Content Matters

This morning, I received an email from Verizon, concerning my DSL service.
The email alerted me to the fact that the federal tax known as FUSF (Federal Universal Service Fund) was no longer to be collected.  Depending upon your level of service, this was a fee of $1.25 or $2.83 per month.  This was part of a decision last year by the FCC to stop regulating DSL, therefore eliminating the need for the FUSF fee to be collected.  Based upon this, consumers should have expected to see a modest reduction in their monthly bills, due to the elimination of the FUSF.

However, in reading my Verizon DSL email, it appears that they couldn't bear to pass that reduction on to their customers.  Instead, they indicate that "Starting August 26, 2006, Verizon Online will begin charging a Supplier Surcharge for all new DSL customers, existing customers with a DSL monthly or bundle package, and existing DSL annual plan customers at the time their current annual plan expires.  This surcharge is not a government imposed fee or a tax; however, it is intended to help offset costs we incur from our network supplier in providing Verizon Online DSL service. The Supplier Surcharge will initially be set at $1.20 a month for Verizon Online DSL customers with service up to 768Kbps and $2.70 per month for customers with DSL service at higher speeds."  In essence, they've taken the amount of the tax (which they had to remit to the government) and shifted it into a new line item as a fee.

Now, I have no problem with Verizon charging whatever they want for DSL.  I believe in competitive markets, and with cable and other competitors entering the market, Verizon should determine its pricing.  But, I think its disingenuous to position this as a "fee" rather than part of the service price.  It lets them continue to advertise a lower monthly rate than their customers can expect to actually pay.

The big telcos have already been the recipients of huge tax credits to help them build up the Internet infrastructure (as Cringeley has described more effectively than I can).  If people can't understand why we need Net Neutrality, this is just another example of how the telcos operate and why we can't let them change the playing field.

Update: Apparently the FCC is not too thrilled with Verizon and BellSouth efforts to mask price increases as fees.  Also see comments from TechDirt on the matter.