Verizon's Billing Brouhaha

VERIZON'S BILLING BROUHAHA
[SOURCE: BusinessWeek, AUTHOR: Catherine Holahan]
Verizon is now under fire from consumer groups and scrutiny by the Federal Communications Commission for certain fees included on Internet customer bills. The flap underscores the challenges facing phone companies as they strive to wring profit from broadband businesses while keeping customers from opting for comparable services provided by cable companies. Verizon and rivals such as BellSouth had an opportunity to reduce phone bills when the government did away with fees charged to phone companies that had been intended to subsidize phone service in rural and other hard-to-serve areas. A year ago, the FCC said it would phase out the "Universal Service Fund" charge for providers of wireline broadband because it hampered the telecom industry's ability to compete with cable providers, which do not pay such subsidies. The government officially stopped assessing the fee, typically passed onto consumer bills, this August. But BellSouth and Verizon customers didn't immediately get the hoped-for relief. Consumer groups complained that the telecommunications giants were unfairly raising fees by refusing to pass on their savings to consumers. Jason Oxman, a spokesman for the Competition Coalition, says that the FCC took away the fee with the expectation that it would allow Verizon and BellSouth to offer more competitive prices, not keep them the same. BellSouth relented, hoping for smooth regulatory sailing for its planned takeover by AT&T. The company dropped a $2.97 monthly fee for high-speed Internet. But Verizon dug in. The company says it would have raised prices if it hadn't gotten the regulatory relief, so the elimination of the USF fees lets it keep prices pretty much unchanged. Verizon prices DSL service competitively, hoping to recoup costs with other products, such as phone and TV services, says spokesman Eric Rabe. Verizon profits more from customers who subscribe to two or more of its services because each additional connection only adds marginally to the cost of supplying an original phone line.
http://www.businessweek.com/technology/content/aug2006/tc20060829_789565...

* IP Democracy: Free Market Economics 101 Courtesy of Verizon
http://www.ipdemocracy.com/archives/2006/08/29/index.php#001891

* Pressure mounts on Verizon over USF fees
[SOURCE: TelephonyOnline, AUTHOR: Carol Wilson]
http://telephonyonline.com/regulatory/news/Verizon_USF_DSL_083006/