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Kokua Line June Watanabe |
Business lines
subsidize home phonesQuestion: I have a small business where there is one phone plugged into the single outlet available. There is no fax or anything else in use. However, I am charged almost twice the price for this phone line than for my line at home. When I asked Verizon why that is, they told me business lines have more options available, such as a fax line. As far as I know, most of those options are also available for your home phone at nominal charges. So why are we small businesses being charged twice as much?
Answer: Basically because businesses, big and small, are subsidizing residential phones.
According to Verizon Hawaii, business lines, on average nationwide, are priced at about twice the cost of residential phone lines.
"Historically, the goal for the telecommunications industry and its regulators was to provide affordable service to as many subscribers as possible," said Ann Nishida, spokeswoman for Verizon Hawaii.
To achieve this "universal service," services were priced based on a "value-of-service" concept in which services with greater value were priced higher, she said.
The result was that business lines and some other services were priced to subsidize the cost of residential phone service, she said.
In the Telecommunications Act of 1996, Congress expanded this concept of universal service to mandate support for schools, libraries and rural health care providers for telecommunications services through the Federal Universal Service Fund surcharge (Kokua Line, June 8, 2003).
In Verizon's defense, Nishida said the company has not raised business line rates since 1997.
"Hawaii also has one of the largest toll-free calling areas, as you can call within each island without incurring additional charges," she said, noting that "in many areas of the mainland, charges would apply."
Q: I bought a new cell phone from AT&T for $99.99. I paid $104.16, which was the price of the phone plus the Hawaii excise tax. But my monthly statement showed 60 cents for "sales tax on equipment purchase" and $15 for "upgrade processing fee." An AT&T customer service representative told me that it was legal to tax my purchase despite the fact that I paid my tax when I purchased the phone. She referred me to the state Tax Department. The person I spoke with there wasn't sure what type of tax AT&T was charging me. I was credited the $15 upgrade processing fee because the sales clerk did not mention anything about charging me a fee. AT&T later credited me the 60 cents, but I still don't understand what it was for. Was this an error on AT&T's part or is everyone who buys a phone charged an additional "sales tax?"
A: There apparently was some miscommunication, because the 60-cent tax was not for the purchase of the phone, but was the 4 percent state general excise tax on the $15 upgrade processing fee.
The $15 is a "standard fee" charged on upgrades, said Lissa Guild, spokeswoman for AT&T Wireless.
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