Verizon and BellSouth caught some flak in the press for retaining surcharges on customers’ DSL bills that formerly went into the FCC-managed Universal Service Fund. Now the two telcos have caught the attention of the federal government.
The FCC is reportedly sending letters of inquiry to the companies asking them to explain these funny surcharges. Although the companies offered gooblydegook explanations about how the new fees aren’t really continuations of the USF surcharges (the telcos are no longer required to contribute to the USF based on DSL revenues), the dollar amounts are remarkably similar.
In other words, Verizon and BellSouth had been charging USF fees to their DSL customers but those fees are no longer required. Instead of subtracting the appropriate amounts from customers’ bills, both telcos have instead substituted new surcharges that suspiciously equal the same amounts as the old USF fees.
In the case of BellSouth, it sounds like the telco is trying to pretend that the new surcharge is somehow related to regulation, when it’s not. In an ungainly and almost incomprehensible statement, BellSouth said the new fee is designed
to offset costs incurred in complying with regulatory obligations and other expenses. The fee also recovers costs associated with additional systems necessitated by federal regulation, as well as costs associated with monitoring, participating in and complying with regulatory proceedings, and other network and servicing requirements.
The FCC’s investigation will purportedly focus on whether Verizon and BellSouth are following its rules regarding truth in billing. It might have been safer for the telcos to just come out and say the surcharge reflects the “$2.00 or so per month that customers were used to paying anyway and therefore won’t notice when it stays on the bill.”
Update: The Wall Street Journal’s Amy Schatz has more detail, including a quote from FCC spokesman David Fiske.
“The commission takes its obligation to protect consumers very seriously,” said FCC spokesman David Fiske. “Consumers must be provided with clear and non-misleading information so they make accurately access the services for which they are being charged and the costs associated with those services.”
Schatz also cites an unnamed Commission official who said that FCC Chairman Kevin Martin is “very upset” by the telcos’ decisions to maintain the surcharges, however they are labeled.
Update: BellSouth has thought it over and decided to eliminate its “cost-recovery” fee. The telco now seems to be saying this was the plan all along.
As described on BellSouth’s website, the broadband fee was designed to recover a number of costs remaining from previous regulatory obligations and other network expenses that increase the cost of the Internet services we provide to consumers. Since the FCC eliminated the continuing applicability of many of these regulations, BellSouth has been able to provide a greater variety of Internet services to consumers, to which consumers have responded enthusiastically, and has signed over 300 contracts to provide independent Internet service providers with wholesale DSL services.
Huh? This makes little sense — the fee was designed to recover regulatory expenses, but since the FCC has eliminated many of the relevant regulations, the fee is going away. This begs the question about why the fee was put into place after the regulations were eliminated, but what the hey. BellSouth’s DSL customers are in for a price cut.
Posted by Cynthia Brumfield at 2:13 PM | Print | Comments (0)On the heels of EchoStar’s and DirecTV’s abandonment of broadband wireless spectrum bids, the question remains: what will the two DBS players do to rectify their inability to offer voice and high-speed data services? Business Week’s Olga Kharif has this intriguing piece that suggests an interesting option — the satellite guys could do a deal with an ATC (ancillary terrestrial component) company.
Say what? ATC is a little-discussed hybrid satellite-terrestrial technology that beams signals from satellites to base stations and then ships the signals to users and back again. There are a group of companies that have licenses to offer ATC services, including Globalstar, ICO Global Communications, Motient, SkyTerra and Inmarsat. All are looking for partners to help them jumpstart their services.
Kharif quotes an analyst with Cowen & Co. who claims that the cost of building an ATC network would be $1.5 billion, compared to the $5 billion or so that DirecTV and EchoStar would have had to pay in the auctions. Moreover, ATC is a natural fit for DirecTV and EchoStar because it uses satellites.
WiMax, of course, is the most oft-cited solution for the two satellite players, with Craig McCaw’s Clearwire the commonly named potential partner. But, McCaw is also Chairman of ICO Global Communications, so the conversations taking place among the DBS providers and the broadband wireless companies — and they are, no doubt, taking place — could yield some surprising deals.
Posted by Cynthia Brumfield at 10:09 AM | Print | Comments (0)
As much as the RIAA has declared victory in the P2P fight, the online music genie is out of the bottle and the old ways of selling music are starting to look as quaint as the eight-track.
Eliot Van Buskirk over at Wired’s Listening Post has the low-down on a new P2P tool from Prague-based AllPeers that is “RIAA-proof.” By that he means that AllPeers is a mini-P2P app that allows small groups of friends, a little social network, so to speak, to swap music online. Because the groups set up with AllPeers are small and invitation only, it’s going to be hard for the RIAA to infiltrate the networks.
AllPeers uses a Firefox extension and leverages BitTorrent to enable the networking and swapping. A beta of the new application is here.
Meanwhile, Wired magazine’s Jeff Howe has this longish piece on a Canadian music management company and indie record label called Nettwerk Music Group, headed by CEO Terry McBride. McBride, who represents top Canadian bands and singers such as Bare Naked Ladies, Avril Lavigne and Sarah McLachlan, thinks the music industry’s business models hurt not only artists but also record companies themselves.
His idea is to sell music “in every form imaginable,” from ringtones to individual vocal and instrumental music tracks. A new Bare Naked Ladies album, which consists of 29 songs, has more than 200 copyrighted assets (all owned by the band) that can be exploited to make more money than was possible under the old, “bureaucratic” record company model.
Between ringtones, acoustic versions, and concert recordings, those 29 songs have been multiplied into more than 200 “assets” – song versions – that can be used individually or in conjunction with others to create a product. “Because the copyrights are in one place [in BNL’s hands], we can be really creative,” McBride says. Hardcore fans can buy 45 of those assets on a USB drive; others can download the special Sims versions (recorded in Simlish, no less). “For decades, people in music have used the number of albums sold as a measuring stick for success,” McBride says. “We’re trying to get people to see beyond that. It’s about revenue from music, however you make it – selling concert tickets, licensing to TV, or selling packed USB drives.”
McBride embraces P2P swapping of music (he calls fans “marketers”) and even paid for the defense of a Texas man sued by the RIAA. His radical vision even extends to selling stock in bands, an idea prompted by the revision of the tax code that makes it easier to sell intellectual property as a stock.
“Once we have access to all the intellectual property, we’re going to offer shares in individual artists and take in equity investments,” McBride says. “Eventually, a major band could be its own public company.” The key, he adds, sounding like an overzealous investment banker, is that the value of a band would be measured like a stock and would receive capitalization in expectation of future earnings. “At that point, even a band selling 100,000 units a year becomes profitable,” McBride says.
These kinds of innovative online music developments makes you wonder whether a recent Screen Digest study on music in Europe will prove true, for the record companies anyway. This analysis projects that by 2010, online music sales will halt the decline in sales of recorded music.
Posted by Cynthia Brumfield at 7:54 AM | Print | Comments (0)
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