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FCC to Examine Phone-Billing Practices

April 17, 1998|From Bloomberg News

Federal Communications Commission Chairman William Kennard, concerned over "consumer confusion" created by new charges on many long-distance bills, directed the agency Thursday to look into the billing practices of all phone companies.

The new charges began appearing on phone bills a few months ago, reflecting new fees required by the 1996 Telecommunications Act as of Jan. 1 to help subsidize the cost of wiring the nation's school libraries and rural health-care facilities to the Internet.

The three largest U.S. long-distance companies--AT&T Corp., MCI Communications Corp. and Sprint Corp.--are charging business customers about 5% of their overall monthly bill to fund the subsidies. New fees are likely to be extended to residential customers this summer.

Also, the FCC last May changed the way local phone companies charge long-distance companies for completing their calls, adding a new per-line charge that is being passed on to customers. The fees vary by company and range from 80 cents to $1.07 per residential customer, and $2.75 per business line or a flat fee of $5.50 per business customer.

"We have not raised and we will not raise long-distance companies' overall costs of doing business," Kennard said at a Washington conference. The new fees "have been more than offset by other cost reductions."

After gathering information on the way phone customers are billing customers, the agency will decide if it needs to "undertake consumer education initiatives," Kennard said.

The 1996 Telecommunications Act requires long-distance companies to pay into a so-called universal service fund that will help subsidize the cost of wiring schools, libraries and rural health-care facilities beginning Jan. 1. The FCC will collect $625 million, mostly from long-distance companies, in the first half of 1998.

In part to offset those new costs, the FCC last May decided to reduce by an estimated $1.7 billion the access fees that local phone companies charge long-distance companies to complete calls.

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