& cplSiteName &

FCC's Martin 'Furious' Over New DSL Fees

Light Reading
News Analysis
Light Reading
8/28/2006
50%
50%

A Washington-based source says Federal Communications Commission (FCC) chairman Kevin Martin was “furious” upon hearing news that Verizon Communications Inc. (NYSE: VZ) and BellSouth Corp. (NYSE: BLS) had imposed new “cost recovery” fees on DSL customers.

Both carriers had just been relieved of collecting Universal Services Fund (USF) fees from those customers, which would have meant a real reduction in what consumers pay for DSL service. The new fees were almost identical in cost to the old USF fees, and appeared designed to allow the carriers to collect more DSL revenues while their subscribers' bills stayed about the same.

The Commission applied pressure late last week, saying it planned to send “letters of inquiry” to both carriers based on concerns that the new fees violated the Commission’s “truth-in-billing” rules.

Sources say Commissioner Martin's office and the two carriers were in phone conversation Friday. BellSouth avoided being the recipient of the FCC's letter by agreeing to cancel the fees, while Verizon held its ground and indeed received an FCC letter Friday. Verizon has 20 days to respond.

BellSouth released a statement late Friday announcing the "immediate" cancellation of the fees. The carrier also said it will credit any of its subscribers who have already paid the fees.

BellSouth has good reason to play nice with the FCC. Its planned merger with AT&T Inc. (NYSE: T), announced in March, is subject to the approval of Martin and the rest of the FCC. (See AT&T, BellSouth to Merge.) BellSouth says it removed the fee because of complaints from its customers, but said its decision was also influenced by the involvement of the FCC. “We were getting feedback from that regulatory body,” BellSouth spokesman Joe Chandler tells Light Reading. “We’re obviously involved in a merger situation, and we wanted to make sure that this did not present a distraction to that process.”

The FCC has no such leverage over Verizon, sources say.

Verizon explained last week it needs the fees to help pay for the costs of connecting its “naked DSL” customers. Such customers buy DSL service without buying phone service. (See Verizon Blames New Fees on 'Naked' Users.)

Verizon spokeswoman Bobbi Henson told Light Reading Monday that her company hasn’t much to say on the issue at present. Henson confirms Verizon received a letter of inquiry from the FCC Friday, and says her company is working on addressing the commission’s questions. Asked if Verizon might cancel its new DSL fees, Henson declined to speculate and says the issue is being considered by “business leadership.”

AT&T says it never considered such a fee. A spokesman said AT&T removed the USF fee line item from its DSL subscribers' bills starting August 14.

An FCC spokesman was called for this story, but he had no comment.

— Mark Sullivan, Reporter, Light Reading



(30)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 3   >   >>
palaeozoic
50%
50%
palaeozoic,
User Rank: Light Beer
12/5/2012 | 3:43:08 AM
re: FCC's Martin 'Furious' Over New DSL Fees

VZ may be within the letter of the law in levying these new fees, and it's an easy way to improve margin without raising prices. But it has to be among the dumbest pricing moves in the history of telecom.

Piss off your customers (from whom you get all of your money)and piss off regulators (that still hold sway over your business) all to please your shareholders (who don't appear to like you anyway).

jmunn
50%
50%
jmunn,
User Rank: Light Beer
12/5/2012 | 3:43:07 AM
re: FCC's Martin 'Furious' Over New DSL Fees
Does this show that competition is basically non-existant? You have a simple way to lower customer prices with no impact to revenue and you choose to increase your margin?

Perhaps the regulators will have to regulate these "new" non-competitive entities.

Maybe they need the money to build out FTTH for those poor people? Isn't that what the USF was for anyway?

jmunn
palaeozoic
50%
50%
palaeozoic,
User Rank: Light Beer
12/5/2012 | 3:43:07 AM
re: FCC's Martin 'Furious' Over New DSL Fees

You're the FCC. For the last decade thousands of RBOC lawyers have been hounding you. They claim RBOC customers shouldn't have to pay USF on DSL service since it is an information service. It's not about us, the RBOCs claim, it's about our customers (who are also voters). Finally, you give in and waive the fees. The RBOCs (well, VZ anyway) pocket the fee. Screw the customer. You are understandably pissed.

Federal regulators aren't getting involved in pricing issues. They're pissed because thousands of lawyers mislead them.
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:43:07 AM
re: FCC's Martin 'Furious' Over New DSL Fees
I thought that the FCC wanted to economically deregulate the telco industry and let facilities based competition set the pricing. Why are federal regulators getting involved in a pricing issue?
Mark Seery
50%
50%
Mark Seery,
User Rank: Light Beer
12/5/2012 | 3:43:06 AM
re: FCC's Martin 'Furious' Over New DSL Fees
RJ,

>> Maybe I'm a bit too cynical, but I don't believe the FCC actions are motivated by an interest in saving customers $3 per month. <<

While I think price is huge motivation for most regulation, on this occassion, it likely is the perception of something else, as alluded to in the article:

http://www.fcc.gov/Bureaus/Common_Carrier/Orders/2000/da000893.doc

Would not be surprised to see this revised in the future.....[disclaimer: I have not seen one of the charges/bills in question so can not make a personal judgement against the text of the current order]. Some of the current language could be interpreted as applying, but some more specific language probably not out of the question.

