GLOSSARY OF TERMS
ACCESS CHARGES / UNIVERSAL SERVICE REFORM
Coalition for Affordable Local and Long Distance Services (CALLS) - Industry
coalition that put forth the proposal for the Commission to consider. Members
include AT&T, Bell Atlantic, BellSouth, GTE, SBC, and Sprint. They represent four
of the five largest local exchange companies and two of the three largest long distance
Access Charges - Access charges are the fees that local phone companies recover for
the costs associated with using the local phone network for the purpose of making or
receiving long distance calls. After the break-up of AT&T in 1982, the FCC adopted
access charge rules to govern the way the local phone companies recover these costs.
Some of the costs of providing access to the "local loop" are recovered through a flat,
monthly line charge - sometimes called a subscriber line charge (SLC) - that they
assess directly to consumers. The local phone companies recover the remainder of
their costs attributable to the use of the "local loop" through charges they assess long
distance companies. Both of these fees, which recover the costs that local telephone
companies incur in providing their facilities, are referred to as "access charges."
Universal Service Fund (USF) - Since telephone service provides a vital link to
emergency services, to government services, and to surrounding communities, it has
been national policy to promote universal telephone service since the 1930s. USF
makes phone service affordable and available to all Americans, including:
consumers with low incomes;
consumers who live in areas where the costs of providing telephone service is
schools and libraries; and,
rural health care providers.
Subscriber Line Charge (SLC) - Local phone companies recover some of the costs
of telephone lines connected to homes and businesses through a monthly charge on
phone bills. This charge is usually called the "subscriber line charge."
Presubscribed Interexhange Carrier Charge (PICC) - The PICC is a fee that a
customer's long distance company pays to the local telephone company to help the
local phone company recover the costs of providing the "local loop" to the customer.
Rate of return regulation - Rate of return regulation is analogous to a cost-plus
contract. Local phone companies subject to rate of return regulation are allowed to
set rates up to an amount that recovers costs on a dollar-for dollar basis, plus a
reasonable rate of return on the amounts invested. A rate of return is the specified
percentage return a carrier is permitted to recover on its invested capital.
Price cap regulation - Price cap regulation focuses directly on regulating the end
price that a local phone company charges its customers. A price cap is the maximum
price a local phone company can charge for its services.
Deaveraging - Deaveraging refers to charging different rates in different areas to
reflect the relative costs of providing service in each area.
X-Factor - Price cap regulation allows prices to increase by a measure of inflation
minus a specified percentage, known as the "X-Factor." In the past, it has
represented the amount by which local telephone companies can be expected to
outperform economy-wide productivity gains.