Verizon Drops New DSL Fee

Bowing to pressure from both the Federal Communications Commission and irate customers, Verizon says it has decided not to impose a new fee on DSL subscribers that would have negated any savings from DSL being exempted from the Universal Service Fund.

Verizon previously began notifying DSL customers earlier this month that it was adding a surcharge for those who did not also subscribe to phone service. Priced at $1.20 to $2.70, Verizon claimed the fee was intended to help the company recoup costs associated with developing a standalone DSL offering.

The additional charge came right as customers were set to receive a $1 to $3 savings on their monthly bill thanks to a decision to classify DSL as an "information service," which means it is not required to contribute to the USF.

The USF mandates that telecommunications companies, including VoIP and cell phone providers, contribute a portion of monthly subscription fees to the U.S. government. The fund helps subsidize telecommunications services in high-cost regions of the country, and in schools and libraries

But the FCC didn't take too kindly to what seemed like a move by Verizon to simply pocket money previously going to the government. Agency Chairman Kevin Martin said he was "very upset" by the plan and decided to send a formal letter of inquiry to both Verizon and BellSouth.

The FCC also said it was looking into whether the move violated federal Truth-in-Billing laws, as most customers would be oblivious to the new charge. Almost immediately thereafter, BellSouth said it had canceled plans to replace the USF fee with another, promising to refund customers who were already charged.

Verizon is now following a similar path, saying it will not impose the planned surcharge. The small number of customers who were already billed for the surcharge will be offered a credit.

"We have listened to our customers and are eliminating this charge in response to their concerns," said Bob Ingalls, chief marketing officer of Verizon. The company inferred in a statement to the press that it was purely coincidence that the surcharge was being added right as the USF fee was to be removed.