Telecom Informer

    

by The Prophet

Hello, and greetings from the Central Office!

It's autumn in the Pacific Northwest, and this means leaves everywhere.  And leaf blowers.  Is there any worse invention than the leaf blower?  Even though I'm inside a noisy Central Office, I still hear them.  RRRRRRRR!  RUUHHHHHHH!  It'd be enough to drive me crazy but at least the landscapers showed up.  They often haven't lately, given what is going on in U.S. politics.  (Community Note: Wait?  Is a billion dollar corporation relying on illegal alien labor?  Hmm....)  And the weather?  Let's just say that it's time to make it rain.  I'll explain.

U.S. telecommunications consumers pay over $14 billion per year in surcharges, and this is big money to phone companies.  Surcharges are responsible for about four percent of annual company profits here at the Central Office, but towards the end of the last administration, it looked like those profits might be in trouble.  The Department of Transportation was very active in challenging "junk fees' imposed by airlines, the Consumer Financial Protection Bureau (CFPB) was going after banks with a wholesale assault on everything from ATM to NSF fees, and the FTC was starting to take an active role in regulating "drip pricing" of hotels and event tickets.  Fortunately for us at the Central Office, the FCC only made it as far as requiring "broadband facts" labels (these look like food nutrition labels, and wireless carriers are required to publish them providing standardized information about their plans).  Plans for further regulation, which might have caused impact to The Company, were stopped in their tracks after the administration changed.

Have you ever looked at those mysterious extra charges on your bill?  You know, stuff with names like (((Regulatory Service Fee))) and (((State Compliance Surcharge)))?  In addition to many other changes, we're adding a new line item of $1.93 to every service call dispatch called (((Fuel Surcharge))).  What is this for?  Well, theoretically it's to pay for the fuel in the trucks our technicians drive to your home or office when they are dispatched.  I mean, delivery companies, airlines, and trucking companies all do this, so why not us?  What is this really for?  Profits, obviously: they're an addition to The Company's financial results, accruing to shareholders.

The genius of our implementation goes beyond this particular surcharge, though.  The way that we're implementing all of this is truly diabolical and I have to hand it to the business guys who came up with the idea.  There are some real "evil genius" overtones to the entire operation, so I'll lay out what we've been doing and how it works.

A few months ago, we added a $2 (((Detailed Billing Surcharge))) to encourage customers to choose a summary bill (in fact, we automatically switched them to summary bill and would only switch them back to the detailed bill if they called and complained, and agreed to pay the fee).  When we did this, we lumped all of the taxes, fees, and surcharges that were previously broken out individually into a (((Taxes and Surcharges))) section of the bill.  After all, there is really only so much we can get away with if we have to clearly list out the fees we charge, or we'll end up with a lot of bill shock complaints.  When we do it this way, people just blame the government when fees go up!  Based on the advice of our in-house industrial psychologist, we have also strongly encouraged customers to switch to electronic billing and automatic payment.  When they do this, they are far more likely to just ignore the bill and pay it if it's delivered electronically (we strongly encourage automatic payment for the same reason).

Now, we're subtly rolling out new fees and surcharges gradually, a little bit at a time, each as a new, separate line item.  We do this on a schedule, and we also raise them on a schedule, so your bill just creeps up a little bit every month.  It's not just surcharges.  We also raise rates on a schedule, usually by offering a "promotion" which reverts to the "standard price" after a fixed length of time.  People will call and argue to renew the promotion, feeling like they have won the argument when we give them the then-current (and more expensive) promotion.  These pricing tactics are carefully designed based on the latest consumer behavioral psychology research.

In the past, our fees were regulated and telecom billing systems have largely been stuck in a regulated mindset.  They were designed to accommodate filing a tariff, getting it approved by a public utilities commission, implementing the changes, and then charging the same price to everyone.  However, these days our services are only barely regulated, and most of our fees and pricing are completely unregulated (they're "market based").  We also have much more data on our customers than we used to, given the prevalence of data brokers.  All of this means that by using AI, we can estimate your price sensitivity and then increase your bill in a personalized way that more effectively "boils the frog."  We aim for an extra six to ten percent per year, based on our AI tooling's estimate of your personal willingness to pay, and your likelihood of churn.  Granted, you can still track what's changing in your account if you pay extra for a detailed bill, but in practice almost nobody does that.  Even if they did, most people wouldn't notice a 43 cent increase in surcharges month on month anyway.

What (((fees))) are we adding, you may ask?  Here's what I'm including in this update, which will apply to all subscribers:

  • Administrative and Telco Recovery Fee: $3.78
  • Regulatory Charge: $0.21
  • Property Tax Allotment: $0.26
  • E911 Surcharge: $0.95
  • 988 Crisis Lifeline Surcharge: $0.40
  • Telecommunications Relay Service: $0.09
  • Energy Surcharge: $1.17
  • Detailed Billing Fee: $2.00
  • Internet Infrastructure Surcharge: $7.00
  • State Tax Surcharge: 21%
  • Federal Tax Recovery Surcharge: 4%

These all sound like official government fees, right?  Well, they're not.  We literally just made them all up.

Some fees don't apply to all subscribers, but we can trip enough people up to generate a substantial amount of fee revenue:

  • Fuel Surcharge: $1.93
  • Late Payment Fee: 5% or $7
  • In-Person Payment Convenience Fee: $5
  • Activation Fee: $35
  • Account Creation Fee: $6.50
  • Number Change Fee: $36
  • Restocking Fee: $50
  • Credit Card Payment Fee: $3.50 plus 4%
  • AutoPay Discount: -$10 per month (we raised all of our plans $10 per month, but give it back if you make your payments via automatic bank withdrawal, which is a high friction and complicated process to cancel)

The upshot?  By harnessing the power of industrial psychology, artificial intelligence, and data mining combined with a more business-friendly regulatory environment, we think we can do a lot better than the four percent competitive baseline from fee revenue.  With a conservatively estimated 50 percent boost in fee revenue from these initiatives, we'll boost corporate earnings by two percent this quarter.  And given that I'll be able to do this almost entirely through automation, I won't even need to hire anyone!  You can imagine what my end-of-year bonus check is going to look like.

That's assuming, of course, that I can concentrate well enough to finish this.  It seems that nobody has used AI to create a less obnoxious leaf blower yet!  Have a wonderful autumn, and I'll see you again in the winter.

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