Phone Rate Proposal Mixed Bag For Consumers Savings Would Total $1 Billion Annually, But Some Would Pay Higher Bills

Americans could save at least $1 billion a year in monthly phone charges under a plan being considered by federal regulators. But bills could go up for customers with more than one phone line who make few long-distance calls.

The changes could come about as the Federal Communications Commission revamps a labyrinth of subsidies that make local phone service affordable to poor people and to those living in high-cost rural areas.

The plan is still being refined and no final decisions have been made. The FCC is expected to adopt a plan May 6.

The estimated $1 billion is what both residential and business customers would net annually, after factoring in changes that also would raise some charges, said FCC attorneys, speaking on condition of anonymity.

And, it accounts for $2.5 billion a year that will pay for new discounted telecommunications rates for schools and libraries, they said.

“Under our plan, 85 percent of all consumers in the country are better off on their total bill and 15 percent are the same,” asserts FCC Chairman Reed Hundt.

But FCC attorneys familiar with the plan said there is a potential for bills to rise for businesses or for residential phone users who make few or no long-distance calls and who have multiple phone lines in their homes - perhaps for a computer or for kids.

For these two groups, the plan would increase the “subscriber line charge” that appears directly on monthly bills and is used to pay for the line to the local phone company’s switch, the attorneys said. A piece of the charge goes to make phone service affordable in high-cost areas.

Multi-line residences on average pay $3.50 a month for that specific charge, and that could rise to $6 a month. Multi-line businesses on average pay $6 a month, and that could increase to $6.64, the attorneys said.

That, coupled with converting some “access” fees to a flat rate, could cause these customers’ bills to go up, the attorneys said.

It is impossible to determine how individual phone bills would be affected because it is up to long-distance companies to pass savings to customers. In addition, customers have different calling patterns and may be on discounted plans.

FCC attorneys acknowledge one potential way for residential customers to avoid the multi-line charge might be to put each line in a different name. That concerns local phone companies.

Meanwhile, the $1 billion in savings would come from cutting access fees that local phone companies receive for routing long-distance calls on their networks. The cuts would come in part through changes in the regulatory formulas the FCC uses to calculate fees, attorneys said.