Is the Ma Bell Monopoly Back?
Posted by Joseph Brochin
In recent months some in the telecommunications industry have started becoming disturbed by recent mergers and acquisitions between companies in the telecommunications industry.
In November of 2005, SBC acquired AT&T. With this acquisition SBC/AT&T became the largest provider of local and long distance telephone services, DSL, and data services in the United States and one of the largest providers in the world.
Recently the planned merger of AT&T with BellSouth has been announced. Both companies have approximately a 50/50 share of Cingular wireless services.
What makes this so ironic is that both SBC and BellSouth where “baby bells” at one time. The “baby bells” where the result of the breakup of the AT&T monopoly in the 1980’s.
So are we seeing the re-establishment of the AT&T monopoly? Some experts feel the answer is no because competition in the industry is much better than when the Ma Bell of old was broken up. Others, to include myself, feel this is the beginning of a new and even larger monster for the telecommunications industry.
When will the mergers and acquisitions be stopped? It probably will not. Why is it that we can never learn from history? With the breakup of AT&T in the 1980’s, competition and consumer savings was seen immediately throughout the telecommunications industry. So why now are we letting this monster take root again?
Other concerns for the telecommunications industry arise with the Sprint/Nextel merger. So why should the consumer be concerned? Simple.
We as consumers have been enjoying the savings of the competition in the telecommunications industry because of all the small independent companies and competitors. When cellular and VOIP technology started taking hold, the traditional companies became scared, they knew they had to get their foot in the door. What better way to do this than to use the large purse they have to start buying them out or merge.
Look in the future for cable and satellite services to fall victim to these large corporate behemoths.
So in my opinion, look out, because history is about to repeat itself in the next few years and all those lovely prices for services we have seen in the telecommunications industry over the years will be gone.
Lets hear your thoughts?
Taxation of phone lines
Posted by Joseph Brochin
Why is it that consumers are still paying taxes to fight the Spanish-American War?
Oh yes folks, you are paying for a war that has long passed and been paid for a long time ago.
In 1898 the IRS levied a tax on traditional telephone communications to help pay for the Spanish-American War. At this time in history, telephones where a luxury and mostly owned by the more affluent citizens. Currently this tax has expanded to include wireless providers as well.
Most residential consumers are not affected too much by this tax, but larger businesses with several thousand long distance calls are losing thousands of dollars to this tax. This type of taxation is one reason businesses are moving to Voice Over IP (VOIP) networks. VOIP networks are not subject to this type of tax and reduce the Total Cost of Ownership to the business. If you would like to know more detail about reducing total cost of ownership with VOIP, please read my published and highly distributed article titled “Lower your Total Cost of Ownership With Virtual Office Voip While Adding Flexibility for Small and Medium-sized Businesses”.
The IRS is currently doing battle with the phone companies who are trying to eliminate the tax. I am not a big fan of some of the larger telecommunications companies, but for this battle they have my vote. They also seem to have the vote of our federal court system as well. Three federal courts have determined the tax to be invalid, to include the U.S. Court of Appeals for the District of Columbia. The crazy deal with this is that the IRS is still collecting the tax. The Supreme Court does not have yet to become involved in this, nor does common sense allow for them to. The fact that an appeal was even entertained is amazing.
This is a prime example of a rogue government agency. Our court systems have deemed the taxation invalid, but the IRS continues to levy it. Who will stop them?
Some companies have filed suit against the IRS, one of which is Radio Shack. It seems that corporate America will have to use the power of lobby and money to force politicians to take action as the IRS has basically thumbed its nose at our court system.
So as a residential customer are you powerless?
No! You can do one of two things.
1.) Write your elected officials about this illegal taxation
2.) Change to VOIP and avoid this scandalous tax. (which the IRS is going after as well)