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Deciphering Those Phone Charges

September 09, 1998|From Associated Press

A key to decoding residential phone bills:

* Subscriber line charge, or SLC, pronounced slick. This federally ordered charge is capped at $3.50 a month. It pays for the phone line from the local phone company into the home.

* Pre-subscribed inter-exchange carrier charge, or PICC, pronounced pixie. The new charge, which varies by company, stems from last year's government overhaul of phone fees. It pays for long-distance companies' use of the local phone network and appears on bills under different names, depending on the company. MCI charges $1.07 a month and calls it a national access fee; AT&T charges 85 cents a month and calls it a carrier line charge; Sprint charges 85 cents a month. On Sprint-sent bills, it is called a pre-subscribed line charge. When Sprint bills through local companies, it is called a regulatory-related charge.

* Universal service fund charge, or USF. Long-distance companies pay the bulk of this charge, which is passed along to their customers. The charge, which varies by company, pays for government-mandated subsidies: making local phone service affordable to the poor and people living in rural and other high-cost areas; and paying for cheap Internet hookups for schools, libraries and rural health-care providers.

The charge to pay for cheap Internet hookups is new and began appearing on residential phone bills this year. But the other subsidies have long been built into telephone rates and, therefore, have not been broken out in bills.

The USF charge appears on bills under different names, depending on the company. MCI calls it a federal universal service fee and charges 5% of customers' long-distance bills. AT&T calls it a universal connectivity charge, assessing a flat 93 cents a month. Sprint calls it a universal service carrier charge, at a cost of 4.5% of customers' long-distance bills.

* Federal excise tax. Started out as a temporary luxury tax in 1898 on telephone service to pay for the Spanish-American War. (Yes, they had phones back then.) It is now 3% of an overall phone bill. Proceeds go to the Treasury for general revenue purposes.

* Gross receipts tax surcharge. Can't blame the federal government for this one. States and municipalities have the power to assess this surcharge in different ways and at different rates. Proceeds go to the local governing body. The surcharge is imposed on local phone company revenues. It also can be imposed on the revenues of long-distance companies operating within a state. In those cases, it may appear on bills as an interstate tax surcharge.

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