Free Cell Phone from the State for the poor

[808blogger]

Likely the biggest subsidizer of Hawaiian Telcom is the department of defense. Yes this is inference but there is a giant stinking elephant in the room, all the talk of USF is a tax not a tax is mute, the war in iraq and afghanistan are subsidizing phone service almost(yes almost) directly in the state of hawaii. Simply consider the owner of Hawaiian Telcom who is currently operating it at a "loss". When you can get 7 meg dsl in the boonies of puna for 30 bucks, and if i report an issue a guy with a truck and a $10,000 meter show up, the entire system is subsidized. And somehow everyone expects more and cheaper IN PUNA "outside of the second largest city in hawaii". The ONLY reason to install infrastructure here is to incur costs and loose money.

http://en.wikipedia.org/wiki/The_Carlyle_Group

EDIT: forgot to add the link

[Rob Tucker]

quote:

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Originally posted by Obie

Some telcos are still charging a touch tone fee even though no one has dial phones anymore but I haven't heard of a digital fee.

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Yeah, thanks Obie, Touch tone fee is what I meant. Seems at this point in time like having a fee for horseshoes. I think the digital conversion to touch tone was completed decades ago. Yet every phone bill in Hawaii that I am aware of still charges the customers to support the conversion to touch tone. When was the last time anyone saw a rotary dial phone?

Obie, do you know what happens to the millions currently collected each month for touch tone service?

[Obie]

Profit for the phone company.I don't think Hawaiiantel still lists it separately.
It was originally the extra that they charged for touch tone service.

My telephone company in Ohio has a separate charge for a dial tone ???

Once a fee or tax is in there it is hard to get rid of.

This is from 2006 but illustrates what I mean:

A pesky, century-old tax on your phone bill is finally being put to rest.

The Treasury Department said Thursday that it will no longer collect a 3% federal excise tax on long-distance calls and would refund about $15 billion to taxpayers.

The tax was imposed in 1898 to help pay for the Spanish-American War. It was designed as a tax on wealthy Americans, back when phone service was considered a luxury.

"It's not often you get to kill a tax, particularly one that goes back so far in history," Treasury Secretary John Snow said.

[KeaauRich]

...and it may surprise you to learn that it was Verizon that championed elimination of the Federal Excise tax on phone service (I worked there while this effort was underway).

The touch tone fee harks back to the monopoly Bell System days, when the philosophy was to overcharge for each and every "frill" (like calling features, long distance calling, touch tone,etc.) in order to keep rates for basic local service low. It is purely an income source for telcos. Untangling the web of cross subsidies between local and long distance and between the companies that start and end calls has been underway for 25 years and it's still a mess. I could tell you stories that would curl your hair about the way telcos (big and small) try to game the system to their advantage - but I retired from the industry so that I wouldn't have to think about these issues anymore

[Bob Orts]

Rob, the touch-tone fee on Hawaii is one of those "you won't believe it, even after being told". It’s widely known in the halls of government and is a rare example of business doing the right thing and government screwing it to the people.

The fee was first implemented to charge for the cost of providing touch-tone dialing service during the era of analog dialing. As the phone company moved away from analog dialing to digital dialing, they were allowed to continue charging the fee to recoup the cost of the conversion. At some point the telecom recouped the cost and asked the regulators to eliminate the charge. The regulators moved slowly on the request and after a couple of years the formal request finally made it to the top of the pile. Remember, this is a couple of years after the cost was recouped. The regulators asked the phone company what have they been doing with all the excess money collected. The response was they used it for all the other services thus reducing the need to ask for rate increases.

The regulators realized that if they eliminate the charge, the phone company will ultimately ask for an increase to replace that revenue, since they were using it in lieu of rate increases. It wouldn’t change the monthly rate you pay, just how it looks on paper. So, they decided to disallow the elimination of the touch-tone fee. This way the regulators looks like they are doing a good job by holding the line on rate increases.

This came to a head in 2005 when Balthazar and Savona sued Verizon Hawaii over collecting these fees and it ended up before the Hawaii Supreme Court. Verizon prevailed because the court ruled you couldn’t sue the phone company when the regulators set the rates. It was the state of Hawaii that said charge it. The phone company wanted it eliminated but the state wanted it to remain over the telecom objections.

To get it eliminated you need to fight the PUC but all that will happen is your basic monthly rate will go up by the amount removed for touch tone. The PUC knows that the average person will not look at them as the bad guy; they will look at the phone company as charging a bogus fee. That's fine with PUC.

[Rob Tucker]

Thanks Bob, I suspected a tortured tale of incompetence. I didn't assume that the telcoms were at fault in maintaining the charge, I just thought it an antique charge that was likely being abused and wondered where tens of millions of dollars a month (billions over the years) had evaporated to.

Assume the best and ask questions.

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