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ACCESS CHARGES AND UNIVERSAL SERVICE REFORM
The adoption of access charges and universal service reform, known as the CALLS
proposal, will bring many specific benefits to consumers. Additionally, the reform of
access charges and universal service will encourage a competitive telecommunications
markets. Specifically, the Order:
- Eliminates the residential and single line business presubscribed interexchange carrier
- Reduces over time the PICC for multiline businesses until it is eliminated in most
- Ensures that AT&T and Sprint customers will have at least one long-distance plan
available to them that does not have a monthly minimum usage charge.
- Low-income telephone customers who subscribe to Lifeline service will continue to
have their Subscriber Line Charge (SLC) waived.
- Participating CALLS companies have agreed to waive the Universal Service Fund
(USF) charge for Lifeline service customers.
- Reduces access charges paid by long-distance companies by $3.2 billion.
- Specifies that before the SLC increase scheduled for July 1, 2002 takes effect, the
FCC will hold a formal proceeding to ensure its validity.
- Removes $650 million in implicit universal service support from access charges, and
replaces it with an explicit, portable universal service fund charge to ensure
affordable phone service for high-cost rural areas.
The adoption of the CALLS proposal will amount to immediate and significant savings
for consumers starting July 1, 2000.
- Reduction in flat fees (monthly minimum usage charges and PICC):
- $50 per year for consumers who make no long-distance calls
- $10 per year for consumers who make 30 minutes of long-distance calls a month
- Reduction in access charges paid by long distance companies - $3.2 billion in lower
rates in the first year
- Consolidation of the PICC and SLC into a new SLC - $600 million in consumer
savings in first year
- Long distance usage per month (1998 figures):
- Households with no long distance calls - 32%
- Households with ten minutes or less of long distance calls - 41%
- Cap of residential and single-line business SLC charges:
July 1, 2000 - $4.35
July 1, 2001 - $5.00
July 1, 2002 - $6.00 (subject to FCC validation)
July 1, 2003 - $6.50 (subject to FCC validation)
- For the first year, the new single charge is lower than the existing charges combined,
and subsequent increases in the SLC line item will have to be justified by the FCC.
Brief Timeline of Access Charges
Since 1983, the Commission has issued a series of decisions that have led to continued
decreases in long-distance rates.
- In 1983, the Commission adopted uniform access charge rules following the break-up
- In 1991, the Commission implemented price cap regulation in place of rate-of-return
- In 1997, the Commission adopted rules reforming access charges to align the access
charge recovery system more closely with the manner in which costs are incurred.
- In July 1999, the CALLS proposal was originally submitted to the Commission.
- In March 2000, a modified version of the proposal was submitted to the Commission.