Delivering a sharp rebuke to a proposed Federal Communications Commission action, congressional leaders said yesterday they will introduce legislation to ease the impact of rising local telephone rates resulting from the break-up of the Bell System next year.
Sen. Bob Packwood (R-Ore.) and Rep. John Dingell (D-Mich.), said the legislation would require the FCC to maintain the use of long-distance revenues to subsidize local phone rates. Historically, the cost of telephone service in this country has been kept relatively low through this policy of cross-subsidy.
In anticipation of the AT&T divestiture and a more competitive telephone marketplace, the FCC last December proposed phasing out the subsidy and requiring consumers to pay local phone companies an additional "access charge" for long-distance service. The commission's move reflected its desire to eliminate subsidies and shift to "cost-based" pricing.
Those added costs could jeopardize the widespread availability of telephone service, Dingell and Packwood charged yesterday. "That's what's really at stake--universal telephone service," said Dingell, chairman of the House Energy and Commerce Committee, "This legislation will overturn the FCC access charge decision, which I think is shameful."
"Unless Congress acts swiftly, reasonably priced phone service for all Americans could be destroyed," said Packwood, chairman of the Senate Commerce, Science and Transportation Committee.
According to industry sources, the FCC access charge proposal would shift approximately $4.5 billion in costs to local phone users next year. "The average monthly home phone bill is between $10 and $11," said House telecommunications subcommittee chairman Timothy E. Wirth (D-Colo.), who is introducing the legislation in the House. "This would add between two and four dollars a month."
By the end of the decade, said Wirth, "the FCC decision could effectively double the average phone bill."
However, Wirth stressed that the access charge was only one factor driving up local phone rates. The division of resources between AT&T and its divested regional operating companies will also determine local rates, he said, as will state regulators' responses to phone company rate increase proposals.
Congress has little jurisdiction over the other two, but it can determine the course of the FCC, Wirth said.
It is unclear how much the FCC access charge might increase local phone rates. Several studies estimate that local rates could jump as much as 400 percent in some areas.
The legislation proposed yesterday would establish a "universal service fund" for allocating long-distance revenues to help pay for local phone service.
The bill would require private telephone systems that bypass the local telephone company to contribute to the local phone costs. A company that uses a privately owned satellite to transmit voice communications would be required to pay a fee to local phone companies.
Another criticism, says MCI Communications Corp., the Washington-based long-distance communications company, is that it penalizes long-distance users while indiscriminately reimbursing local users. "The affluent would benefit regardless of need," said Gene Eidenberg, MCI's senior vice president of public policy, "and the poor would pay regardless of ability."
A Senate aide conceded that "it is difficult to tell what will happen to long-distance rates." A Wirth aide says that long-distance rates are likely to stabilize rather than continue their decline.