Really Unlimited 4G Wireless for $30 Dollars? Triple Play for $45? How Much are You being Overcharged? #IRREGULATORSvsFCC

bruce kushnick
Aug 7 · 11 min read

On July 22nd, 2019, IRREGULATORS v FCC moved forward and we filed the official legal brief against the FCC. The FCC has until September 5th, 2019 to respond. This legal challenge exposes one of the largest accounting scandals in American history.

And what does this have to do with you? It appears that AT&T, Verizon and CenturyLink, with the help of the FCC, manipulated the FCC accounting rules and this has impacted every communications service you, your friends, family, and your business, pays for. I’ll get back to this in a moment.

America vs Worldwide Triple Play and Unlimited 4G Wireless Pricing Just Might Piss You Off.

In countries around the world, from Slovenia and Korea to Finland, the price for a totally unlimited 4G wireless service, with 500–1000GB, can be under $30 US dollars. The US unlimited wireless packages, with taxes, fees and surcharges, are mostly over $90 dollars (special deals aside) and can be capped at 22–50GB.

Even more surprising, around the globe, a basic Triple play with 30–100Mbps can be as little as $15 bucks, but the average “least expensive” appears to be around $45 bucks. America’s Triple play advertising claims it only cost about $88, yet somehow it ends up, by magic, costing $150–200 a month for the basics.

(I can hear the readers screaming… You got to be kidding me!)

Comparing specific American low usage and unlimited 4G wireless as well as the basic Triple play, with the prices for services in 41 countries who are members of the OCED-EU (“Organisation for Economic Cooperation and Development”, “OCED”, and the “European Union” “EU28”), and using information supplied by Rewheel Research and the European Commission;

New Networks Institute estimates that:

  • Overcharging on America’s Triple Play is costing customers $70-$155 a month extra, not counting add-ons.

Wireless

  • We estimate that the US unlimited wireless customers are being overcharged $50-$75.00 a month, not counting the additional 500–1000GB of a truly unlimited service that you did not receive.
  • This comes to an average of $873 a year extra
  • There is severe customer gouging in the low-end wireless market where a 1GB “data booster” from Verizon costs $15.00; not counting taxes. We estimate that while the average basic wireless plan can be $30-$60 a month, when there are plans around the world that have 100GB for $8.27, and services at $7.50 that offer the same amount of GB, we estimate that the overcharging is $20–50 a month.
  • This comes to an average of $654 a year extra.
  • Overcharging by Capping GB Usage. It is clear something is very wrong when other countries have unlimited usage of 500–1000GB as standard, and the US has been capped at 25–75GB, and then the service is slowed to being almost unusable.

Rewheel Research’s chart discusses just how out-of-whack America’s wireless prices are with the rest of the world.

“US Wireless median mobile broadband gigabyte prices were 6 times higher than the median price in the 36 OECD countries (from South Korea and Japan to Spain, Slovakia and the UK), and 10 times higher than the median price in European Union (EU28) markets.”

  • NOTE: The numbers for the United States are not adjusted for the added taxes, fees and surcharges in the US.

Wireless Unlimited Means Unlimited: “By April 2019 more than 50 operators have launched 4G smartphone plans with truly unlimited mobile data volume in 23 out of 41 EU28 & OECD markets.”

We estimate that America is paying an estimated $50-$60 billion in overcharging annually and this is the low number. The retail pricing of different services is just one of the problems.

The Regulatory Capture of the FCC Allowed for Manipulated FCC Accounting and Negligence.

Unknown to almost everyone reading this, all of this overcharging, price gouging, and harms to customers are directly caused by the manipulation of the FCC cost accounting rules in a multitude of ways, which started in the year 2000. In fact, the FCC’s accounting rules are set so that expenses for all of the companies’ services using the state utility infrastructure will be based on the year 2000 — really. And, in December, 2018, the FCC decided to extend these rules for 6 more years.

The year 2000 is before there were Iphones, high-speed broadband, or even streaming services — or Facebook.

In the end, this overcharging is the consequence of a few holding companies — AT&T, Verizon and Centurylink, (who are actually the former “Bell Companies” that were created out of harmful mergers with their siblings (an act against nature)), that have taken control of America’s telecommunications state-based public utility infrastructure. They have been able to manipulate the FCC’s accounting rules to make utility phone customers fund the fiber optic wires used for wireless, broadband or internet, then the companies claim it is private property. And all of this is helped by the cable companies, Comcast and Charter-Spectrum, (which is another part of this sorted tale).

