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Computer industry

Verizon to Surcharge DSL Customers, Cedar Point Raises $20M, IBM Donates $5M to UMASS-Amherst

Strategic Insights

— 1 min read

Verizon Communications Inc. plans to introduce a new surcharge for its digital subscriber line (DSL) customers in Massachusetts and New England, while Cedar Point Communications Inc. has secured an additional $20 million in funding. Meanwhile, IBM Corp. has pledged to donate over $5 million in technology and equipment to the University of Massachusetts-Amherst (UMASS-Amherst) to support an alliance between the company and the university.

Key Takeaways:

  • Verizon will start charging DSL customers in Massachusetts and New England an additional $2 to $3 per month to recoup the cost of the Universal Service Fund fee, which applies to all phone lines, beginning next month.
  • The surcharge is estimated to cost Verizon approximately $75 million annually, but the company claims it will continue to offer DSL at a lower price point than cable modem service from Comcast Corp. and other cable companies.
  • Cedar Point Communications Inc. has raised $20 million in new venture capital, bringing its total funding to $65 million, with the new funds coming from JP Morgan Partners and prior investors.
  • The additional funding will support Cedar Point's technology, which combines cable TV and phone services, and has caught the attention of Federal Communications Commission (FCC) Chairman Michael K. Powell.
  • IBM Corp. will donate technology and equipment worth over $5 million to UMASS-Amherst, including a Linux lab with hardware and networking technology, to support an alliance between the company and the university.
  • The IBM donation will also provide IBM's Rational software to help professors design curricula in fields that can be supported by technology.

Statistics:

  • Verizon will charge DSL customers an additional $2 to $3 per month to recoup the cost of the Universal Service Fund fee.
  • The estimated annual cost of Verizon's surcharge is $75 million.
  • The number of Verizon DSL subscribers nationally is over 2.5 million.
  • The current price of Verizon DSL is $35 per month, or $30 bundled with long distance and local phone service.
  • Comcast Corp.'s cable modem service costs more than Verizon DSL.
  • Cedar Point Communications Inc. has raised a total of $65 million in funding.
  • Cedar Point's new funding came from JP Morgan Partners and prior investors, including Comcast Corp.'s investment arm.

Sources:

  • Peter J. Howe, "Verizon to Surcharge DSL Customers," The Boston Globe, April 14.
  • Peter J. Howe, "Cedar Point Raises $20M in Funding," The Boston Globe, April 14.
  • Robert Weisman, "IBM Donates $5M to UMASS-Amherst," The Boston Globe, April 14.

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