Verizon Dreams Up DSL Surcharges

The government at one time made telcos tack on a surcharge of between $1.25 to $2.83, depending on DSL connection speeds, whose proceeds were to go toward bringing service to lower-income and rural areas.  Verizon included the federal surcharge in their bill. But the government recently stopped charging that fee.  Actually it ended on August 14th.  Now, Verizon has tacked on its own surcharge of $1.20 or $2.70, beginning August 26, which it said was to "help subsidize connection costs."

A spokesperson for Verizon mumbled about the costs of providing DSL service to its customers and actually had the balls to say that "this DSL surcharge was one way for Verizon to recoup some of those costs."   Which in plain-speak means, a way to boost their bottom line at the expense of customers and that's exactly the view taken by consumer groups who's own complaints about Verizon charging extra for DSL service fell on deaf ears - so far.

Verizon said that they were enacting the DSL surcharge right away as consumers were used to the charges overall.  As if to say, if a customer saw the savings and then we jacked up their DSL rates, heaven forbid, they might complain, or worse, switch providers.

Another DSL provider, Covad Communications Group, Inc. (AMEX: DVW) got a boost in the market today following the news of Verizon's DSL rate hike.  Covad sells DSL services in 44 states, which includes much of Verizon's market and investors may have perceived an advantage for Covad over Verizon's DSL surcharge considering that it would not apply to Covad's customers.  Covad confirmed that it would not be required to pass on Verizon's surcharge to its customers but could not comment on any market advantages Verizon's move may have given the San Jose-based company.

Shares of Verizon closed up 8 cents at $34.60.  Shares of Covad rose 2 percent, or 3 cents per share, to close at $1.51 in after-market trading.

(Contributed by Axcessnews)