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August 30, 2006 9:05 pm

Verizon rescinds plans for internet surcharge

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Verizon Communications joined BellSouth and abandoned plans to impose a surcharge on some of the company’s broadband internet customers after consumer groups and regulators protested that the move would have wiped out the benefit of the elimination of a government-imposed fee.

The reversal underscores the sensitivity of the big US telecommunications companies to public pressure and regulatory scrutiny at a time when they are seeking to roll out new video services in competition with cable operators.

It also highlights the increasingly competitive market for residential broadband in the US, a market that cable TV companies initially dominated.

Verizon and the other major US phone companies quietly announced plans to impose the small “supplier surcharge" on so-called "naked" DSL customers earlier this month at the same time that the US government officially stopped collecting the "Universal Service Fund" charge which has typically been passed onto customers.

The surcharge would have applied to residential DSL customers who do not also subscribe to the telecommunications company’s traditional phone service.

The introduction of the new surcharge – which has already appeared on some consumers’ monthly bills - caused a storm of protest from consumer advocacy groups and regulators including the Federal Communications Commission.

One Verizon customer, Ailis Wolf, was so enraged that he set up a web site dubbed "www.StopTheDSLFeeRipoff.com" urging other Verizon DSL customers to send a message to Kevin Martin, FCC Chairman, and the other FCC commissioners to urge them to stop Verizon imposing the surcharge.

On Wednesday Verizon conceded defeat announcing that they would drop their plans to impose the new charge and refund it to the small number of customers that have already paid it.

“We have listened to our customers,” said Bob Ingalls, chief marketing officer of Verizon Telecom, “and are eliminating this charge in response to their concerns.”

Verizon’s climb down comes after BellSouth announced that it was also rolling back plans to impose the new fee and would credit any customers who had already paid it.

Welcoming the change of heart on Wednesday, Mr Martin said, “I am pleased that both Verizon and BellSouth have eliminated fees recently imposed on their DSL customers.”

The FCC chairman added: “Consumers should receive the benefits of the Commission’s action last summer to remove regulations imposed on DSL service. The continued deployment of broadband at affordable prices for consumers remains my top priority as chairman.”

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