Panel Recommends Increase in Local Telephone Access Fee

An advisory panel of federal and state regulators unanimously recommended Thursday that the controversial $2 monthly “access fee” now added to consumers’ telephone bills be increased in three stages to $3.50 by April, 1989.

The increase in local phone bills would be offset by an estimated 15% reduction in long-distance rates. In addition, the panel urged that local telephone companies subsidize up to half of the first $30 in telephone installation fees for low-income customers.

The Federal Communications Commission, which has final authority, is soon expected to approve the recommendations. The advisory panel, called the Joint Board, is composed of three FCC members--more than half of the five-member commission--and four state phone regulators.

Under the panel’s recommendation, the $2 monthly access fee--so called because it helps long-distance companies pay the costs of gaining access to local telephone networks--would rise to $2.60 in June, $3.20 in September, 1988, and $3.50 in April, 1989.

That would raise local telephone bills nationally by an estimated $17 billion over the next six years.

FCC Chairman Mark S. Fowler, who had asked the board to approve increasing the monthly charge to $4, said he is “extremely pleased” with the board’s recommendation.

Congressional Opposition

But consumer groups and some members of Congress condemned it, and a challenge to the increase is considered certain to develop in Congress.

“It’s another example of raising rates first and justifying the increase afterward,” said Rep. Ron Wyden (D-Ore.), who is sponsoring legislation to freeze the monthly fee at $2. “It leaves open the question of whether the FCC or Congress should be making telecommunications policy.”

Gene Kimmelman, legislative director of the Consumer Federation of America, called the proposed fee increase “nothing short of a consumer rip-off. It’s unwarranted and it’s unjustified.”

Despite the accompanying reductions in long-distance rates, Kimmelman said most telephone customers would pay more if the advisory panel’s recommendations took effect than they do now. Most customers, he said, do not make so many long-distance calls that the rate reductions would offset the increased access fee.

“In an era when utility prices ought to be coming down in this marketplace, the federal government keeps adding more charges onto our local telephone bill,” Kimmelman said.

Fowler, who had recommended that the access fee rise to $3 this year and $4 in July, 1988, said the board’s decision Thursday to limit the fee to $3.50 represented a significant compromise.

The board also recommended that the access fee for businesses with more than one telephone line, now $6 a month, rise to $9 by 1989.

Reflecting Real Costs

The FCC designed the access fee, which was inaugurated in June, 1985, to bring local telephone rates more closely in line with the cost of providing local service and to hold down the fees that long-distance carriers had to pay to local phone companies to gain access to their customers.

Otherwise, the commission warned, some long-distance carriers and their major customers would simply set up their own local telephone networks. That would result in higher bills for local phone companies’ remaining customers because there would be fewer customers to foot all the costs.

Earlier in the day, a coalition of telecommunications business representatives warned that recent recommendations by the Justice Department to relax restraints imposed in the AT&T; divestiture decree and give the seven new Bell operating companies increased freedom to enter new business ventures would cripple their industries.

The department has recommended to a federal court here that the Bell operating companies, including San Francisco-based Pacific Telesis, be allowed to manufacture phone equipment, offer limited long-distance telephone service and provide computerized information services ranging from fire and burglar alarms to electronic yellow pages.

At a news conference, the companies said nothing has changed in the three years since the breakup of AT&T; to justify any decision to lift the restraints.

“Our survival is at stake,” said Martin McDermott, of the National Telecommunications Network, which is building the country’s first terrestrial all-digital telecommunication transmission network.