This News Release: Text | Word97
Press Conference: Audio/Video Recording - Powerpoint slides used during Press Conference
Statements: Furchtgott-Roth
Order FCC 00-193: Text | Word97 | Acrobat - includes all Appendices, 191 pages
- Factsheet: Access Charges And Universal Service Reform
- Glossary of Terms: Access Charges / Universal Service Reform
- Summary of CALLS Proposal Access Charge Provisions
- Summary of Interstate Access Universal Service Support Mechanism

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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

May 31, 2000

Mike Balmoris at (202) 418-0253


Monthly Minimum Usage Charges Eliminated for Immediate Savings for Consumers

Washington, D.C. - Today, the Federal Communications Commission (FCC) reduced telephone access charges paid by long distance companies by $3.2 billion, the largest decrease ever adopted. Access charges are the prices long distance companies pay to local telephone companies for access to their local phone network. Since the Telecommunications Act of 1996, the FCC has been moving the price of long distance companies' access to local telephone networks towards levels that reflect costs, and to date have reduced prices by a total of $6.4 billion. These reductions have stimulated billions of dollars of investment in infrastructure and reduced consumer prices by 17% since the passage of the Act.

Major long distance companies have agreed to pass these savings onto consumers living in all areas of the country, and have agreed to immediately eliminate monthly minimum usage charges. Although long distance rates have been plummeting for years, consumers who make no or few long distance calls have experienced increased phone costs because of monthly minimum usage charges, and other line item charges.

The changes adopted today will accelerate competition in the local and long distance telecommunications markets; and set the appropriate level of interstate access charges for the next five years. Specifically, the reforms should:

  • lower telephone bills for consumers;
  • result in an overall, immediate $3.2 billion reduction in access charges paid by long distance companies this year;
  • accelerate competition by removing implicit subsidies found in access charges;
  • change the subsidies hidden in interstate access charges into explicit, portable, and sufficient universal service support so that affordable telephone service will continue to be available regardless of a consumer's income or geographic location; and,
  • provide regulatory stability for the industry so that it can make longer range investment decisions.
Major long distance companies have committed to passing through these reductions to consumers. In response to concerns that only high-volume consumers might see the savings, two of the largest long distance companies - AT&T and Sprint - have agreed to eliminate from their basic rate plans the monthly minimum usage charges consumers are now required to pay whether or not they make any calls. This action alone will lead to immediate, significant savings for customers who make few long distance phone calls.

Additionally, two phone bill charges - the existing presubscribed interstate carrier charge and the subscriber line charge - will be combined into one line item. For the first year, the new single charge is lower than the existing two charges combined. Consumers will continue to see savings, even as the charge increases in the second year. Subsequent increases in the charge are subject to further FCC action.

The rules also continue to preserve the FCC's commitment to providing financial support to companies offering phone service in areas expensive to serve. Currently, roughly $650 million of revenue from access charges is used to support service to high-cost customers. Because this revenue is collected through interstate access charges, it is available only to incumbent local phone companies. Under the new rules, $650 million is removed from access charges and replaced with an assessment on all carriers' interstate revenues which is placed in a fund available to any carrier serving customers in high-cost areas.

Today's action follows nearly two decades of contentious debate of complex issues stemming from the breakup of AT&T in 1984. In an effort to resolve these issues the Coalition for Affordable Local and Long Distance Services (CALLS) submitted a comprehensive proposal to revise the current access charges and universal service rules to the Commission in July 1999, and a modified version of the proposal in March 2000. Members of the industry coalition 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 companies.

Action by the Commission May 31, 2000 by Report and Order. Chairman Kennard, Commissioners Ness, Powell and Tristani with Commissioner Furchtgott-Roth concurring in part and dissenting in part.

CC Docket Nos. 96-262, 94-1, 99-249, and 96-45


Common Carrier Bureau contacts:
Jane Jackson or Richard Lerner at (202-418-1520)
Jack Zinman at (202-1500)

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