Death of a Bogus Fee

Tuesday, September 05, 2006

We mark the passing of our dearly departed fee, the DSL Supplier Surcharge or “Regulatory Cost Recovery Fee.” After the FCC ruled that DSL users don’t have to pay into the Universal Service Fund (the federal subsidy for schools, libraries, low-income or rural users), phone companies like BellSouth and Verizon advised customers of a new fee of almost $3. (Coincidentally, this is about the same amount the companies no longer have to pay into the Universal Service Fund.)

Did the companies think customers wouldn’t notice? Under questioning, BellSouth claimed the new $2.97 per month fee was necessary to cover regulatory costs for its DSL service—even though DSL is unregulated. When the FCC sent stern “letters of inquiry,” the two companies reversed course. The fee is dead.

Historically, phone companies have dressed up ridiculous fees as taxes. (“Regulatory recovery fee," anyone?) It seems reasonable that a business has to pass on the cost of new regulation to the consumer, right? Wrong. It’s just a made-up fee. Strangely, no law prohibits bogus charges. These junk fees are "stealth inflation," allowing telecom companies to advertise a price that bears no resemblance to the true cost. They are the main reason your “$39.99” plan costs $60.

“Carrier cost recovery fees,” Sprint’s infamous $1.50 “single bill fee,” MCI’s surcharge for paying their property taxes—all garden-variety mal-fee-sance when it comes to phone bills. These levies are there to pad against ordinary costs of doing business. Hats off to all the consumers who complained before the new surcharges become business as usual.

Not all DSL providers seem to have a copy of the FCC’s letter. Speakeasy continues to gouge its customers with a bogus “Regulatory Compliance Fee.” After DSL was exempted from USF fees, Speakeasy eliminated its “Federal Regulatory Fee” (a formerly legitimate tax) and jacked up its Regulatory Compliance Fee (a made-up fee) by roughly the same amount. Perhaps the mood of FCC Chairman Kevin Martin, which went from “very upset” to “furious” to “pleased,” may sour again.

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