August 22, 2006 4:56 PM PDT

No price cuts for Verizon, BellSouth DSL customers

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Verizon Communications' and BellSouth's DSL customers won't see a reduction in their broadband bills, even though a special fee that had been tacked on to bills to pay for a federal program has been eliminated.

Last year, the Federal Communications Commission changed how it classifies DSL (digital subscriber line) services, thus eliminating a fee that had been charged to all DSL subscribers to help pay into the Universal Service Fund. USF is a federal program that helps subsidize rural telephone service and provide Internet access to schools and libraries.

Verizon DSL customers subscribing to its 768Kbps (kilobits per second) service paid about $1.25 into USF every month, and customers of its 3Mbps (megabits per second) service paid about $2.83 per month, the company said. BellSouth customers were charged $2.97 per month for USF, according to the BellSouth Web site.

But now that the fee has been eliminated, as of Aug. 14, neither Verizon nor BellSouth plan to pass the savings on to consumers. Instead, Verizon has added a new "supplier surcharge" starting Aug. 26 that's $1.20 per month for the slower service and $2.70 for the faster service. BellSouth said it will keep its $2.97 fee, which it continues to call a "regulatory cost recovery fee."

Verizon said it is charging its new supplier surcharge to offset the cost of offering its standalone, or "naked," DSL service, which allows customers to subscribe to DSL without subscribing to Verizon's local phone service.

The company said that because it's losing revenue from those voice subscriptions, it must make up the difference in other ways. But instead of simply recovering those costs in the price of the actual service, Verizon has chosen to spread the cost of naked DSL across its entire DSL customer base.

Customers subscribing to standalone DSL pay $5 more per month for their broadband service than customers who buy DSL bundled with a voice service.

"We didn't think the standalone DSL service would be competitively priced if we put all of the cost on the service," said Bobbi Henson, a Verizon spokeswoman. "So we spread the cost across the entire base of our DSL customers. Doing this as another fee was coming off the bill seemed like good timing, since it will have little impact on what customers are actually paying per month."

Meanwhile, AT&T and Qwest Communications International, which also offer standalone DSL, are not adding new fees in lieu of the USF fee. AT&T charges about $10 more per month for the standalone DSL service than it does for its bundled DSL services.

BellSouth had a different explanation for keeping its $2.97 fee. It explained in a statement sent to CNET News.com via e-mail that the charge is "to offset costs incurred in complying with regulatory obligations and other expenses. The fee also recovers costs associated with additional systems necessitated by federal regulation, as well as costs associated with monitoring, participating in and complying with regulatory proceedings, and other network and servicing requirements."

But consumer groups don't buy either explanation.

"Verizon and BellSouth are using the situation to pocket more revenue from every customer by labeling this fee, which customers are already used to paying, something else," said Jeannine Kenney, senior policy analyst for Consumers Union. "BellSouth is clearly misrepresenting what the fee will pay for. I mean how can this be a 'regulatory cost recovery' when DSL is no longer regulated?"

Mark Cooper, director of research at the Consumer Federation of America, believes that Congress should take the phone companies' recent actions as a warning of what could happen if lawmakers do not impose Net Neutrality regulation, a hot topic being debated in Washington. Without Net Neutrality legislation, network owners, such as the phone companies, could charge third parties, like Vonage or Google, extra fees for offering services over the phone companies' broadband networks. Phone companies have argued that if they could provide Internet companies premium services for a fee, broadband customers could ultimately benefit through lower-priced and more innovative services.

"They made similar arguments when they lobbied to be excused from USF regulatory obligations that doing so would benefit consumers," Cooper said. "And here they are, free from those regulations, and they still stick it to the consumer."

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BellSouth Corp., DSL, DSL service, fee, Verizon Communications

15 comments

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Greed makes the world go round.
Greed makes the world go round. Get used to it or do something about it. I'm now investigating alternatives to my Verizon DSL and will take my money elsewhere if I can find a competitive rate. Unfortunately collusion also makes the world go round and the big suppliers often band together to keep rates similar.
Posted by Freiheit13 (92 comments )
Reply Link Flag
Yep
It's called capitalism, one of the foundation stones of the American way of life...
Posted by MadKiwi (153 comments )
Link Flag
Youre right, but your also making a false conclusion
Youre correct in stating that greed makes the world go round.
No one here is complaining about capitalism. What verizon has
done however is not just simply greed, its mass deception and
abusing legislative intent. Deception and abuse is not just
simply greed, it is wonton and purposeful theft. The legislators
passed a law to help consumers get internet acces, to make us
continue paying this fee even though they don't have to and
hope we don't notice the difference is not greed, its deception
possibly motivuated by greed. But at 6 billion in profit PER
YEAR, I dont care what mens rea Verizon has when they do
something sociapathic like this, what I care about is how its
going to effect me and the rest of the American citizens.
Posted by reykjavik (5 comments )
Link Flag
stop playing fee games
>"We didn't think the standalone DSL service would be
>competitively priced if we put all of the cost on
>the service," said Bobbi Henson, a Verizon
>spokeswoman. "So we spread the cost across the
>entire base of our DSL customers. Doing this as
>another fee was coming off the bill seemed like good
>timing, since it will have little impact on what
>customers are actually paying per month."

Bull-pucky. I don't buy it. Both figuritively and literally. I've wanted out of cablemodem, but Verizon's policies annoy me and prevent me from giving money to them for that.

I wish I could replace my landline with cellular service, but cells don't work well at home. And I have Verizon Wireless for mine, which makes me want to dump that as well next opportunity, and try out another provider.

Why in god's name do they need to make up for "lost money" from people who don't have voice phone service, when those people are not using voice phone service? Honestly, how are they losing money there? They aren't giving away the voice service for free to these people, it's just not even there.

