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Verizon Tacks On New DSL Fees

By Martin H. Bosworth
ConsumerAffairs.com

August 22, 2006

Verizon • Local Service • Wireless Service • "Enhanced" Services • Long Distance • DSL Service • Verizon Fios --- News • Video - Verizon Introduces The Droid • Verizon Pays $21 Million to Settle Termination Fee Lawsuit • Verizon Snaps Up Alltel • Verizon Rolls Out Unlimited Calling • Verizon Wireless Changes Contract Policy • Verizon Cuts Off Northern New England • Verizon Joins BellSouth in Retreat From Unexplained New DSL Fee • Verizon Tacks On New DSL Fees • Verizon Limits Its "Unlimited" Wireless Broadband Service • Verizon Wireless Cuts Early Termination Fee • Michigan Charges Verizon's Rates Are Excessive • Verizon Completes MCI Purchase

The satirical Web site The Onion recently published a tongue-in-cheek article "reporting" that Verizon was introducing the new "Charge-You-At-Whim" plan.

Now it seems that life does indeed imitate art, as the telecom giant announced yesterday that it would be tacking on a new surcharge for customers using Verizon's "standalone" DSL service.

The new fee comes just as Verizon stops paying into the Universal Service Fund (USF), which would have saved its subscribers $1 to $3 a month on average.

Verizon had successfully petitioned the FCC for relief from paying the USF, which was ostensibly designed to fund telecommunications initiatives for in low-income and rural areas. The monthly USF fee for consumers ran from $1.25 to $2.83 a month, depending on their type of DSL service.

The new surcharge almost exactly mirrors the old USF fee, ranging from $1.20 to $2.70 a month.

Verizon spokesperson Bobby Henson claimed the new fee was due to "costs" incurred from the development of standalone DSL service, as opposed to service bundled to Verizon's phone offerings or other services.

Industry observers, tech pundits, and Verizon customers greeted the explanation with skepticism. Techdirt noted that Verizon had resisted deploying a standalone DSL service for some time, and the oddity of new costs for the service appearing out of nowhere.

"What the quote is really saying is that Verizon is still upset that its traditional voice line business is in trouble, but Verizon can't admit it publicly as it would cause investors to beat down the stock," it said. )

Critics have for years complained that the USF was mostly a "slush fund" for companies, funding little in the way of new infrastructure.

A recent study conducted by the Government Accountability Office (GAO) found that telecom companies opposed expansion of the USF for new infrastructure development, saying that they would have to incur more costs from "program development."

In order to recoup losses to the USF from telecoms not paying into the fund, the FCC recently ruled that Voice over Internet Protocol (VoIP) providers must start paying into the fund.

VoIP services, which have marketed themselves as being low-cost alternatives to traditional phone lines, faced an average of $1.75 extra in monthly charges for users as a result.

Verizon's practice of charging extra fees without providing any additional service is not a new complaint. The company came under fire in May for its "limited unlimited" EV-DO wireless network, when users who pay upwards of $80 a month for the service found their accounts terminated for any usage heavier than casual Web surfing.

Readers at tech forum Broadband Reports theorized that the new surcharge was needed to fund the rollout of Verizon's new high-speed FiOS broadband service. "Come on Verizon DSL Folks," said one reader. "The FiOS program needs funding and investors are getting worried! Now they got their extra funding."

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