Verizon and BellSouth caught some flak in the press for retaining surcharges on customers’ DSL bills that formerly went into the FCC-managed Universal Service Fund. Now the two telcos have caught the attention of the federal government.
The FCC is reportedly sending letters of inquiry to the companies asking them to explain these funny surcharges. Although the companies offered gooblydegook explanations about how the new fees aren’t really continuations of the USF surcharges (the telcos are no longer required to contribute to the USF based on DSL revenues), the dollar amounts are remarkably similar.
In other words, Verizon and BellSouth had been charging USF fees to their DSL customers but those fees are no longer required. Instead of subtracting the appropriate amounts from customers’ bills, both telcos have instead substituted new surcharges that suspiciously equal the same amounts as the old USF fees.
In the case of BellSouth, it sounds like the telco is trying to pretend that the new surcharge is somehow related to regulation, when it’s not. In an ungainly and almost incomprehensible statement, BellSouth said the new fee is designed
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.
The FCC’s investigation will purportedly focus on whether Verizon and BellSouth are following its rules regarding truth in billing. It might have been safer for the telcos to just come out and say the surcharge reflects the “$2.00 or so per month that customers were used to paying anyway and therefore won’t notice when it stays on the bill.”
Update: The Wall Street Journal’s Amy Schatz has more detail, including a quote from FCC spokesman David Fiske.
“The commission takes its obligation to protect consumers very seriously,” said FCC spokesman David Fiske. “Consumers must be provided with clear and non-misleading information so they make accurately access the services for which they are being charged and the costs associated with those services.”
Schatz also cites an unnamed Commission official who said that FCC Chairman Kevin Martin is “very upset” by the telcos’ decisions to maintain the surcharges, however they are labeled.
Update: BellSouth has thought it over and decided to eliminate its “cost-recovery” fee. The telco now seems to be saying this was the plan all along.
As described on BellSouth’s website, the broadband fee was designed to recover a number of costs remaining from previous regulatory obligations and other network expenses that increase the cost of the Internet services we provide to consumers. Since the FCC eliminated the continuing applicability of many of these regulations, BellSouth has been able to provide a greater variety of Internet services to consumers, to which consumers have responded enthusiastically, and has signed over 300 contracts to provide independent Internet service providers with wholesale DSL services.
Huh? This makes little sense — the fee was designed to recover regulatory expenses, but since the FCC has eliminated many of the relevant regulations, the fee is going away. This begs the question about why the fee was put into place after the regulations were eliminated, but what the hey. BellSouth’s DSL customers are in for a price cut.
Cynthia Brumfield at 2:13 PM|Comments(0)
Blogs We Read
