FTC Urges Cut in Phone Rates for the Poor

The Federal Communications Commission unanimously recommended Tuesday that telephone charges for low-income subscribers be reduced by $2 a month as quickly as state regulators can act and by $4 from current levels next June.

The American Assn. of Retired Persons promptly denounced the proposal as “a Band-Aid solution to a problem that threatens the ability of many older persons to keep their only connection to the outside world.” But a Commerce Department report showed that, despite the widely expressed fears of such consumer advocacy groups, the breakup of American Telephone & Telegraph has had no impact on the number of Americans subscribing to telephone service.

The department’s National Telecommunications and Information Administration reported that the number of phone subscribers between November, 1983--just before the breakup of the Bell System--remained effectively unchanged throughout the country, in every state and among the groups that many had feared would be the most adversely affected, the elderly and the poor.

Consumer advocates had warned that the breakup of the Bell System, accompanied by an increase in the cost of local telephone service, would force the poor to give up their phones.

The FCC recommendation that phone charges be reduced for low-income users already had been been made by the Federal-State Joint Board, a committee of FCC and state regulators. FCC staff members told commissioners that the rate reduction would have to be administered by states that chose to adopt it.

Under the proposal, a state would require local phone companies to grant a $1-per-month rate reduction for subscribers covered by federal benefit programs for the poor, such as Supplemental Security Income and Aid to Families with Dependent Children.

Where the reduction is granted, the FCC would waive payment of the $1-per-month fee--first imposed in June--that local phone subscribers must pay for access to long-distance service.

Access Charge to Rise

Under the proposal, the state reduction would double in June of next year, when the federal access charge is scheduled to rise to $2.

Despite concern by the AARP that the proposal would not prevent the elderly from dropping their phone service in large numbers, the Commerce Department survey released Tuesday said that more than 95% of all persons 65 and older still have telephone service. That is higher than the 91.8% rate in the population as a whole, and it is virtually unchanged since November, 1983, when Ma Bell was still whole and its breakup had not begun to produce the shifting of phone costs from long-distance to local service.

Similarly, the phone-use rate for poor persons also has shown no significant decline since November, 1983.

Among families with annual incomes below $5,000, 71.7% were phone subscribers before breakup, compared to 72% in July. For the $5,000 to $7,500 bracket, the shift was from 82.7% to 83.2%, and for $7,500 to 10,000, it was from 88.2% to 86.9%.