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Phone Giants Propose Lower ‘Access’ Fees But Proposal Gets Cool Response From Fcc, Consumer Advocate

Associated Press

In an unusual alliance, AT&T, Bell Atlantic and Nynex sent federal regulators a plan Friday they say would cut monthly telephone bills for businesses and residences $400 million annually.

But FCC Chairman Reed Hundt quickly dismissed the plan.

The companies’ proposal comes as the Federal Communications Commission considers revamping two areas of phone regulation: a subsidy program that keeps local phone service affordable in high-cost areas and for low-income customers, and $20 billion in annual “access” fees that long-distance companies pay local phone companies.

The FCC is expected to take action next month.

Gene Kimmelman, co-director of the Consumers Union’s Washington office, said the phone companies’ plan would raise monthly bills by more than $3 billion a year in new charges and fees.

The FCC chairman said, “I don’t think Congress intended to have us raise residential basic dial tone like AT&T and Bell Atlantic propose. And, I think I’m reading Congress right on this.”

But Tom Tauke, executive vice president of Nynex, which plans to merge with Bell Atlantic, said the proposal would not jeopardize subsidies that keep phone service affordable and would not boost phone bills.

Nynex, which provides local phone service in the Northeast; Bell Atlantic, a provider of local service in the mid-Atlantic states; and long-distance giant AT&T asked the FCC to approve the plan so it can take effect July 1.

The proposal would increase some charges to residential and business customers but would net them $400 million in savings, mostly from reductions in access fees long-distance companies pay local companies to route calls, the companies said.

The companies suggest the FCC cut access fees nationwide by $2.5 billion a year. Long-distance companies would save $1.8 billion annually and the rest would go to keeping local phone service affordable. But the plan also would assess customers $1.4 billion in new charges for such things as discounted telecommunications services to schools and libraries.