Verizon Imposes New Fees on DSL

By Nate Mook, BetaNews

August 22, 2006, 1:20 PM

Just as DSL customers were set to see their monthly bills drop due to the technology being excluded from the Universal Service Fund, Verizon has announced it will impose new fees on its subscribers that largely negate any savings.

The USF requires telecommunications companies, including VoIP and cell phone providers, to 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.

Last August, the Federal Communications Commission agreed to deregulate DSL by classifying it as an information service, removing the requirement that it contribute to the USF. In order to avoid a significant revenue drop, however, DSL providers were required to continue payments until August 14 of this year.

For DSL subscribers with 768kb service, the USF fee was $1.25 per month, while those with faster speeds were charged $2.83. Verizon said in a notice to customers that the new surcharge would run $1.20 per month for 768kb and $2.70 for faster service.

Verizon told AP the added fees were brought about by "new costs that we've developed over the past year as we've been developing and delivering this standalone DSL service. That service doesn't have the benefit of the revenue that was coming in from voice."

The company did not say why it opted to cover the higher costs with an additional fee, rather than raising the base price of DSL service.

The telecommunications giant rejected claims that it was simply redirecting the USF fees into its own pocket now that it is no longer required to hand them over to the U.S. government. Verizon was one of the main proponents of DSL regulation and its removal from the Universal Service Fund.