Why long-distance access fees are on hold

By , Staff writer of The Christian Science Monitor

Long-distance phone calls are a minor luxury today, like steak for dinner. Local calls, on the other hand, are hamburger: a cheap, often-used commodity. Most consumers in the United States are so used to this split that they probably think it's a law of nature. Yet the forces of deregulation and new technology are now driving the cost of long distance down, and the cost of local calls up.

Three hundred billion phone calls a year are made in the US, so such a cost shift would inevitably have major consequences. It's fear of, and uncertainty about, these consequences that lie behind the recent Federal Communication Commission (FCC) decision to postpone proposed phone ''access charges.''

Back when the American Telephone & Telegraph Company (AT&T) was a young monopoly, no one worried about the relative prices of phone calls. Local service was made artificially cheap, so that everyone in the US could afford to have a phone in his home. Long-distance rates were artificially high, so Ma Bell could make back the money lost on local hook-ups.

Recommended: Default

And that's the way phone calls have continued to be priced through the years. In 1983, between 35 and 50 cents of every long-distance dollar was used to subsidize local calls, estimates a Senate source.

But the world of phones is far more complicated today than it was in the 1930 's. For one thing, a variety of factors are conspiring to push long-distance rates down.

The FCC has allowed fast-moving firms such as MCI to enter the long-distance business and undercut AT&T. New technology is allowing heavy long-distance users (read ''big businesses'') to buy private circuits, if they think their charges are too high. AT&T has been split from the local operating companies, and no longer must subsidize local calls as a matter of course.

''And once you create one chink in the armor,'' says Jeff Cunard, a communications lawyer at the Washington, D.C., firm Debevoise & Plimpton, ''the entire (phone) pricing structure crumbles.''

Enter ''phone access charges.'' Proposed by the FCC, access charges are a flat fee that phone users would pay to replace the subsidy local calls get from long distance. For individuals, the fee would start at $2 a month, and rise gradually to $6 a month or more.

The access fee, however, worries many members of Congress. What concerns them most is thinking about how voters will react when the highly visible access charge first appears on a monthly bill.

The fee is unfair, say congressional sources, because by shifting costs from long distance to local callers it lightens the burden on business and places a greater load on individuals. Sixty-two percent of all long-distance calls are made by only 4 percent of business phone customers, notes a Republican congressional committee staff member.

Last week, 32 senators signed a letter to FCC chairman Mark Fowler requesting that access charges be postponed. Reluctantly, the FCC, in a preliminary vote Jan. 19, agreed to put off the charges until mid-1985.

AT&T was not pleased, because its costs for access to local phone lines will rise higher because of the FCC's actions. AT&T spokesman Pic Wagern says a planned 10 percent cut in long-distance rates is now in jeopardy.

''If long distance continues to be artificially overpriced, more companies will have an incentive to set up their own phone facilities,'' says Mr. Wagner. If that happens, he says, local phone operating companies, as well as AT&T, will lose revenue, and be forced to jack up the cost of residential phones to new heights.

Access-charge opponents, however, say they'll continue to press for victory, instead of a mere delay. The House of Representatives has already passed a bill that would scuttle the access charge; the Senate is to take up legislation that would put off the fees for two years while further study is conducted.

''We think the access charge is unfair now,'' says Glenn Nishimura, legislative representative of the Consumer Federation of America. ''And we think it will be unfair a year from now.''

Share this story:

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...