Tuesday, September 05, 2006

Verizon got greedy

Here is a letter I just got from Verizon:

Dear Valued Verizon Online Customer,
Effective immediately, Verizon Online is dropping its previously announced plans to impose a DSL Supplier Surcharge. We are eliminating this surcharge in response to customer concerns. The supplier surcharge has not been included in your bill.

Thank you for choosing high speed Verizon Online DSL. We appreciate and value your business.

Verizon Online
Broadband Customer Care Team

What this means is Verizon's customers let them have it. It was just plain greed for Verizon to try to replace a tax with a surcharge... Greed...

MIke Sylvester


Kevin Knuth said...

Actually, i think the FCC let them have it- by starting a formal inquiry into the matter


Andrew Kaduk said...

This is really some black and white corporate number fudging you see here. Even if Verizon only had a million customers (which they don't, they have many, many more), and if each of those customers had the slowest DSL possible (which they don't, but that fee was gonna be $1.20 monthly), It would be a $14.4 Million yearly wound to their revenue stream. You see, under the old tax, Verizon was allowed to hold that money for up to six months prior to paying in the tax. The interest they earn on that money, (whether invested modestly or blown on advertising) goes directly to the "plus" column while figuring their bottom line. Using our absurdley underestimated model above, and assuming Verizon invested the money at a modest 5% (which isn't great when talking in the MILLIONS or BILLIONS of dollars), even based on the "pay the tax every six months" model they would pocket $120,000 every time they flipped the money...essentially free of charge. Now, just go ahead and plug in the actual customer data, the proper fees and the correct interest rate...it'll make your head spin like a big whiff of Nitrous Oxide.

That, gentlemen, is why Verizon didn't want that tax to go away. Hell, with the suggested surcharge, it's even better!!! They get to keep the revenue AND the interest!