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Verizon Drops DSL Fee Under Duress

Washington — Yielding to political pressure, Verizon Communications Inc. last Wednesday dropped a digital subscriber line surcharge that took effect in August about the same time the company stopped collecting the universal-service fund (USF) tax for the federal government.

Verizon got into political trouble with Federal Communications Commission chairman Kevin Martin, who deregulated DSL last year in an action that also exempted the service from making payments to the USF, a $6.5 billion program which keeps phone rates affordable in rural America.

Verizon's withdrawal of DSL from the universal-service program meant, in theory, that monthly consumer bills would be reduced by the same amount as the USF fee.

Instead of eliminating the universal-service fee, Verizon decided to replace it with a monthly “supplier surcharge” that would cost $1.20 or $2.70 per month, depending on DSL download speeds.

The FCC sent Verizon a letter trying to determine whether the company had violated federal truth in billing requirements. BellSouth Corp., which instituted a similar fee, also received an FCC letter.

Like Verizon, BellSouth dropped the fee almost immediately upon receipt of the letter.

In a statement last Wednesday, Verizon said it dropped the DSL fee in response to customer concerns, adding that anyone billed would receive a refund.

Verizon and BellSouth could have just raised DSL rates equal to the size of the surcharges. Under agency rules, DSL is an information service not subject to federal price regulation.

“I am pleased that both Verizon and BellSouth have eliminated fees recently imposed on their DSL customers. Consumers should receive the benefits of the [FCC's] action last summer to remove regulations imposed on DSL service,” Martin said in statement.