Phone companies overcharging by $75 billion, Consumer group says

Phone overcharging, Consumer Federation.

Phone companies overcharging, Consumer Federation says.

 

Taking on one of the most pressing issues facing the current Federal Communications Commission, the Consumer Federation of America  Tuesday released a study that estimates that large incumbent telephone companies such as AT&T and Verizon have engaged in abusive pricing practices for high-speed broadband “special access” services, with overcharges totaling about $75 billion over just the past five years.

As a result, CFA estimates that the indirect macroeconomic loss to American consumers doubles that damage to a total in excess of $150 billion since 2010.

An incumbent local exchange carrier is a telephone company that provided local service prior to the Telecommunications Act of 1996 which owns most of the local loops and facilities in a service area.

 

The analysis, The Special Problem of Special Access: Consumer Overcharges and Telephone Company Excess Profitsexplores the critical – and often unappreciated – role special access plays in the U.S. telecommunications and broadband marketplace and the impact concentrated market power has on American consumers and the American economy as a whole.

Special access services are critical inputs to a wide range of businesses, including mobile broadband services, anchor institutions like hospitals, schools and libraries, public safety offices, ATM networks, and essentially any enterprise that needs access to secure, dedicated high-speed, high-capacity connections to the wireline communications network. 

 

“This review is both timely and important, particularly in light of the FCC’s historic investigation into anticompetitive conduct in this critical market,” said Mark Cooper, Director of Research at the Consumer Federation of America and author of the study. “The anticompetitive, anti-consumer conduct of the large incumbent telephone providers is a shocking reminder of the immense market power held by these organizations and the consequences this kind of concentration can have on both the individual consumer and the American economy.’

 

“The unreasonable costs that special access impose on businesses are rolled into the costs of the goods and services they sell. They don’t disappear, and the tooth fairy does not pay them,” Cooper said. “Consumers pay them in the price of the products and services they buy.” 

 

 

 

Reader Comments 0

0 comments