Verizon Redirects Typo Traffic to its Own Search Service

[qi:004] Update: Some customers of Verizon’s (VZ) high-speed FiOS Internet Service are reporting that when they mistype a website address, they are redirected to a Verizon’s own search engine page, regardless of what they have set as default. Verizon had introduced “Advanced Web Search” in June 2007.
Cox and Earthlink (ELNK) have dabbled in similar search-jackings, and if you use Microsoft’s Internet Explorer, a mistyped URL leads you to MSN Search page. On the surface, it seems this is to save Verizon customers the hassle, but it is also a nice way for the incumbent to goose up their revenues via advertising. The ads on the site come from Yahoo (YHOO) and Ask (IAC).
Sure, they can’t beat Google, but they can game the system in their favor. Thus far, domain squatters have benefitted from mistyped web addresses, and seems like large ISPs are waking up to “money making opportunity.” If this trend spreads across the world, then pure-play search engines, especially Google have a reason to be concerned.
Verizon has an opt-out option for its Advanced Web Search service. Why make it a default – is what I ask. If they are just offering it as a helpful add-on, then make it an opt-in feature. Let the customer decide, what and where do they want to do. I have emailed Verizon to get their side of the story. Stay tuned.
Update from Verizon Spokesperson:

The industry went to this approach a couple of years ago.  Many others have similar procedures and this has become a de facto industry standard.
The money we make from ad sales on this site offsets some (probably not all) of the cost of providing it.  Nice as it is to get the cash, it’s not a significant income stream for a company like ours. Our procedure hardly makes a case that Verizon is unfairly competing with sites like Google or MSN or Yahoo that also offer search.