IRREGULATORS vs FCC is a direct hit to exposing just how we’ve been overcharged — and we’re doing something about it. Over the next few weeks we will be addressing how IRREGULATORS vs FCC exposes and addresses the harms — from overcharging and inflated rates on your services because of a lack of actual competition, to creating the Digital Divide and the Homework Gap; it even impacts the removal of basic customer and privacy protections as well as Net Neutrality.

The IRREGULATORS is independent consortium of senior telecom experts, analysts, forensic auditors, and lawyers who are former staffers from the FCC, state advocate and Attorneys General Office, as well as telecom auditors and consultants.

NOTE: This article is based on published research and published prices, including the advertising from companies to the actual collected US wireless bills, unlimited and limited, and cable triple play bills. In fact, New Networks has been doing communications bill surveys since 1992. However, no government agency in the US, especially the FCC, has collected basic data about actual costs of wireless services in the US, much less about the Triple play. And this paucity of basic data is being used to manipulate public policies as it can leave out the actual expenses, especially the taxes, fees and surcharges, or it only supplies the ‘promotional’ price, and not the costs to the customers once the promotion ends. (We will address 5G wireless and the wireless cross-subsidies in detail in upcoming articles.)

PART 1: Wireless Pricing and Services in America vs OCED-EU

PART 2: Triple Play Prices and Services in America vs OCED-EU

PART 1

Wireless Overcharging: Why are America’s Wireless Prices 6–10 times more than other Countries?

Backdrop: According to the CTIA, the wireless association, in 2018 there were 421 million connected devices, which equates to 1.3 devices per person. Other sources claim that in 2019, 97% of the US population is using a cellphone or smartphone.

America’s “Best Cellphone Plans 2019”?

Tom’s Guide “Best Cellphone Plans 2019” listed these prices for Verizon, Sprint, T-Mobile and AT&T as of August 1st, 2019. Notice “speeds may be throttled after 22GB”, and that the use of a ‘hot spot’ is limited as well.

These are one line unlimited plans, and these prices do not include the 20+% increase created by the taxes, fees and surcharges, nor add-ons for multiple devices and other separate charges. (These are the prices as of August 1st, 2019, and are all subject to change.) While each of these offers comes with other ancillary services or discounts, the differential between the OCED-EU countries’ pricing for unlimited wireless is ludicrous on every level.

Verizon Wireless Basic Sharing Plans

This is the pricing for Verizon’s smaller plans which comes with 2GB, 4GB and 8GB for sharing or per line. Notice the “Data Boost”, for $15 for 1 GB. This is to make sure that if you went over your allowance, you can buy extra data so that your service didn’t slow to a crawl.

Fine Print Caveats

Verizon lists a host of caveats about when the services will slow down, including specific mobile hotspot usage. In fact, all of the carriers have a limit of 15GB on this, but also on most of the other services ordered. We do not know what the situation is in other countries about this practice, but we assume with the wave of unlimited plans being unlimited, this is not occurring as a standard industry practice.

Examining the US Unlimited, Verizon Basic and OCED-EU Wireless Plans

Using the US wireless advertised prices and services we just went through, we decided to do a chart of the service (or country), the GB that comes with the plan, the price of the plan, and the cost per GB, (dividing the price by the number of GB supplied).

Click for an interactive look at the Rewheel countries in this chart.

NOTE: For the US, we added the taxes, fees and surcharges. And for this exhibit we used a sample of country information with the info supplied by Rewheel’s research, where we just used the EURO prices because they included the VAT taxes, usually at 15%, and the EURO conversion rate is $1.11 dollars; thus a wash which slightly overstates the country’s pricing.

By the Numbers: America Really is Number 1 in Wireless, Really…

NOTE: This exhibit summarizes the previous listing of US wireless unlimited plans, Verizon basic wireless plans, and the prices of 4G wireless from select OCED-EU countries collected by Rewheel Research and published, April 2019, and the European Commission’s report, Mobile Broadband Prices in 2018.

