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CU Applauds FCC Inquiry Into Broadband Rate Hike

August 25, 2006

Consumers Union Applauds FCC Inquiry Into Broadband Rate Hike

Consumers Union applauded the Federal Communications Commission for asking Verizon to explain why it is hijacking savings its broadband customers would have enjoyed from the recent elimination of regulatory charges borne by consumers.
“I applaud FCC Chairman Martin for looking in to what appears to be not just a consumer rip-off, but a blatant attempt to mislead consumers,” said Jeannine Kenney of Consumers Union, publisher of Consumer Reports® magazine.
Last year, the FCC deregulated DSL service. One result was that carriers such as Verizon would no longer be required to collect $1 – $3 per month from its DSL customers for the Universal Service Fund. When the fees expired this month, Verizon told customers that it would impose new surcharges of approximately the same amount, denying customers savings. The company claimed it needed to recover costs associated with FCC’s requirement that it offer stand-alone DSL service as a condition of its merger with MCI. But Kenney noted that the company has priced its stand-alone service so high that few consumers purchase it without also buying phone service.
According to press accounts, the FCC’s inquiry asks Verizon to explain how the surcharges are consistent with federal Truth-in-Billing requirements that prohibit misleading charges on customer bills and how underlying costs support imposition of new fees.
“The decision of Verizon to deny consumers’ savings they’re entitled to demonstrates just how little competition there is in broadband,” Kenney added. “Given this transparent effort to nickel and dime consumers, both Congress and the FCC should be skeptical of the carriers’ arguments that government oversight of broadband, including preserving strong network neutrality requirements, is unnecessary.”
The companies have contended that Congress should not require network neutrality because broadband markets are competitive. Carriers also argue if network neutrality requirements prevent them from charging Internet companies new fees, consumers will be at risk of higher broadband prices.
Kenney urged FCC to also crack down on unreasonable broadband prices and impose more meaningful conditions on the pending AT&T/Bell South merger to protect broadband consumers.
“Based on consumer experience with Verizon’s stand-alone broadband service, FCC should not only require that Bell South and AT&T offer their broadband service on a stand-alone basis, but also that they charge reasonable prices so consumers have a meaningful choice,” Kenney said.

Jennifer Fuson or Jeannine Kenny 202-462-6262