Net telephone fees have users fuming

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pretending all along. All of a sudden, SBC doesn't look that bad."

And that kind of harsh assessment is bad for an upstart industry in which the smallest operators, in particular, rely on word-of-mouth recommendations and "buzz" in lieu of large marketing budgets or longtime name recognition.

Follow the money--vaguely
VoIP providers say they have identified the longstanding fees in recent months without raising the cost of their services--no harm, no foul. But since it is unclear how, or even whether, the fees make their way to government coffers, the line items aren't sitting well with some consumers.

"The money is first handed to any of the four major phone companies, who then hand it to the government," said Janee Briesemeister, a senior policy analyst for the Consumers Union advocacy group.

How these sums are set and what's done with them aren't clear. "These charges, in the hands of the major phone companies, really amount to nothing--they're for whatever. That means everybody should be worried about something called a regulatory recovery fee," she said.

The billing controversy dates to September, when Vonage began breaking out the regulatory charges on its billing statements, a practice soon taken up by rivals, including Vonage, Lingo and BroadVoice. Net phone providers insist that their billing practices are legitimate because the charges directly offset fees passed on to them from the local phone companies, with nothing extra going into their own pockets.

Less than 2 percent of a typical Time Warner Cable bill for its Digital Phone offering contributes to a fund for rural telephone expansion and to a location-aware 911 service informally known as E911. Keith Cocozza, a spokesman for Time Warner Cable, said his company must contribute to those funds, despite the lack of government fees imposed directly onto VoIP firms.

"There really is an E911 service fee," he said. "We really do contribute to universal service."

True or not, listing the charges has struck a raw nerve among some customers and engendered new feelings of distrust.

"I would guess that the regulatory fee most people are seeing is related to the federal universal service," opined one contributor to a Broadband Reports forum critical of the fees. "However, I would NOT be surprised if the providers were slipping in something extra there."

[gogots]

VONAGE its better thatn the baby bell

I was a customer with the Bell and was very disappointed with the service. first you get marketing call cause they are the once who can overide the "do not call" rule. Secondly I'd rather pay the $3.00 regulatory charge than cough up all the bogus service charges implied by the BELLS.

VONAGE Bills are preety clear and uptodate by the hour and BELLS bills surprise you at the end of the month

Vonage has flexible plans to go with but BELL has fixed rates for the same service and DO I WANT TO PAY for something that i dont need but STILL had to cough up $60 a month for one home line. Now i pay $30 for a land line and a fax line. "BEAT THAT BELL".

[markdoiron]

Fees Suck

they just don't get it: if a customer goes into the local dept store and buys a set of dishes after using the bathroom, he doesn't want his bill to say $455.99 + 34.20 (state and local sales tax) + $7.50 (washroom use, 2 flushes). having a bathroom that customers use is the cost of doing business. having to pay various local fees and taxes is as well. just build it into one final cost so that we can comparison shop in some sensible manner.

mark d.

[aabcdefghij987654321]

Amen

I have a degree from college, but that doesn't mean that I can understand the phone bill that I get every month. It's a total load. And don't get me started on the overcharges from my cell company.

[sanenazok]

I would rather know

I'm all for full disclosure of fees. This way I know they're not ripping me off, and if they are, someone else can catch them and get me a refund. Why should this work differently than sales tax?

What do you expect?

Yes, fees are ridiculous, but I think most people don't understand the big picture. If you really have a problem with the fees, you are pointing fingers in the wrong direction. Tell your legislators about it. They are the ones keeping a 100 year law on the books targeted specifically for phone service.

Packet8 Regulatory Fees

Please note that this article inaccurately includes Packet8 (Nasdaq: EGHT) in the list of service providers charging "regulatory recovery fees". Packet8 adds Federal Excise Tax (FET), currently 3%, to the total of our customers' bills, period. The addition of FET is based on the current advice of our tax attorneys, and all of this money is remitted bi-monthly to the Federal Treasury. Thus, a $19.95/month Packet8 residential customer who makes no overseas calls (calls to non-Packet8 subscribers outside the United States are billed at an extra per-minute rate which can be found on our website, packet8.net) is charged $20.55 TOTAL after application of FET. No additional charges are added to the bill.

Packet8 does offer a number of additional services that can be added by our subscribers on TOP of any of our basic subscriptions (such as Virtual Numbers, E-911 service, etc.), and we do charge extra for these additional services. Our E-911 service costs subscribers an additional $1.50/month, all of which goes towards paying the direct costs that 8x8 incurs in providing true, replacement E-911 service to our customers, but the choice of whether E-911 service is enabled on each line (and the additional fees collected) lies with the individual customer. We do not charge any of the "recovery" fees described by this article, and we will be contacting Ben Charny directly to correct this error.

