The Chicago Tribune, August 3, 1999

Firms Seek Boost in Long-Distance Fees
By Jon Van

A plan to rejigger long-distance phone rates was proposed by several large phone companies Monday and denounced by consumer advocates as promoting higher bills for those customers who use their phones the least.

Long-distance giants AT&T Corp. and Sprint Corp. joined with regional phone companies SBC Communications Inc., Bell Atlantic Corp., BellSouth Corp. and GTE Corp. in urging the Federal Communications Commission to consolidate and raise the fixed-rate monthly fees that phone customers are charged to support long-distance service.

Under the proposal, the current $3.50 monthly fee called a subscriber line charge would be combined with a fee called the presubscribed interexchange carrier charge, which runs around $1.50 a month.

Under the new plan, the combined fee would be $5.50 a month, later rising to $7 a month.

As part of the deal, there would be a reduction in so-called per-minute access fees that local phone companies charge long-distance companies to complete their calls.

"We feel this is the best way to promote competition in the local residential market and bring consumers the benefits of competition," said SBC spokesman David Schlosser.

An AT&T spokesman, Jim McGann, said the proposal would eliminate much phone-bill confusion that now irks consumers and would result in lower per-minute rates for long-distance calls.

Consumer advocates, however, said the proposal gives phone companies more power to charge higher fees to customers who seldom make long-distance calls so they can reduce the amount charged to the most attractive customers--those who make a lot of long-distance calls.

"We're going to vigorously oppose this," said Gene Kimmelman, co-director of Consumers Union's Washington office. "They're simply raising customers' monthly bills. The FCC's own analysis shows that for people who make less than 30 minutes a month in long-distance calls, the effective rate of their bill has doubled."

In Chicago, Seamus Glynn, co-director of the Citizens Utility Board, called the proposal "another example of competition that doesn't deliver lower rates for the bulk of phone customers."

"If you're a high-volume phone user, the companies really cater to you, but if you're not, they just pile on the charges and you really don't have many options," he said.

AT&T's McGann said that as per-minute rates fall, people who don't make many long-distance calls may make more such calls so they can enjoy the savings.

Not all large phone companies backed the proposal for consolidating and raising monthly fees. Ameritech Corp., U S West Inc. and MCI WorldCom Inc. didn't endorse the deal.

Under the current system, monthly fees charged by long-distance companies vary from one carrier to another, providing consumers a chance to shop for the long-distance deal with the lowest monthly fees.

"We believe that market forces, and not more regulation, should determine rates," said Ameritech spokesman Marvin Wamble.

The FCC had encouraged the phone industry to devise a plan to reduce and reform access fees. An FCC-sponsored plan was thrown out in May by a federal court.

After receiving the new proposal, the FCC is expected to invite public comment and hold hearings on the matter.