Verizon imposes new service surcharge

updated 8:58 p.m. ET Aug. 21, 2006

WASHINGTON - Verizon Communications Inc. is imposing a new surcharge on high-speed Internet service just as customers were set to receive lower bills thanks to a decision last year to deregulate the service.

In a recent notice to customers, the telecommunications company said it would begin imposing the surcharge for all new digital-subscriber line customers, and on current DSL customers with monthly plans. Customers on an annual plan will start paying when their plan expires.

The surcharge will initially be $1.20 a month for customers with service up to 768 kilobits per second and $2.70 per month for customers with faster DSL service, according to the company.

The fee comes as a government fee on DSL customers for the Universal Service Fund is being phased out. For customers with service up to 768 kpbs, the fee was $1.25 a month, and for customers with service of up to 3 Mbps, the fee was $2.83 a month, according to Verizon. Customers will no longer pay such charges effective Aug. 14, New York-based Verizon said.

Bobby Henson, a Verizon spokeswoman, cited "new costs that we've developed over the past year as we've been developing and delivering this standalone DSL service. That service doesn't have the benefit of the revenue that was coming in from voice."

Verizon was among the companies that had pushed for the Federal Communications Commission to deregulate DSL service, which the commission did in August 2005. Under the ruling, DSL was considered to be an information service. Information services are generally exempt from universal service payments that are included in telephone bills. The FCC, however, mandated that DSL providers continue to contribute to universal service for 270 days in order to give the agency time to develop broad reform of the system.

Henson said the decision to impose the new surcharge now "is not related at all to USF." She said she "would strongly disagree" with criticisms that Verizon was in effect diverting to its own coffers money that had previously supported the Universal Service Fund.

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