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The Honolulu Advertiser
Posted on: Saturday, September 2, 2006

Some Internet users will save $3 monthly

By Sean Hao
Advertiser Staff Writer

Hawaiian Telcom high-speed Internet customers soon could be saving nearly $3 a month on their phone bills.

That's because the Federal Communications Commission has eliminated a monthly fee on digital subscriber line, or DSL, services.

However, if you use your DSL for Internet phone service, you will still have to pay the fee, known as the Universal Service Fund fee. The fund subsidizes phone service in low-income and rural areas.

For Hawaiian Telcom's 80,000 or so DSL customers, the elimination of the fee will eventually mean a savings of $2.75, or $2.86 including taxes, on each monthly bill. However, the savings won't take effect until the company clears a few regulatory hurdles, Hawaiian Telcom said. That should occur sometime later this year.

"We're happy to pass this savings on to our high-speed Internet customers," said Hawaiian Telcom Chief Executive Mike Ruley. "This means almost $3 million annually back to consumers and back into the local economy."

Prior to the FCC changes, DSL customers were assessed the Universal Service Fund fee, while customers of cable-based high-speed Internet services such as Road Runner were not. Now the fee is assessed only on customers using their high-speed Internet services to make phone calls.

"This change will also put us on a more level playing field with our cable competitor, which has not contributed to the Universal Service Fund," Ruley said.

The FCC's actions also will affect the bills of some Time Warner Oceanic Cable customers, though the cable company said customers are unlikely to notice any change. That's because Oceanic already was voluntarily collecting the Universal Service Fund fee from its Internet phone customers, said Alan Pollock, vice president of marketing for Oceanic.

"The bottom line is, really it's a non-event for the customer," he said. "I don't even think they are going to notice it."

How telecommunication companies have reacted since the fee was eliminated in August has been a source of controversy. Verizon Communications Inc. and BellSouth Corp. initially eliminated the fee from customer bills, but then tacked on a new surcharge of an equal amount.

Both companies rescinded the new surcharge after the FCC threatened to investigate the practice.

The elimination of the Universal Service Fund fee could take the bite out of a recent decision by Hawaiian Telcom to begin assessing the state's 4 percent state general excise tax on services such as high-speed Internet. That added a minimum of $1.36 a month to accounts with DSL service.

The company also has begun assessing the tax charge on a federal fee known as a subscriber line charge. That amounts to an added 27 cents a month on phone bills of customers with one phone line.

Reach Sean Hao at shao@honoluluadvertiser.com.