Copyright 2000 Journal Sentinel Inc.
Milwaukee
Journal Sentinel
June 1, 2000 Thursday FINAL EDITION
SECTION: NEWS; Pg. 01A
LENGTH: 1067 words
HEADLINE:
Cheaper phone bills coming in July;
FCC adopts overhaul expected to benefit
all customers
BODY:
All telephone
customers are expected to see savings beginning with their July long-distance
bills under a dramatic overhaul devised by the industry and adopted by the
Federal Communications Commission on Wednesday.
Officials said the cuts
were the largest in the history of phone regulation and would have the biggest
impact on the poor and those who do not make many long-distance calls.
For tens of millions of consumers who make few or no long-distance
calls, bills could drop by as much as 50%.
The commission cut by
$3.2 billion the "access fees" that local phone companies
charge long- distance carriers to connect calls -- costs that are typically
assessed to consumers. Long-distance companies have pledged to pass on the
savings, meaning their customers should see lower per-minute rates.
Low-volume callers would see the most immediate benefits -- with their
bills dropping $3 to $4 a month. Moderate and
heavy users may see only small reductions in the short run, but stand to gain
from falling long-distance rates or price wars that the new plan may trigger,
officials said.
"It's going to affect everyone differently, but overall,
everyone is going to benefit from this plan," FCC Chairman William Kennard said
in Washington, D.C.
Previous subsidy reductions have sparked price
competition among the largest carriers, Kennard said, with some rates as low as
5 cents a minute.
Consumers should begin seeing the changes in their
July statements.
The changes will do little to simplify phone bills
because regulators are cutting some charges, raising other charges and folding
some together.
Regulators have sliced access charges to date by
$6.4 billion over the past few years to better reflect local
phone companies' connection costs -- but Wednesday's reduction is the most
dramatic.
The FCC said that past reductions had stimulated "billions of
dollars of investment in infrastructure" and reduced consumer prices by 17%
since passage of the Telecommunications Act of 1996, which further deregulated
the phone industry.
The FCC's action implements an industry proposal
offered by long-distance carriers AT&T and Sprint and major local phone
companies Bell Atlantic, BellSouth, GTE and SBC Communications.
SBC is
the parent of Ameritech, the largest local phone company in Wisconsin.
"Today's decision by the FCC will bring immediate savings to consumers
and will guarantee that people who live in high-cost rural areas can continue to
enjoy affordable local phone service, " said Priscilla Hill-Ardoin, senior vice
president for federal regulatory affairs at SBC.
Industry officials said
the plan was a major step in moving the long-distance business toward flat-rate
-- rather than per-minute -- pricing. That's something that wireless carriers
and Internet providers that offer phone service over their data lines have
already latched onto.
"That's probably the trend of the future," said
John Nakahata, spokesman for the industry coalition. "This will allow those
types of plans to proliferate."
Still, Gene Kimmelman of Consumers Union
said the public would only realize the benefits "if long-distance companies
deliver on their promise to pass through the savings with rate reductions."
There is practically no way of measuring whether this is happening or
not, he warned.
The Wisconsin Public Service Commission filed comments
with the FCC and expressed concern that the proposal would not go far enough to
help the poor and consumers who are not heavy long-distance users. The agency
also said it needed more information from the phone companies to ensure that
their promise of future rate cuts would become a reality.
WorldCom,
which did not sign onto the plan, said that based on FCC data, it believed that
the plan would ultimately result in higher rates for customers and added revenue
for the Bell companies.
Kimmelman did note that the plan offered
benefits for those who make few or no long-distance calls -- long a source of
concern for consumer advocates.
As part of Wednesday's action, AT&T
pledged to eliminate a $3 monthly charge for residential
customers on AT&T's most basic calling plan, since some consumers make calls
totaling less than that amount. Sprint agreed to do the same.
Under
AT&T's basic rate schedule, a customer who makes 10 minutes of calls a month
would save $2.52 a month and more than $30 a
year. A person who makes no calls would save $4.71 and more
than $56 a year, the commission said. More than 41% of
long-distance users make 10 minutes or less in calls each month.
The
plan also folds together and reduces two flat- rate charges now on monthly
bills. One, the subscriber line charge, covers the cost of the phone line from
the local phone company into the home and is capped at $3.50 a
month. A second pays for long-distance companies' use of the local phone
network. It now averages about $1.50 a month.
These two
costs will be consolidated and reduced to $4.35. It would rise
to $5 next July. The commission would then study the cost to
see whether it should be raised further.
A portion of the access fees
that long-distance companies currently pay local phone companies goes toward
keeping phone service affordable for low-income people and those in high-cost
areas.
Instead of contributing to this $650 million
fund indirectly, consumers would see the monthly charge for universal service
assessed by their long- distance carrier spelled out as a separate charge.
Consumers also will see a separate fee from their local phone company,
averaging about 36 cents, also used to keep phone service affordable.
These moves fit into the goal outlined by a 1996 telecommunications law
of making subsidies explicit and clear to consumers.
Last week, the
House of Representatives voted overwhelmingly to repeal a federal
telephone tax originally passed to finance the Spanish-American
War.
The 3% telephone excise tax affects an estimated 252 million
telephone numbers -- including those used by cellular phones, fax machines and
computer modems.
The House voted 420-2 to use part of the projected
federal budget surplus to do away with the telephone tax in
three equal steps. Full repeal would come Oct. 1, 2002.
------------
The Associated Press, Lee Bergquist of the Journal Sentinel staff and
Bloomberg News contributed to this report.
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June 1, 2000 
