Rollback

A break for phone users

Raising the phone bills for millions of Americans during an election year is abhorrent to politicians. That is why Congress has been moving inexorably toward repeal of controversial access charges on long-distance telephone service that were due to go into effect on April 3. Last week, bowing to the inevitable, the Federal Communications Commission decided to delay the charges until next year for individuals and many small businesses.

The FCC last year ordered the fees, ranging from $2 a month for individuals to $6 for businesses with only one phone line, as part of the restructuring of phone charges taking place in conjunction with the breakup of American Telephone & Telegraph. Until now, revenues from long-distance charges have been used to subsidize local service. The new fees were to help replace that subsidy. But the House last November passed a bill striking down most access charges, and the Senate was preparing to pass its version of the bill. Before the Senate got around to voting, the FCC announced its move. The delay will not affect companies with more than one phone; they will still have to pay the new charges.

AT&T had said that it would lower long-distance rates by more than 10% once the access fees went into effect, but AT&T's critics did not like the math.

Access charges could save AT&T $3.3 billion a year in subsidies to local phone companies. But because of other costs, the company had proposed cutting long-distance rates by only $1.75 billion. As expected, AT&T was unhappy with the FCC action. Said Executive Vice President Kenneth Whalen: "We find any delay by the FCC extremely troublesome. It's a disservice to customers because it could prevent the sizable long-distance reductions we had planned."

But there was some satisfaction among other phone companies over the FCC decision. As part of its ruling, the agency also allowed MCI Communications, Sprint and other long-distance competitors of A T & T to offer a deep discount, at least until the time when it is just as easy to use the new services as those of AT&T. Currently, MCI customers must punch in up to twelve extra numbers to make a long-distance call. The net effect of last week's action, said MCI Chairman William McGowan, "will be healthy competition in the long-distance market."

In another, more subtle way, both politicians and telephone industry executives welcomed the FCC's move. It meant that the access charge issue was being taken back by the commission and away from Congress, where the politically sensitive subject had always rested uneasily. Said a relieved aide: "The FCC is the right place to untangle these complex questions."