RealTime IT News

FCC on Verizon's DSL Fee Case

The Federal Communications Commission (FCC) wants some answers from Verizon about a new fee it imposed on its DSL customers.

The new charge comes only days after Verizon and other telephone companies are no longer legally obligated to collect Universal Service Fund (USF) fees on broadband bills.

Verizon's new "supplier surcharge" is approximately the same as the previous USF charge.

The new fee prompted the FCC, which is seeking to lower the cost of broadband through its deregulatory policies, to send a letter of inquiry to Verizon seeking justification for the charge.

"We're looking closely at the letter and we'll be responding," Bobbi Henson, a spokesperson for Verizon, told internetnews.com. "We feel we've been upfront about the whole matter."

Henson said the new fee is to cover the cost of supplying standalone DSL. The cost, she said, is being spread over all the company's DSL customers.

Most Verizon DSL comes bundled with voice service, but Henson said a "growing number" of customers want standalone or "naked" DSL.

"But there's no voice on that line," Henson said of the unbundled service. "We didn't want to price that service out of the market."

Henson declined to name the number of Verizon standalone DSL customers.

An FCC spokesman refused to confirm the Verizon letter, noting, "We don't comment on investigative matters."

Incumbent telephone carriers' obligation to charge a USF fee for broadband service expired in early August. USF fees are added to customer bills to cover the cost of rural and high cost telephone service.

On Aug. 14, Verizon posted a message on its customer service site announcing the new fee.

"The surcharge is not a government-imposed fee or a tax; however, it is intended to offset costs we incur from our network supplier in providing Verizon Online DSL service," the announcement states.

"The underlying supplier surcharge helps Verizon to recover the cost of a local telephone line in situations where Verizon does not simultaneously provide both local voice and Internet services."

The fee is initially set at $1.20 per month for broadband service up to 768Kbps and $2.70 per month for customers using higher DSL speeds.

The USF fee Verizon no longer collects for broadband service was approximately $1.25 per month for 768Kbps service and $2.83 per month for higher speeds.

"On balance your total bill will remain about the same as it has been or slightly lower," Verizon states on its site.

According to sources contacted by internetnews.com, BellSouth also contemplated imposing a fee in place of the USF charge, but backed down considering its proposed merger with AT&T pending before the FCC.

The FCC eliminated the USF obligation on broadband bills last year when it ruled DSL was an information service independent from the incumbent carriers' voice services.

The transition period ended in August.

The FCC DSL decision followed a June 2005 decision upholding the FCC's authority to declare cable modem broadband an information service.