Verizon backs off plans for Internet surcharge

[Wayne Harrison]

Verizon abandons plans for a high-speed Internet surcharge

By Leslie Cauley, USA TODAY

NEW YORK — Under pressure from the Federal Communications Commission, Verizon (VZ) on Wednesday dropped plans to collect a new surcharge on DSL Internet lines.

Verizon's about-face marked a second victory for the FCC. The agency's dissatisfaction with the fee caused BellSouth to stop collecting the surcharge last week.

The two companies moved to add fees to DSL customer bills — $1.20 to $2.70 per month in the case of Verizon — just as the federal Universal Service Fund fee was coming off. The FCC has decided the USF fee should not apply to DSL Internet access.

Verizon, in a statement, said it was dropping the new fee as a result of feedback from consumers: "We have listened to our customers, and are eliminating the charge."

Gene Kimmelman of Consumers Union had another explanation: "They got caught red-handed in a blatant consumer rip-off. Only under the pressure of regulators cracking down on them did they back off from this unwarranted charge."

The FCC last week sent Verizon a "letter of inquiry," the first step in a formal investigation.

FCC Chairman Kevin Martin said in a statement that he was pleased that both Verizon and BellSouth have eliminated the new fees. "The continued deployment of broadband at affordable prices for consumers remains my top priority as chairman," he said.

Verizon said the new surcharge was necessary to cover rising "supplier" costs associated with providing DSL for customers who do not also buy its phone service. Verizon is its own DSL supplier, however, so the new fees would have been going from one company pocket to another.

BellSouth had argued, initially, that it needed its $2.97-per-month fee to cover regulatory costs associated with DSL. The problem with that argument? DSL is an unregulated service.

AT&T, which has a deal to buy BellSouth, steered clear of the whole fracas. The carrier told USA TODAY last week that it has no plans to impose a DSL surcharge. In backing off the surcharge, BellSouth cited the proposed AT&T deal, which awaits FCC approval.

Wednesday, Kimmelman offered the carrier rare praise from him. "I think AT&T deserves credit for being more sensitive to their customers' needs," he said.

Even so, he says, the episode demonstrates that the big phone companies often can't be counted on to look out for consumers: "This time, (Martin) was willing go out on a limb and call them out, but what about next time?"

[batrotter]

I got a notice from Cingular that they are raising their monthly insurance rates on cell phones from $3.99 to $4.99 a month. I have had this insurance for a while but I think I'll drop it now. $5 a month starts to add up. Besides the insurance has a $50 deductible. You can buy a new phone for $50 and get the latest model.

[graveleye]

This seems to be what happens when the govenment cuts us a break and removes a tax: the companies quickly raise their rates to make up for the tax.

I saw this when Georgia removed the sales tax from groceries. Now the 6% tax is gone. Grocery stores raise their prices by 6% across the board. We thought we were going to save some money, but no one did except for the retailers.