Verizon Communications has decided to pocket most of the savings from the cancellation of a government surcharge on digital subscriber lines, despite calls from consumer groups to pass on the savings on to users.
Verizon, one of the biggest U.S. telecoms companies, used to charge DSL customers a monthly fee of $1.25 or $2.83, depending on connection speeds, for a government fund to help bring service to lower-income and rural areas.
The government stopped charging that fee on August 14, but Verizon will instead impose a new monthly surcharge of $1.20 or $2.70, beginning August 26, which it said was to help subsidize connection costs.
"There's a lot of cost associated with the service and this is a way we've elected to recover a portion of that cost," said Verizon spokeswoman Bobbi Henson on Tuesday.
By introducing the new surcharge as the previous fee ended, Verizon hoped to minimize the impact on customers, she said.
But consumer groups like the Consumer Federation of America said DSL customers should not have to pay a new fee.
"They charge so much for that already. The simple fact is they have market power," said Mark Cooper, an official at the Consumer Federation of America.
Verizon's latest earnings report in August showed it had a total 6.1 million broadband customers, although 375,000 were connected to its more advanced fiber-optic network called FiOS.
Copyright 2006 Reuters Limited.
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