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updated 8/25/2006 6:54:22 PM ET 2006-08-25T22:54:22

Under pressure from the Federal Communications Commission, BellSouth Corp. said Friday that it will stop collecting a $2.97 per month regulatory fee from its high-speed Internet customers.

The company made the announcement after learning the FCC had begun investigating whether the carrier and Verizon Communications Inc. were violating federal truth-in-billing laws.

BellSouth said it is "immediately eliminating" the fee that was "designed to recover a number of costs remaining from previous regulatory obligations and other network expenses."

The company said most of BellSouth's DSL Internet service customers will see the change on their bills within a week.

Both companies have been accused of continuing to collect regulatory fees that the government is no longer assessing.

The FCC confirmed Friday that "letters of inquiry" had been mailed to the two carriers seeking information about their billing practices.

At issue is the Universal Service Fund, a fee the government imposes on carriers to subsidize communications services in rural and low-income areas. Carriers pass the charge along to customers and usually itemize it on their bills.

FCC spokeswoman Tamara Lipper said Friday that the agency prefers to let competitive forces govern the markets with minimum government regulation but is "willing and quick to act to protect consumers."

The FCC decided last year that carriers would no longer be required to collect the fee for high-speed digital subscriber line (DSL) service starting Aug. 14, 2006.

Verizon sent DSL customers an email stating that on Aug. 26, it would charge a new monthly "supplier surcharge" of $1.20 or $2.70, depending on the connection speed. The fee will affect about half of Verizon's 5.7 million DSL subscribers, according to the company.

Prior to Aug. 14, the company was collecting $1.25 or $2.83 for from DSL customers depending on the connection speed.

Until Friday's announcement, BellSouth had continued to collect $2.97 per month from all 3.2 million of its DSL customers.

As of Friday afternoon, Verizon did not indicate that it had no plan to cancel the new fee, which the company says is needed to recover costs related to offering the high-speed Internet service.

"We would have no comment on it other than to say obviously we will explain to them (the FCC) whatever it is they want to have explained," said Verizon spokesman Brian Blevins.

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