FCC to Investigate Verizon DSL Fee; BellSouth Scared Off
The FCC Fri. sent a letter to Verizon asking why it hit customers with a new DSL fee just as a federal fee of about the same amount lapsed. However, the agency decided not to question BellSouth, which said Fri. afternoon it was killing plans for such a fee. FCC Martin reportedly was upset by the companies plans for replacement fees. “We generally prefer regulation be done by the marketplace but we will act to insure consumers’ interests are protected,” an FCC official said.
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The Bells were freed Aug. 14 of making Universal Service Fund (USF) payments on DSL revenue, under the FCC’s deregulation of broadband Internet access service in Aug. 2005. The FCC said at the time it expected the move to cut consumer costs, since the Bells had been passing the USF fees through to customers.
But Verizon and BellSouth recently said they're replacing the govt. fees with charges of their own. An FCC spokesman would not comment on issuance of a Notice of Inquiry (NOI) to the companies, but said “the Commission takes its obligation to protect consumers very seriously.” Consumers deserve “clear and non-misleading information so they may accurately access the services for which they are being charged and the costs associated with those services,” he said.
The FCC Verizon inquiry will focus on whether the new fees meet “truth in billing” requirements, an official said. The letter to Verizon asks the company to explain how the charges fit truth in billing requirements and whether they're applied consistently to all DSL customers, those receiving stand-alone service as well as those receiving it in a bundle.
Verizon told customers this month the new fees would begin with Aug. 26 bills and be roughly the same as the lapsed USF fees. The company told customers in a letter it would stop charging “the Federal Universal Service Fund recovery fee” but begin charging a “Supplier Surcharge… intended to help offset costs we incur from our network supplier in providing Verizon Online DSL service.” Verizon told customers “on balance your total bill will remain about the same as it has been or slightly lower.” The company said it “regretted the need to add this Supplier Surcharge.”
BellSouth issued a terse statement that it’s “immediately eliminating” the new DSL fee, “designed to recover a number of costs remaining from previous regulatory obligations and other network expenses.” The company said any payments already made by consumers would be credited to their accounts.
Officials at both companies claimed the new fees covered legitimate costs not tied to USF payments and were timed to come when the USF fee lapsed to minimize impact on consumers. AT&T and Qwest officials said they don’t plan to impose new surcharges.
Consumers Union applauded the FCC for asking Verizon “why it is hijacking savings its broadband customers would have enjoyed” from the elimination of regulatory charges. The consumer advocacy group said Verizon’s fee is “a blatant attempt to mislead consumers.”
Media Access Project Pres. Andrew Schwartzman called the new fees “a deceitful exploitation of consumers.” Schwartzman belongs to the Competition Coalition, formed recently to fight the planned AT&T-BellSouth merger. “This is exactly what our coalition has been concerned about,” he said. “After convincing the FCC that elimination of USF fees would lead to lower broadband prices, the Bells simply replaced the government fees with their own sneaky surcharges.”
A pro-net neutrality group likewise held up the new fees as reflecting Bell market power. “In a competitive market, these savings would be passed along automatically,” the It’s Our Net Coalition said in a news release. “The myth of broadband competition persists despite” such evidence to the contrary.