Surprisingly good economic news -- Verizon property values up!

So the value of your home, car, stocks, bonds, furniture, jewelry, dog and cat are down. Don't worry! We know that things are looking up due to a heartening piece of news from the telecom industry. Through an unbelievably shrewd process of real estate selection, Verizon has somehow managed to see an increase in the real estate value of its central offices and interexchange POPs, even though many are located in some of the hardest-hit real estate markets in America. We know this because Verizon just increased its property tax surcharge applicable to a host of voice and data services on your Verizon bill from 2.5% to 3.0% of the affected net charges.

Of course the veteran corporate telecom managers out there know the punch line, and I hope they're enjoying the picture of me extricating my tongue from my cheek. Verizon's property tax surcharge does not bear a direct relationship to its real estate costs, for the simple reason that the whole concept of a property tax surcharge on a telecom bill is basically nonsense.

Property taxes are part of Verizon's overhead, just as they are for any other vendor. You don't get a property tax surcharge when you buy computers, software, paper, coffee, or insurance. Rather, this surcharge (from AT&T and Sprint, too) is simply part of the telecom industry's "cost recovery" culture under which the major suppliers happily blur the distinction between true taxes on the actual services you buy and revenue-boosting surcharges that you're supposed to feel guilty and helpless about.

These range from actual taxes that they have to charge (such as a non-long distance remnant of the old excise tax and some sales and gross receipts taxes) to actual costs that they don't have to pass along but do anyway (the current 11.4% universal service fee) to unrelated, purported costs they incur that they just choose to tack on (such as the property tax item) to the simply inane (AT&T's 0.88% surcharge for the administrative "expense" of adding one line item for the USF pass-along). And I'm only talking about wireline services -- wireless taxes and surcharges are a whole different bag of misery.

But it's not my purpose to single out Verizon or AT&T or anyone for particularly comical surcharge actions. Here's the underlying truth: Somehow, when individual carriers keep making what appear to be random adjustments to one or another surcharge, in the end the sum of surcharges that are based on a percentage of your bill for recurring and non-recurring charges magically ends up in a tight range among the major carriers. They just watch each other and keep the overall surcharge bite closely aligned.

That's why users are mistaken if they believe can "negotiate" these surcharges in isolation. It's almost impossible to get a carrier to drop or alter these surcharges, if only because account teams have no ability to crack open their billing systems for this purpose and no authority to influence their policy shops in the industry's winking gamesmanship on surcharges. Some very large users get offsetting credits elsewhere, but for most the issue is most effectively handled within the context of an overall award of service under a competitive procurement.

When you put out a competitive RFP, you get to ask each carrier to make a statement justifying each surcharge and to put all of them on notice at the same time regarding future increases. You get to add up all the charges together and demonstrate to all of the bidders that you consider each dollar paid in surcharges to be equivalent to each dollar paid for services. You get to find out which specific carrier service may happen not to be subject to certain surcharges -- for example, for a long time AT&T removed its FRASI (frame relay to ATM interworking) service from the USF pass-along -- at least at the time of deal.

In the end, you negotiate the surcharge by negotiating the bottom-line deal, sometimes via credits, sometimes via price concessions in rate-element "sweet spots," and occasionally via a specific commitment to hold the line on a specific surcharge. Ultimately, the key to not getting frustrated over the inherently maddening issue of surcharges is to understand what does and does not work. We will continue the discussion as we congratulate Verizon on its uncommon success in the real estate crash. Just kidding!