Sorry guys, but this excuse has me looking up alternative landline and cell services. If you're going to raise prices, just raise the freakin price for the service itself, don't go playing mind games with additional fees. If people aren't using phone service, charge them whatever connection fee is otherwise part of the landline voice service which is rightly owed. Don't charge *everyone* for something that some people are not even using, that's just dumb and blatantly evil.

Since I'm not buying their DSL service, how long is it before they start charging everyone yet another service fee to cover any "lost money" due to landline voice users like me who aren't also shelling out for DSL? Oh no, I'm a terrible customer, I'm costing htem money by not paying for DSL which I don't use. How will they ever survive without my DSL payments when I only use and pay for landline voice and wireless services?

Oh how I wish there was some broadband service around here that wasn't evil and/or expensive... The duopoly of choices are both unacceptable.
Posted by amigabill (93 comments )
Reply Link Flag
This is the reason why I switched to Cable
Verizon puts in too many fees that are not explainable and are not related to your bill or use of service. Plus whatever (phone, DSL, & video) deal you got instantly got your drafted to Verizon exclusively for two years, even if the service sucked.

All the phone companies do it, even cellular - if there was a company that offered cellular service without the "clause", I would flock to it as soon as my current subscription expired.
Posted by techned (200 comments )
Reply Link Flag
Little as possible
Give Verizon little as possible. Check phone services like Vonage. Vonage is the first phone service I ever saw actually reduce fees. Verizon just doesn't care! They figure no problem if your not a customer of a particular service we will stick it to you somewhere else or to who ever is a customer. Verizon is rolling out FIOS service with all kinds of perks. They want to kill off Cable and other offerings and then watch out! Verizon's slogan should be "Bend over or be bent over" or "Verizon we get you coming and going". I can here them now!
Posted by captnet (16 comments )
Reply Link Flag
Fee for NSA compliance
These unspecified regulatory expenses gives one to pause and think.
Posted by penheaded (1 comment )
Reply Link Flag
And they say Net Neutrality doesn't need regulation . . .
I hope our Senators and Congresspeople are paying attention to this (instead of paying attention to the HUGE campaign contributions this "surcharge" is helping to fund!) If this is the way the Telecomms treat consumers re this relatively small fee that should have gone back in consumers' pockets, then imagine what will happen if the end of Network Neutrality comes to pass. You'll end up paying every time you want to see a site that isn't one of their advertisers' sites, if you can access it at all. And forget being able to use VOIP, the end of Network Neutrality will kill it dead.

It's time we all started to yell for Local Loop Unbundling, a regulation which, in every country it's enforced, ensures COMPETITION in broadband. That's why Japan, Korea, and most of Europe is ahead of the US in fiber to the home. And true competition would put an end to this price gouging very quickly.
Posted by bjnovack (14 comments )
Reply Link Flag
This one is pretty evident...
They should be giving those fees back to the customer. I find it incredible what these guys will do to extract every last cent out of us while blowing smoke our way as to the reason why.

The fees have been eliminated. They have no right NOT to return them to the customers.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Reply Link Flag
Fees
They were charging people a fee for the universal Service Fund, then they find out that they don't need to, but since everyone is accustomed to paying the fee, the figure they could add a fee equal to the other one, but they collect 100% of the profit. Since the price of dsl doesn't go up or down, you think everything is ok, so you keep paying your bill unaware of the little extra that they are pocketing from you.

Pretty underhanded if you ask me.
Posted by thedreaming (573 comments )
Reply Link Flag
This is outrageous!
Of course they chose to raise our rates when the FUSE fee expired, so most people would just say "I don't care since my bill isn't going up." But this is greed pure and simple. If they want to recover costs for offering the "naked" service, they should raise the rates for that service only, where they'd have to compete with the local phone companies and undoubtely lose. This cost-shifting to its total DSL base is totally unfair for us.
Posted by pbarnes7 (113 comments )
Reply Link Flag
This is bull!
Okay, we have Time Warner Cable + Internet + Digital Phone at my house, so I already know we get charged a lot.

But my aunt has Verizon Encore, which is Verizon Online DSL (slow@14.95), along with the Verizon Freedom Package for 49.95.

We got her Vonage service, so she only pays $24.99 for the unlimited to US and Europe plus a bonus 9.99 fax line.

We've (I've) been calling Verizon (everyday for the past 2 weeks, i might add) to make it a stand-alone higher speed (@3.0MbpsDS/768KbpsUS) for 34.95/month.

Verizon Telephone and Broadband said, they can't turn it into Dry-Loop/Naked DSL until at least 3 weeks.

They said the POTS has to be disconnected first. (takes about 24 hours)

Then the DSL will be disconnected.
(takes about 5-7 business days)

Then we have to return the DSL modem/router in order for us to avoid getting charged $79.00.
(takes about 7-10 days, AFTER the DSL gets disconnected)

Then they call us to activate the AUTODEBIT, required for Dry-Loop/Naked DSL activation.
(same day that the Modem/router has been received)

Then Verizon DSL will ACTIVATE the DSL (higher speed)
(takes about 3-5 business days)

Finally, they send us another router/modem.
(takes about 7-10 business days AFTER activation)

If they want everybody to pay $1.20 for a fee that fixes that, how come we're still waiting for them to disconnect the DSL attached to the POTS line (scheduled TOMORROW)?

This is definitely wrong.

And they have the courage to charge EVERYONE $1.20/month for something that they should already be doing for us?

Shame on Verizon. This is why we have Time Warner at my house.
Posted by ThunderShock2005 (31 comments )
Reply Link Flag
 

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