Lower costs for long-distance junkies and higher expenses for multiple-line families is the summary version of how new Federal Communications Commission rules, handed down May 7 are likely to affect the average residential phone customer.
What exactly did the FCC do? Why? And how might it affect you? A question and answer look.
Q–What happened?
A–The FCC, which regulates telephone firms, revamped the fees that long-distance companies pay to use phone lines operated by so-called Baby Bells–such as Pacific Bell, Bell South and GTE–who wire phones into consumers’ homes. In short, the rules will reduce so-called “access fees” for long-distance firms, while allowing Baby Bells to charge a bit more in fees to customers–both business and residential–who have multiple phone lines.
The agency also will require phone companies to continue paying for universal telephone access for the poor and pay into a fund that will help provide subsidized Internet access to public schools and libraries.
Q–Why was this done?
A–Long-distance companies have been complaining for several years that the access fees they pay to local phone companies are overly high, which unfairly boosts long-distance charges to consumers, while enriching profit margins for the Baby Bells. These fees had been set years ago, when the cost of providing phone lines, particularly in remote areas, was higher, says Jeff Kagan, president of Kagan Telecom Associates in Woodstock, Ga.
What the FCC is attempting to do is make the fees better reflect the cost of providing the service, he says. Long-distance firms say the FCC didn’t go far enough, while some Baby Bells maintain the agency went too far.
And, then, other experts say the move is simply rearranging deck chairs on the Titanic. Today’s system of Baby Bells providing local service and long-distance firms connecting all other calls is slowly evaporating. Telecommunications rules passed last year will eventually open both markets to competition.
Q–How will this affect my phone bill?
A–That depends on how you use your phone. If you have one line and make very few long-distance calls, you probably won’t be affected at all. However, if you have multiple phone lines, you are likely to see a hike in the monthly fees charged to provide basic service. The hike, at least initially, should amount to no more than $1.50 per line, however.
Meanwhile, if you make a substantial number of long-distance calls and are not on a calling plan, you should save some money on long-distance charges. Long-distance carriers have promised to pass on the bulk of their savings from the lower access fees to consumers. However, it’s still unclear as to just how much that’s likely to amount to. Industry experts estimate that the average long-distance bill will drop from 5 to 15 percent, depending on where and when you call. The FCC estimated that an average consumer, who has just one phone line, would see his long distance bill drop to $20.65 per month from $22.50.
If you have more than one line and make a lot of long-distance calls, you may find the rules are a wash–you’ll pay a little more for the extra line and a little less per long-distance call.
Q–What about people who are enrolled in long-distance calling plans?
A–They probably will not see any rate break, says Mark K. Phigler, president of Americans for Competitive Telecommunications, a Walnut Creek, Calif.-based consumer organization that studies the impact of the Telecommunications Act of 1996.
Q–You mentioned subsidies for schools and libraries hooking up to the Internet. Does this mean I’ll pay less to hook up to the Internet from home?
A–No. If you have an extra phone line to connect your computer to the Internet, you’ll be among the losers in this deal because you’ll pay a bit more for that second phone. However, if you don’t have a computer or Web access, it’s more likely than ever that your public library will have a computer with Web access that you can use. Schools, too, are more likely to offer access to the Internet.
It’s worth mentioning that about 15 percent of American households do have more than one phone line and the bulk of those additional lines are used primarily to hook to the Internet, says Kagan.
Q–I own shares in several telephone firms. How might this affect me?
A–Shares in nearly all types of telephone companies dropped May 7, with the Baby Bells taking the biggest hit. However, long-distance companies are expected to be a bit more profitable in the long run as a result of the changes, while Baby Bells will find their profit margins squeezed a bit.
Q–When does this go into effect?
A–The rules are slated to go into effect in July, but some experts believe that the Baby Bells will challenge the rules in court. If that’s the case, implementation could be delayed into fall–or even longer–while a court attempts to decide whether the FCC’s rules are fair to all involved.