Whether the charge can be "justified" is probably the low order bit on this one, but always a constant in regulation thinking (IMO).
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:43:06 AM
re: FCC's Martin 'Furious' Over New DSL Fees
re: Finally, you give in and waive the fees. The RBOCs (well, VZ anyway) pocket the fee. Screw the customer. You are understandably pissed.

I don't think the majority of customers would have noticed that the BOCs were pocketing the fee. If the market will bear the price, why should the FCC get upset? My guess is they acting for some political reasons. (I don't think they are giving up on the facilities based competition ideology.)

re: "Federal regulators aren't getting involved in pricing issues. They're pissed because thousands of lawyers mislead them.

Hmmm, it's hard to believe the FCC is so gullible.

From reuters a few days back:

California regulators voted on Thursday to relax restrictions on how much the state's landline telephone companies, including AT&T and Verizon Communications, may charge customers.

The California Public Utilities Commission's vote stems from the state's first major review of telephone regulation in 18 years and the new policy is meant to allow phone companies to compete better in the voice-service market against unregulated wireless, broadband, cable and Internet companies.

"Regulation needs to recognize there is a competitive voice communications marketplace," said Michael Peevey, the commission's president. "The changes we order today will enhance competition by allowing new services to be provided sooner and eliminating unnecessary government regulation."


See, there really is competition. A state PUC commissioner said so (and they wouldn't be involved in misleading anyone ;-) ;-) Wireless is unregulated and so should be wireline, so goes the argument? But then how does one reconcile the testimony from Sprint/Nextel about special access charges and the BOCs monopoly position on DS1/DS3 circuits needed to interconnect their cell towers?

http://commerce.senate.gov/pub...

Maybe I'm a bit too cynical, but I don't believe the FCC actions are motivated by an interest in saving customers $3 per month.
Mark Sullivan
50%
50%
Mark Sullivan,
User Rank: Light Beer
12/5/2012 | 3:43:06 AM
re: FCC's Martin 'Furious' Over New DSL Fees
palaeozoic -

Very funny how you put that. My understinding is that Martin got angry because the BOCs assured him a year ago that there was healthy and growing competition in DSL, and therefore no need for regulatory price control. Martin was one of the commissioners who voted for the deregulation at the time. Here's the rub: when the FCC deregulated the BOCs on DSL, it eliminated the USF but also gave away its own review power over any new tarriffs on DSL customers. BellSouth and Verizon can now introduce new fees without filing them with the FCC. So you could say that BellSouth was, and Verizon is, simply playing by the new rules. And Martin knows this better than anybody, so why is he so upset now? Well, he MUST appear upset -- because that's the only power the commission has left. -M
Mark Seery
50%
50%
Mark Seery,
User Rank: Light Beer
12/5/2012 | 3:43:05 AM
re: FCC's Martin 'Furious' Over New DSL Fees
RJ,

>> Thanks for the pointer. I'd guess that the FCC using truth-in-billing to modify BOC behavior won't have much teeth. <<

According to the Supreme Court, the FCC, and other agencies, literally have the ability to write rules that have the same force as legislation. Scary - but that's the way I read some of the Supreme court decisions (of course they blame the congress for handing that power to them).

-mark
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:43:05 AM
re: FCC's Martin 'Furious' Over New DSL Fees
Mark,

Thanks for the pointer. I'd guess that the FCC using truth-in-billing to modify BOC behavior won't have much teeth.
Stevery
50%
50%
Stevery,
User Rank: Light Beer
12/5/2012 | 3:43:02 AM
re: FCC's Martin 'Furious' Over New DSL Fees
According to the Supreme Court, the FCC, and other agencies, literally have the ability to write rules that have the same force as legislation. Scary - but that's the way I read some of the Supreme court decisions (of course they blame the congress for handing that power to them).

Think of it as outsourcing.
Page 1 / 3   >   >>
Featured Video
Flash Poll
Upcoming Live Events
September 17-19, 2019, Dallas, Texas
October 1-2, 2019, New Orleans, Louisiana
October 10, 2019, New York, New York
October 22, 2019, Los Angeles, CA
November 5, 2019, London, England
November 7, 2019, London, UK
December 3, 2019, New York, New York
December 3-5, 2019, Vienna, Austria
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events