Consumer Groups Offer a Way to Reduce Phone Bills

Leading consumer groups said Monday that they have devised a way to slash $4 billion a year from home and business telephone bills--even for people who make few long-distance calls.

The proposal, submitted to the Federal Communications Commission, would reduce one line-item charge that consumers now see on their monthly bills and eliminate another.

The coalition of groups backing the plan--including Consumers Union, the Consumer Federation of America, the National Retail Federation and the American Assn. of Retired Persons--say the innovation would take several dollars off the bottom of every home and business phone bill.

“This would guarantee that every consumer, regardless of how much calling they do, would get the benefit of declining industry costs,” said Gene Kimmelman, co-director of Consumers Union’s Washington office.

The proposal responds to a plan offered by the phone industry last summer to reduce by $5.6 billion a year “access” fees that local phone companies charge long-distance carriers to connect calls.

If long-distance companies pass on the savings, the companies contended, their customers would see lower rates. In turn, certain flat-rate fees on local phone bills would go up. Backers of the industry proposal, which has been submitted to the FCC for consideration, include Bell Atlantic, BellSouth, GTE, SBC, AT&T; and Sprint.

Consumer advocates have argued that the industry plan contains no guarantee that long-distance companies will pass savings on to consumers.

The consumer plan would take $1 off the cost of the phone line from the local phone company into the home. That charge, on bills as the “subscriber line charge,” is now capped at $3.50 a month.

The consumer proposal also would get rid of a charge that pays for long-distance companies’ use of the local phone network. That item averages about $1.50 per month.

The industry coalition immediately rebuked the consumer plan as shortsighted.

“They want to issue price controls to drive savings for consumers, when the clear trend is to use the marketplace to drive savings for consumers,” said John Nakahata, a lawyer with the Washington firm Harris, Wiltshire & Grannis, who represents the companies.

The FCC put out the industry plan for comment last year, but has said it is interested in hearing from consumer groups.