Verizon, BellSouth Drop DSL Surcharges

Scratching your head over a new charge that's appeared on your Verizon or BellSouth DSL bill? You won't have to worry over it for long. In response to significant negative customer reaction, the companies have just agreed to drop the controversial charge and will credit the money back to those who have already paid.

The surcharge began appearing in customer bills in mid-August, right after DSL providers were allowed to stop collecting a federal fee for the Universal Service Fund. (The USF subsidizes communications services for rural or lower income areas which otherwise might not get service. The Federal Communications Commission last year decided to allow DSL providers to drop the USF fee.)

The new fees--ranging from a bit over $1 to nearly $3--were almost identical to the old USF fees, so customers saw little or no change in their bills, when some probably expected a slight drop.

Many consumers were outraged when they got their bills. At least one angry customer went so far as to put up a Web site, Stop The DSL RipOff, urging others to write to the FCC and complain, and making it easy for them to do so.

Customer reactions drew the attention of the FCC. And so BellSouth and Verizon received letters from the agency inquiring about the new surcharge as part of a potential investigation.

Last week, The Wall Street Journal even reported that FCC Chairman Kevin Martin and other FCC officials were "fuming" about the new charge. By Friday, BellSouth had issued a statement saying that it would drop the charges. Today, Verizon did the same.

Both companies say the fees are justified. BellSouth stated that the fees were to cover leftover regulatory obligations as well as network expenses.

Verizon Online's fees are a result of additional charges imposed by Verizon's telephone branch for DSL customers who do not also get telephone service from the company, says Senior VP of Media Relations Eric Rabe. Although Verizon Online has been dealing with the extra charges for about a year, the DSL-only option has been growing in popularity so the firm tried to recover the costs.

It's unclear whether the FCC inquiry will continue now that the two companies have dropped the new surcharge.

There has been a lot of debate over billing issues as consumers review their various phone and service bills and puzzle over "mystery fees." My colleague, Tom Spring, recently blogged about a controversial item in cell phone bills. In that case, the questionable service involved "Roadside Assistance," which neither he nor many other customers recalled signing up for, although many had been paying for it for a while.

Cingular Wireless and Verizon Wireless are both being sued over the Roadside Assistance charge.

Larger questions also loom, as the FCC and states debate over who has the right to set guidelines for what must be spelled out in each of our communications bills and how clear the explanations for charges must be. Stay tuned.