FCC queries Verizon on high-speed Internet fee

Posted 8/27/2006 7:17 PM ET

By Leslie Cauley, USA TODAY

NEW YORK — BellSouth has stopped collecting a new surcharge on high-speed Internet services, while Verizon says it has no plans to drop the fees, now being investigated by the Federal Communications Commission.

Verizon on Friday confirmed that it had received a "letter of inquiry" from the agency.

"The FCC has a number of questions about what we're doing," said Verizon spokesman Eric Rabe. "Obviously, we'll answer those."

The DSL fees were imposed just as another surcharge — the Universal Service Fund (USF) fee, used to help subsidize rural phone service — was set to come off the bills of DSL customers.

Under the FCC's "truth in billing" rules, companies are required to be forthcoming about their fees.

The FCC, which has broad authority over the U.S. telecommunications industry, could force Verizon to clarify its public statements about the DSL surcharge.

BellSouth made no bones about one of its motivations for dropping the fee: It needs the FCC's blessing to complete its pending merger with AT&T.

FCC approval of the merger "is really important to us, obviously," said Joe Chandler, a BellSouth spokesman. "We didn't want this to be a distraction."

BellSouth customers who have already paid the $2.97 fee will be credited, he added.

Verizon has argued that its DSL fees, which range from $1.20 to $2.70 a month, are necessary because of additional supplier costs.

The problem? Verizon is its own broadband supplier, so the fees are going from one pocket to another.

Rabe confirms this, but says the fees are justified: "We're paying ourselves, but our costs are increasing, nonetheless."

He adds: "We have additional costs we're covering with this rate increase, which is essentially what this is."

AT&T hasn't "instituted the surcharge, and we have no plans to," says spokesman Kevin Belgrade.