In the 19th century, Congress created a universal service fund to ensure fair pricing of telephone services across rural and urban areas. In 1996, Congress expanding the application of the USF in a way that made it apply to DSL service. But, recently, the FCC began classifying DSL service in a way that lawfully exempted DSL from the USF charge. Therefore, DSL users, like users of cable internet services, no longer have to pay the USF.
Did BellSouth cut out the USF and drop the rate? No, BellSouth created a new charge of almost the same amount as the USF and is pocketing the money. According to Ars Technica:
BellSouth will simply keep its $2.97 monthly fee, and keep calling it a “regulatory cost recovery fee.