Access Fees Ad Infinitum

More than likely, the long distance portion of your January 1998 phone bill will show some new charges. But if you ask where this new money is going, all you're likely to get is a bunch of finger pointing.

History of Access Fees

Since the 1984 AT&T divestiture, the FCC has authorized access fees to make up for the subsidy that long distance charges used to provide towards local phone service, in order to encourage "universal service", a goal originally stated in the 1934 Communications Act. These included a subscriber line access charge (which was $3.50 per line for residential customers in 1997) and per-minute carrier access charges.

The Telecommunications Act of 1996 provided for the substitution of per-minute access charges with per-line access charges, based on the premise that the per-minute fees were too high and created economic distortion.

Who's Getting the Fees

These access fees go into a universal service fund, which is doled out to local phone companies according to an FCC formula. Because the increased per-line fees are accompanied by reduced per-minute fees, the local phone companies have not benefitted from this change. In large measure, this change has capped the amount of funds that will be generated from these fees.

A year or so ago, long distance companies were sponsoring advertising campaigns claiming local phone companies were overcharging long distance companies for access. It would be charitable to describe these statements as disingenuous, since these "overcharges" were decreed by the FCC. The long distance companies were also promising that any reduction in access fees would be passed through in full to customers.

Only Increases Passed Through

The carrier access line charge (also called a "preferred interexchange carrier charge" or PICC) is imposed on the long distance company for lines which are presubscribed to that company. The fee remains at $0.53 per month for the first line at a residence, but is increased to $1.50 per month for additional lines.

AT&T is imposing a monthly fee of $1.50 for additional lines, even though its rate has only increased by $0.97. MCI is charging $1.07 per line for every line with charges to MCI, even if they are not presubscribed. Although these companies are passing through charges in excess of the amount of the increase, they have not announced across-the-board rate decreases for their customers. Thus, they have kept the decreased per-minute rates for themselves, while refusing to absorb these higher per-line charges that were imposed on them by FCC decree.

Disclaimer

This explanation of these new access charges is based on my current, extremely fuzzy, understanding, Comments from people who think they have a better understanding are welcome. And by the way, these fees are scheduled to go up $1.00 per month every January 1 for the next several years.

                                              Eli Mantel aka the Cagey Consumer

Access Charge Reform (US Telephone Association)
FCC Lowers Access Charges (MCI)
The MCI Pledge (MCI)
The AT&T Pledge (AT&T)
FCC Delusions About Access Reform
subscriber line charge explanation (Florida Public Service Commission, 3/18/1998)

Send your comments to mantel@hotmail.com