For additional information on Packet8, please call us at 1-866-TRY-VOIP.

Bryan Martin
Chairman & CEO, 8x8, Inc. (Nasdaq: EGHT)
[e-mail]

[kieranmullen]

Charge for 911?

Give me a break. People should have this wether they like it or not as long as they know it may not work in a power or internet outage. Charging them for it is just silly. Put it in as part of the package. Vonage.com does...

[LannyS1]

Well Sir,
Thats a lie. I just got my bill and what did i see in the "Taxes and Fees" a $12.00 Regulatory Recovery Fee. So since you don't charge for these fees I should be looking for a refund on that line item. Expect an email from me shortly.

[the kraut]

Thanks for pointing that out.

The story has been corrected.

[Jahntassa]

As a VOIP user...

I joined up with Vonage about two weeks after Circuit City started carrying them. I have the $99 Motorola VOIP adapter sitting on my desk, and have been with them since around January of '04. So far, I can never say i've been dissapointed.

I had BellSouth for about two months, just to get BellSouth DSL. That venture, for two-three months of basic phone and DSL service, ended up costing me around $400. It was completely rediculous! Their phone service was overpriced, and there were way more fees than a Federal Service charge, or whatnot.

I pay for the 500 minute a month 'call anywhere' plan. I pay $16.98 every month for my phone. One that will automatically forward to my cell if my network is down. One that I can easily check voicemail from either phone, or computer. If they need to put a line-item that says 'fees'. Then so be it! I understand that they have to connect to landlines somewhere, and as long as they don't get rediculous (more than 40% regulatory fees), I won't care. Heck, i'm paying $17 a month for a phone service that starts at $30 a month for BellSouth! I'll take that hit!

Former BellSouth customer is now a Packet8 customer

The existence of a company such as Packet8 allowed me to drop BellSouth. I had been a faithful customer of BellSouth for ~15 years.

I even ported my home number to Packet8 by exploiting the existing, albeit sluggish, LNP process. Granted, this did take some time, but I now have Packet8 doing everything BellSouth did and soooo much more.

Incidently, I just got my last bill from BellSouth two days ago. They actually sent a bill for $0.63... No wonder the only surge in their stock recently was due to the sale of their Latin American operations.

[fred dunn]

Then what's the point? Switched is more reliable.

VoIP is making promises it can't keep and this is just another one of them. VoIP service costs more than my regular "switched" service through SBC and VoIP depends relies heavily on the latency of the Internet being low. So the next time we have another Internet-wide virus outbreak, good luck to all of you VoIp'ers.

[Below Meigh]

Doubtful VoIP is more than Local/Intra and Toll calls

Paying a $25/month fee for UNLIMITED local and intra/toll (48 states) is FAR cheaper than Local MaBell incarnate Verizon fees. Even witha $3/month fee to cover regulations, Vonage is cheap solution if you have broadband.
But seeing that Verizon (and other Bells) seem to wait, watch and submission to other technologies (see DSL history), its a matter of time before MaBell takes back her lost revenue by offering DSL/Voice/Video on demand over fiber.
History repeats...as do the monopolies...

[Jahntassa]

SBC is cheaper?

So you're paying less than $15 a month? And voice data doesn't take up much bandwidth, btw. I've had cleaner calls with Vonage than I did with BellSouth.

[lavacentral]

VOIP has its goods and bads

I would hate to see fees appearing in my bill. I havent seen any on my Broadvoxdirect bill yet..
Thats one thing I am afraid that they are just after getting new customers these days and as soon as they realize you are comfortable at your seat, they start to squeez you. Sorta like Hotmail and Yahoo did with their free emails. They removed features after they had tons of customers and then tried to sell them (pop3 access, large attachments, etc).

I have enjoyed VOIP for months now. Its been more than satisfactory. The voice quality is the same or better. The features are awesome! Call waiting, call forwarding, caller ID,...The best feature I like is Broadvoxdirect's Follow me and call to call where you can patch any two telephones via the web. Say I am at a hotel or on my cell phone in a cafe. I can log on to my account and I just patch myself (at the current phone) to any phone in US/Canada. Oh and broadvox offers one free virtual number which is cool.
Try getting a virtual number from SBC with a canadian Area Code!!

The downside is that you are at the mercy of your broadband when making calls from home. You may still need the devil SBC for DSL.. which means you have to have your landline to get DSL. Or you have to cough up an average of $50 for cable braodband to cox/time/comcast.
When someday Everyone has internet then it would just be the 19.99 or $25 for VOIP and thats it.