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Phone fee overhaul could save customers cash

May 08, 1997

WASHINGTON (AP) - A government plan overhauling telephone fees would mean about $2 a month in savings for many Americans, but bills probably would go up for some customers.

The changes are in a Federal Communications Commission plan, adopted Wednesday, that would revamp a labyrinth of access payments local phone companies get for routing long-distance calls and for subsidizing local phone service. The FCC's decision is likely to be challenged in court.

The FCC agreed to cut those fees - which now total $23 billion and make up about half the average long-distance bill - by $1.7 billion starting July 1.

Assuming AT&T, MCI, Sprint and other long-distance companies pass along the reductions to customers as pledged, the average savings this year would be about $2 a month, the FCC said.

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The average long-distance bill is about $22.50 a month. The FCC says its plan would reduce that by 8 percent to 10 percent.

Business and residential phone users who make few long-distance calls and who have multiple phone lines - perhaps for a computer or for kids - will see bills go up, said Gene Kimmelman, co-director of the Consumer Union's Washington office.

About 16 percent of U.S. homes have second phone lines, and most of those customers make a lot of long-distance calls, the FCC said. More than two-thirds of those homes would see bills go down, officials said. The remaining one-third would see bills stay the same or go up depending on the number of long-distance calls they make.

``I think the public overwhelmingly benefits from what we have accomplished,'' said FCC Commissioner Susan Ness. ``We are not adopting any sort of modem tax,'' she added, responding to complaints from computer users who have two lines at home.

FCC Chairman Reed Hundt asserted the plan would lower phone bills for 85 percent of the nation's 82.6 million residential customers with one phone line. For the remainder, bills would remain the same.

In general, the more long-distance calls made, the more saved.

Businesses and homes with multiple telephone lines pay increased charges to help pay for discounted telecommunications services for schools and libraries, as Congress and the Clinton administration required in a 1996 law.

Residential customers with multiple lines would pay an additional $1.50 a month for each line beyond the first beginning Jan. 1, 1998. The average ``subscriber line'' residential charge that now appears on monthly bills is $3.50. It is used to pay for the cost of the line from the customer's home or business to the local phone company's switch.

Multiline businesses beginning July 1 would pay on average an additional 40 cents a month for each line. The average subscriber line charge for businesses is now $6 a month.

In addition, both multiple-line homes and business would pay an increased charge that would come from replacing some access fees that are based minutes of long-distance use with flat monthly rates to better reflect costs and more evenly spread fees among customers.

Beginning Jan. 1, 1998, multiline homes would pay an additional 97 cents a month per line, bringing this total monthly charge to $1.50 per line. Multiline businesses would pay $2.22 more a month per line, bringing this total charge to $2.75 a month per line.

One way residential customers could avoid the multiline charges is by putting each line in a different name. For this year at least, the FCC decided against increasing monthly line charges for residential customers with just one telephone line.

To make up for the $1.7 billion revenue loss, local phone companies say they'll be forced to either ask state regulators to raise local rates or reduce investment in the network.

``We are not raising local rates,'' declared Hundt. ``That's a lot of hooey.''

Sharon Nelson, chairman of Washington state's Utilities and Transportation Commission, expects state regulators to get flooded with rate increase requests from local phone companies. ``But that does not automatically mean they deserve it.''

Congress ordered the FCC to take the action as part of opening the $100 billion local phone market to competition from long-distance and cable companies.

Even though he's disappointed to see any rate increases, Kimmelman called the plan a ``good downpayment to consumers by cutting a portion of the fat in telephone network pricing.''

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