When you sign up for telecom services — some combination of TV, broadband, and/or phone — from your cable company, you’re told you’ll pay something like $49 or $99 a month… and yet the price you actually pay can be as much as 40% or more on top of that, thanks to a heap of sometimes confusing charges and fees. Which ones should you blame the government for, and which are made up by your cable company? One cable company at a time, we’ve been using real customers’ bills to break it down. In previous installations we’ve gone through Comcast, DirecTV, Charter, and TWC; now, it’s Verizon’s turn.
The below bill was provided to Consumerist by a real-life Verizon FiOS customer who subscribes to a triple-play TV, broadband, and phone package for a stated rate of $129.99 per month.
The customer has a promotional discount, but also pays various taxes, surcharges, and fees. In the end, of their total $149.31 bill, $39.92 — about 26% — comes from add-ons outside of the stated package price.
To better understand each of these fees, we’ll go through the bill line-by-line:
FiOS TV, Internet & Phone Bundle
1.) FiOS bundle price
This is the quoted price for the service bundle you subscribe to. In this case, the consumer subscribes to a triple-play bundle that includes the Preferred HD level of TV service, 50 Mbps internet, and a home phone line.
As of March, 2016, the closest advertised bundle on Verizon’s website actually has more services for a lower cost, but they advertise it like so:
This is the price you expect to pay, and the one you sign up for.
Additional Services, Equipment & Discounts
2.) (Rent): HD DVR
When the FCC says that cable companies make too dang much money from anticompetitive set-top box fees, this is the kind of fee they mean.
This particular $16.99 fee is for one single HD-enabled, DVR-enabled box. Other fees we’ve seen on Verizon customers’ bills range from $12 for a single HD, non-DVR box to $34.99 for a bundle of four HD-enabled, non-DVR boxes in four rooms.
In other words, charges will vary based not only on what services you get and how many devices you have, but also on what bundle terms you subscribe to, and where and when you signed up for service.
3.) Extended Savings 24 Mo. Discount
Verizon creates their bundle prices by promising “discounts” over their standard, non-bundle pricing for each of the services included in your package. The discount line is how they reconcile that. On this bill there’s only the one line-item, however on a different customer’s bill, Verizon laid out their pricing rationale like so:
Fees & Other Charges
4.) State and Local Sales Tax
They do say death and taxes are the certainties in life, right?
Basically every jurisdiction in the country has some kind of state and/or local sales tax imposed on telecommunications services. Verizon bundles all of theirs into one single line item. This particular subscriber lives in an area where both their municipality and also their state charge sales tax on telecommunications services.
Googling “[state name] communications tax” should be the fastest way to find the pay-TV or voice line service tax rates in your state. Rates may also vary based on the county or city where you live.
5.) Telecommunications Relay Service
This subscriber’s home state imposes a small fee on all phone lines to cover the cost of providing relay services for consumers who are deaf or hard of hearing.
The state where this subscriber lives imposes a charge on every phone line — landline and wireless — to contribute to financing the state’s Enhanced 911 services. The vast majority of states impose a similar fee.
7.) Federal Universal Service Fee
The FCC’s Universal Service Fund pays for programs like Lifeline that expand phone and Internet coverage to include more rural and/or low-income Americans who would otherwise be unserved.
The Universal Service Fund is paid into by telecom operators, who are permitted — but not obligated — to recoup that cost from consumers. But much like the Regulatory Recovery Fee, almost everyone directly pushes this one through. This is Verizon’s pass-through line-item for recovering its USF contributions.
8.) [State] Gross Receipts Tax Surcharge
Although Verizon lists this as one of their fees, it is in fact a tax imposed by this consumer’s state government (according to the state government’s website), and is the same flat fee across all phone plans and providers. Similar charges in other states may or may not meet the same qualification.
9.) Video Franchise Fee
Franchise agreements between states, counties, and/or municipalities and pay-TV companies generally say that the company owes the franchising authority a regular fee — usually, though not always, equal to 5% of their revenues — in exchange for being able to operate in that area.
Most franchise agreements say that cable companies may recover the fee directly from customers. (A few here and there actually do say “shall.”) This subscriber’s locality has one of those “may” agreements, and so Verizon passes that per-subscriber, per-year fee on through in the monthly bill.
10.) Regulatory Recovery Fee – Federal
The FCC collects annual fees from cable operators; that’s part of where the FCC gets its operating budget from.
The FCC rules permit — but do not require — cable operators to recover the regulatory fees from subscribers in monthly installments. Technically speaking, Verizon, or anyone else, could pay this fee without passing it through to consumers. That said, literally every company whose bills we’ve dissected passes this fee through to consumers.
11.) Fios TV Broadcast Fee
The Broadcast TV Surcharge has become a favorite way for cable providers to increase your bills without just outright increasing your TV or bundle package price. TWC, Charter, and Comcast all charge a variation on this fee now, too.
Verizon started adding this fee to FiOS customers’ bills back in 2010. Theoretically it’s to offset the costs of negotiating carriage rights with broadcast operators in your local area. Realistically, it’s a way to pass those costs through to you without cutting into the profit Verizon makes from your bundle price, which nominally includes the price of programming.
12.) Regional Sports Network Fee
This, like the broadcast TV fee, is a way for cable providers to pass along the costs of content carriage agreements through to you, while claiming not to raise prices and while avoiding damage to their bottom line. Rather than applying to local broadcast networks,
Verizon began adding their fee in 2013, at which time it cost $2.42.
Verizon points out on their website that the fee is only assessed on customers whose channel bundles include regional sports networks. However, customers who provided their bills and don’t watch sports have told us that those channels can be difficult to avoid when selecting packages of preferred networks they do actually watch.
13.) FDV Administrative Charge
According to Verizon, this FiOS Digital Voice charge is to “defray account servicing costs associated with providing voice services.” Don’t know what that means? Neither does anyone else, really. It’s effectively a $1 increase on the phone portion of your bill, and the money presumably goes into Verizon’s internal “phone stuff” budgets.
Verizon started adding the $0.99 fee in the summer of 2014.
Not pictured: Different states and localities impose different service fees on their telecommunications bills. PEG fees, municipal rights of way, CATV fees, school fund fees, or other varying charges would also appear under this header as needed. Verizon’s website has a list including some of the others you might be likely to see; barring that, googling “[state name] [fee name]” is usually going to be your best bet for tracking those down.
Verizon not your cable/Internet/phone provider? No worries! Previous installations of this feature of covered Comcast, DirecTV, Charter, and TWC, and future editions are yet to come!
Editor's Note: This article originally appeared on Consumerist.