A key House committee, bucking a massive lobbying campaign by American Telephone & Telegraph Co., yesterday voted to repeal parts of a Federal Communications Commission order imposing "access" fees on the monthly telephone bills of consumers and small businesses.
The 27-to-15 vote in the House Energy and Commerce Committee was a major victory for consumer groups, which have warned that phone bills could increase next year by 100 percent to 200 percent because of the access fee order and the breakup of AT&T, scheduled for Jan. 1.
The Senate Commerce Committee passed similar legislation earlier this month. Floor action in both chambers is expected within the next few weeks.
Rep. Al Swift (D-Wash.) called yesterday's vote "the most important piece of consumer legislation to be acted on by this Congress."
But AT&T spokesmen, denouncing the measure as a "charade" fed by political "hysteria," pledged to step up their efforts to kill the measure. The company has already spent an estimated $2 million to defeat the phone bill.
The measure includes a number of provisions to reduce the economic impact of the impending Bell System breakup. To settle federal antitrust charges, AT&T is to be split up. Seven new regional telephone companies will provide local phone service, while the original AT&T will retain long-distance lines, manufacturing and other operations.
The bill would create a $1.2 billion Universal Service Fund, financed by charges on long-distance carriers and firms that set up their own independent phone systems. The fund would provide phone subsidies to high-cost rural areas and subsidize low-cost service for the poor.
In addition, the measure would require the FCC to give funds to outside groups that want to intervene in long-distance rate cases before the commission. A separate provision would allow phone-user groups to place inserts in consumers' phone bills to solicit funds to fight phone company rate requests before state regulators.
The heart of the bill repeals the portion of the FCC order, now scheduled to take effect next April, that imposes access fees on consumer phone bills. The access fee is to start at $2 a month next year and then increase by $1 per month each year.
The $6-a-month access charge for small businesses that use single phone lines would be repealed, but the fees on larger businesses would still be imposed.
Calling the access fee order "infamous," committee Chairman Rep. John Dingell (D-Mich.) yesterday said it would allow AT&T to "reap a multibillion-dollar windfall at the expense of the ordinary telephone subscriber."
Even the measure's sponsors acknowledged yesterday that the $2-a-month fees are relatively small compared with the more than $9 billion in phone rate increase requests that are now before state regulatory commissions.
"We're not voting on any local increases that are pending out in the states," acknowledged Rep. Timothy Wirth (D-Colo.), one of the bill's chief sponsors. "But we can have an impact. There is an impact from the FCC order."
When it imposed the access fee last July, the FCC said it was reversing a long-standing pricing policy that has kept long-distance rates artificially high in order to subsidize part of the cost of local telephone service. The access fee would slowly raise the cost of local service, making up for the money lost by reducing long-distance rates.
Repeal of the order would be a direct threat to AT&T, which, after it is separated from its local phone companies, will compete for long-distance business with companies such as MCI Communications Corp. and GTE/Sprint.
AT&T Executive Vice President Kenneth J. Whalen said yesterday that repeal of the fees would keep AT&T's long-distance rates excessively high and thus would be "an open invitation" for large business users to find some competing phone system that is cheaper.
As a result, he said, local phone companies would have higher fixed costs that they would pass along to consumers through higher rates. "So while the measure purports to preserve universal service, it encourages exactly the opposite outcome," said Whalen. "It makes no sense at all."
Equally threatening to AT&T is another provision added to the bill that freezes the rates that MCI and the other alternative long-distance carriers would have to pay to hook up to local phone lines. AT&T says that since it now has to pay twice as much as the alternative carriers, the freeze would hamstring it as it vies for long-distance customers.
AT&T two weeks ago launched an intense lobbying campaign of full-page newspaper advertisements and pleas to its more than 1 million employes and more than 3 million stockholders to flood Congress with letters and phone calls.
Unlike a similar AT&T effort last year, the campaign has thus far fizzled, with many members reporting relatively few letters. Despite AT&T's pledge to intensify its efforts, Dingell said yesterday he was "confident that my colleagues in the House will not be misled by this propaganda blitz." CAPTION: Illustration, Major elements of telephone legislation approved by House Energy and Commerce Committee: 1. Repeals Federal Communications Commisssion-ordered "access fees" on monthly phone bills of consumers and small businesses. 2. Creates a $1.2 billion Universal Service Fund to provide subsidies for phone service in rural areas and for "lifeline service" for the poor. 3. Imposes a $25-per-month charge on privately owned and operated telephone systems that interconnect with the local phone lines. 4. Authorizes the funding of public participation by outside groups in FCC rate cases. Also authorizes the creation of voluntary citizens boards in each state to intervene in state regulatory proceedings. The boards would raise money by placing inserts in monthly phone bills. By Gail McCrory--The Washington Post