virtually no one could answer basic questions about who the companies are or the services they offer.
  • Let’s give government subsidies to keep America in a perpetual state of “Please Sir May I have another?”. Currently there are subsidies being given to low-income families to go online, which are then handed over to the same companies that hae caused this Divide in the first place; i.e.; a new flavor of Corporate Welfare. We will address these issues in an upcoming story.

The Real Subplot: The Telecom Holding Companies that control the critical infrastructure wires, towers and antennas created the Digital Divide. They also control the pricing of all services, wireline, wireless, broadband, internet and even cable, and as we will discuss, they also were able to manipulate the accounting formulas to have the state telecom utility act as a cash machine to fund, illegally, the other lines of business.

America must go after these cooked books and must clean up the mess. There is plenty of money to get America upgraded, and it must be seen as the first step in LA County to clean up the mess and decades of public policy and regulatory issues.

In Sum: Government subsidies, both state and federal, to companies who have created the Digital Divide and can control the prices and profits over the public utility wires needs, immediate investigations in LA County — not more gifts of largesse.

And is it “overcharging” if you’re paying $75 a month more for your broadband connection to watch Netflix, — over $900 a year more than countries oversas? Would the Digital Divide be solved if the rates matched the EU and the costs for a wireline broadband connection cost only $10–15 bucks a month, and your cell phone for 100 GB less than $10 bucks?

Violations & Egregious Acts: You can fool all of the people all of the time… until they know the truth. IRREGULATORS

Next up: LA County, Part 3: Investigate the Underbelly: One of the Largest Accounting Scandals in American History goes unchallenged.

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Bruce Kushnick

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 40 years, and I have been playing the piano for 65 years.