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Cable companies make comparison shopping ridiculously tough

There are apparently no state laws or regulations that require telecom firms to disclose taxes and fees up front.

August 24, 2010|David Lazarus

Santa Monica resident Dan Sanders was interested in a fully monogamous relationship with Verizon Communications. He already received phone and Internet service from the company. Now he wanted to add TV to the mix.

Sanders, 53, was in luck. Verizon was offering a sweet-as-you-please deal of $89.99 per month for the first year of bundled TV-phone-Internet service.

But Sanders knew better. He wanted to know how much the monthly cost would be with all the taxes and fees included.

"It was a simple question for the Verizon staffer," Sanders told me. "I said, 'I live in the 90405 ZIP Code. What's the full price?'"

And the answer?

"She insisted that she would have to write up the entire order before she could give it to me. She said that's the company's policy."

Sanders then asked the obvious question: "Is this legal?"

You'd think not. But I'll get back to what federal and state regulators had to say in a moment.

First, phone and cable companies love saying how competitive the telecom market has become. With so many different services available, they say, consumers are free to shop around to their hearts' content.

In reality, only a handful of providers typically operate in each market. And they often include so much fine print with their offers that comparison shopping becomes all but impossible.

Jon Davies, a Verizon spokesman, said the company's sales reps aren't being deliberately evasive when it comes to taxes and fees. They're just making sure potential customers have been offered every possible option and add-on before a final price can be given.

"We have to build the order to see what the customer is going to get before we can give a final price," Davies said. "We need to make sure they're aware of everything that's available."

OK, but what if a customer doesn't want any additional features? What if, like Sanders, a customer knows from the get-go that he's interested only in the $89.99 base plan? Couldn't Verizon just plug in his address and immediately calculate the taxes and fees?

"The bill estimator doesn't come until the end of the process," Davies replied.

And how long does it take to get through the sales process?

"Ten or 15 minutes."

This is completely unreasonable. How many people would be willing to endure a 15-minute question-and-answer session just to get an estimate of their monthly cable or phone charges?

"It's unbelievable," said Denise Mann, who oversees telecom matters for the California Public Utilities Commission's consumer-watchdog division. "It shouldn't be this hard to get such simple information."

It shouldn't. But it is.

John Britton, an AT&T spokesman, said his company operates pretty much the same way as Verizon, determining taxes and fees only after an order has been taken.

"Assessment of taxes and fees can be quite complex," he said. "If asked, we do our best to provide estimates on additional taxes and surcharges, but it's not always possible."

Mann said there are apparently no state laws or regulations that require telecom companies to disclose taxes and fees up front.

A spokesman for the Federal Trade Commission said failure to disclose all charges in a timely manner could be seen as an unfair business practice, but it's unclear whether telecom companies are violating any laws.

Still, the FTC advised the Federal Communications Commission last year that "communications service price advertisements should disclose the amount that the consumer actually will pay," including taxes and fees.

A spokeswoman for the FCC said that various rules cover aspects of phone and cable pricing but don't necessarily apply to bundled services. She said the commission is taking a closer look at ways consumers can be provided with more information.

Taxes, fees and surcharges vary widely depending on your location and the services received. Verizon says taxes and fees for its bundled packages range from about $6 to about $15.

Clearly a phone or cable company would be unable to determine total taxes and fees on all available options until a service plan is finalized.

But if a customer is willing to provide his or her address, there's nothing that would prevent a company from determining taxes and fees for a basic package, without any add-ons.

"The fact that I couldn't get it tells me that they want to get you completely on the hook and then lower the boom," Sanders said.

So what did he do? He hung up. Sanders said he'd probably stick with Verizon for his phone and Net service, but he'll skip adding TV to the mix.

Not only has Verizon succeeded in denying itself extra revenue, it's also angered a long-term customer and deterred him from deepening his relationship with the company.

How this can be seen as a smart business practice is beyond me.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.

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