US Wireless Unlimited

  • US average unlimited plans (not the most expensive) were around $91.50 counting taxes, fees and surcharges and the average came with 36GB before they slow to a crawl.
  • However, the standard has been that the services crap out after around 25GB.
  • With this generous accounting, the US unlimited costs $2.54 per GB.

OCED-EU Combined

  • Using a blended model of Rewheel and European Commission provided data, the average monthly cost that would match the US average costs comes to around $17.50, and delivers an average of 75GB (much more than the US 22GB.)
  • The cost per GB also varies but with plans costing over $40, we found that the cost per gig averaged around $.10-$.15 per GB; we use $.13 as compared to the US $2.54 per GB.
  • NOTE: However, different reports on wireless pricing can have averages of $.27-$.54 per gig, and different price ranges can have 1 gig cost dollars, depending on the countries’ competition.

Verizon Wireless Compared

  • America’s low end data costs are so ludicrous as compared to OCED that it demands immediate investigations.
  • A basic plan, which comes with 2G or 4G or 8G, averaged $15.50 per GB and $15.00 if you start to run out or go over your allotted amount.

Overcharging

Anyway you cut this, how can OCED-EU have an average of less than $20 that includes 75GB a month, when the basic costs in America are over triple the amount of money for 4–5GB. And with the 6 countries we highlighted listed from Rewheel research in April 2019, you have Israeli wireless companies offering 100GB for $8.27 and Demark with 500GB for $15.82

This, of course, makes America the laughing stock of the world. Our carriers keep talking about deploying 5G with 1Gbps speeds — but with caps of 22–75GB this is all just a mirage. And those who claim that 5G will replace the home broadband connection — at these prices and with massive data caps — 5G is dead in the water.

Answer: Most people do not know that the holding companies that control the wireline state public utility networks control America’s wireless networks.

  • Wireless is a Wired service. Your wireless services do NOT go into the ‘ether’ or to some satellite; your call or data first goes to a hot-spot or cell site, then travels the rest of the way over a fiber optic wire.
  • The state-based utility wires are the guts of all services — wireless, wireline, fiber optics and copper. AT&T, Verizon and Centurylink control the wired state utility networks, including the “Business Data Services”, sometimes called “backhaul”, which are the wires, the guts of the networks, but they are also the basis of wireless in America.
  • Obscenely Profitable: These state-public utility-wired network ‘backhaul’ services are obscenely profitable because they are kept at inflated prices, which is then the baseline for wireless, broadband and internet services.
  • The prices are kept inflated. These 3 companies control the wireless business and most of the state-based wired utility infrastructure. Sprint, etc., is independent and so it rents the networks at these inflated rates — and this is the base-line.
  • Massive financial cross-subsidies: AT&T and Verizon’s own wireless services were mostly built by cross-subsidies, charging local phone customers and the wired-state-based utility for the construction expenses.

Wireless Services, then, are extremely profitable because they a) do not pay most of the construction expenses (in-region), b) have inflated ‘backhaul’ pricing on the wireline side that competitors pay, c) the wireless companies appear to only pay a fraction of the actual expenses to use the networks and d) they appear to have sweetheart deals with their other incumbent wireline-brethren.

Rewheel adds that the US wireless services should have much lower pricing models. “4-MNO” represents 4 active competitors in the marketplace to help lower prices.

“What is wrong with competition in the Canadian, Japanese and US markets? Gigabyte prices in the Canadian, Japanese and US markets are a universe apart from prices in 4-MNO competitive large European markets or from the ultra-competitive Israeli 5-MNO market. The median smartphone plan gigabyte price in Canada was 24 times higher while in Japan and the US was 15 times higher than median prices in 4-MNO competitive large European market.”

Wireless Pricing in America Conclusion: IRREGULATORS vs FCC exposes how all of this overcharging stems from the manipulation of the FCC cost accounting rules and allowing massive financial cross-subsidies of the wireless networks via wireline customers. It also points to negligence on the part of the FCC for its failure to properly monitor how their rules have become deformed and how they added to the inflated wireless prices.

Part 2: Triple Play Overcharging: Why is America’s prices 2–5 times more the OCED-EU?

bruce kushnick

Written by

New Networks Institute,Executive Director, & Founding Member, IRREGULATORS; Telecom analyst for 38 years, and I have been playing the piano for 63 years.

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