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Verizon Joins BellSouth in Retreat From Unexplained New DSL Fee

Telcos' Response to Regulatory Relief? A "Regulatory Cost Recovery Fee"

By Truman Lewis
ConsumerAffairs.com

August 30, 2006

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Like BellSouth, Verizon has retreated from its plan to impose a surcharge for DSL service after the normally compliant Federal Communications Commission (FCC) sharply questioned the fee.

"We have listened to our customers," said Verizon executive Bob Ingalls, perhaps momentarily overlooking the eight-page letter the FCC sent to Verizon and BellSouth.

Ingalls said a small number of customers who have already been billed for the surcharge will receive a credit.

Last year, the federal government changed a rule that had required DSL subscribers to pay into a federal fund that subsidizes phone service in rural and low-income areas, intending to shave a dollar or two off subscribers' broadband bills.

Instead, just as the federal fee expired, Verizon and BellSouth tacked on a new "supplier surcharge" fee -- Verizon's euphemism -- ranging from $1.20 to $2.70 per month, almost exactly the same as the eliminated fee. BellSouth called its extra take-home pay a "regulatory cost recovery fee."

Embarrassed and angered by the blatant consumer gouging as the fall election nears, the FCC sent an eight-page "letter of inquiry" to both BellSouth and Verizon asking whether the new fees complied with the FCC's "Truth-In-Billing" requirements for clearly explained and understandable customer charges.

After chewing on the question for a few days, Verizon and BellSouth apparently couldn't come up with a credible answer.

"The old-line telco tubbies talk a lot about listening to their customers but they are so accustomed to having their way with Congress and the FCC that they clumsily, stupidly and ineptly embarass their patrons by imposing an outrageous and indefensible fee as the party in power wrings its hands over voter anger at the current Congress' war on consumers," said one longtime D.C. public affairs practitioner.

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