FCC Order Won't Reduce Business Telecom Surcharges

WASHINGTON (06/05/2000) - Don't look for any of the annoying surcharges on your company's telephone bill to go away anytime soon, despite a widely publicized order by the U.S. Federal Communications Commission to reduce users' costs.

The FCC this week changed the system of collecting money to assure universal service by adopting a proposal from six large carriers to consolidate several current charges on residential users' phone bills into one slightly lower fee.

But business users - except those who happen to be at locations with only one phone line, an increasing rarity in the Internet age - will see their current surcharges remain, and may even face a new one in coming months.

Under the FCC order, business users will continue to pay - as they have since AT&T Corp.'s breakup in 1984 - a per-line fee called the Subscriber Line Charge (SLC). That fee has been creeping up during the years and now stands at a maximum of US$9 per month.

Business users will also continue to pay the Primary Interexchange Carrier Charge (PICC), a controversial charge that arose after the FCC expanded universal service coverage following the Telecommunications Act of 1996.

The PICC is technically a charge levied by local carriers on whichever long-distance carrier a user selects as the presubscribed carrier for each line. But in practice it is almost always passed along by the chosen long-distance carrier to the user as a billing line item. The PICC is the main charge the FCC is eliminating for residential users.

The agency said the PICC might be eliminated down the road for business users, too. But frustrated representatives of the business community accused the FCC of trying to hide the impact of its decision, especially after the agency unexpectedly released its order with a glowing announcement about omitting the business user charges, instead of scheduling a meeting for the usual public vote of the five commissioners.

"They put a wonderful spin on it," says James Blaszak, attorney for the ad hoc Telecommunications Users Committee, a group of about 20 large corporations.

"You'd think they were in the political consulting business."

Blaszak noted that the FCC soft-pedaled another part of the order, which sets up a $650 million fund designed to compensate mainly rural carriers with unusually high local-loop costs for keeping the new combined residential SLC and PICC down. The new money may be raised by increasing the current percentage "universal service surcharge" that many long-distance carriers levy on business users or may show up as yet another new line item, Blaszak says.

The FCC order did come with one bit of good news for business users. The agency set a schedule for continuing to reduce the per-minute toll that local carriers assess long-distance carriers for completing their calls. In the next four years, the rates will go down from the current average of less than 2 cents per minute to 0.55 cents per minute.

But business users will have to mention this new schedule in their carrier negotiations if they want to gain a corresponding reduction in their long-distance rates, Blaszak says. "The telecom market is not designed to protect the weak and uninformed," he says.

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