Federal and state regulators, trying to forge a compromise on telephone access charges, have disagreed on whether to establish a special fund for low-income people who may not be able to afford rising telephone rates.
Many states are resisting the idea of a federally mandated "life-line" fund for low-income customers, saying it is a jurisdictional issue best left to the states to decide, sources said yesterday.
Other areas of disagreement include whether to provide bulk rate discounts for large business customers who are heavy users of long distance. State regulators have said that such a discount is needed to prevent major business customers from leaving the local telephone network and building their own facilities.
The controversy grew out of a Federal Communications Commission proposal last year to charge residential customers and single-line businesses an access charge of $2 a month for the upkeep of the local telephone network. The fee would rise to $4 a month by 1987. Under heavy congressional pressure, the FCC put off the implementation of the plan until next June.
The idea of the access charge is to provide relief to long-distance companies such as American Telephone & Telegraph Co., MCI Communications Corp. and GTE/Sprint, which pay a disproportionately high share of overall telephone network operating costs, according to the FCC.
Mark S. Fowler, chairman of the FCC, has argued that the situation leads to higher long-distance rates, which create an incentive for large businesses to bypass the local network, building their own. The pattern could threaten residential customers with rising telephone rates, he said. The imposition of access charges directly on residential and single-line business customers would keep large businesses on the local network and result in lower rates in the long run, Fowler has argued.
The FCC met with the Joint Board of State and Federal Commissioners -- a panel of four state public service commissioners and three FCC members -- a few weeks ago. In that meeting, FCC officials indicated they would be willing to reduce the size of a residential telephone access charge and give state regulators more responsibility for recovering access charges on a state-by-state basis. The joint board is expected to meet in mid-November to adopt a new access charge plan.
New reports have indicated that the FCC might consider an initial $1-a-month fee beginning in mid-1985 and a $2 monthly charge beginning in 1986, with a possible surcharge of 35 cents on residential users, sources said.
State regulators have disagreed with the FCC's approach, once access charges are implemented, of an across-the-board reduction in long-distance rates as a way to stop large companies from bypassing the local telephone network. Volume discount rates are also needed, they have said. To make up for revenue lost through such discounts, some regulators have suggesting imposing a 35 cent surcharge on residential customers in addition to the access charge, sources said.
Volume discount rates could be proposed by telephone companies to state public service commissions, sources said. Telephone companies could appeal to the joint board if the rates were rejected by a public service commission, sources said.
Still other sources said allowing large long-distance discounts to big businesses might encourage a new rate structure that would charge customers for long-distance calls based on the cost of providing service. Customers living in rural areas could therefore end up paying more for long-distance service.
Another issue in the overall compromise is establishment of the life-line funds favored by members of Congress and consumer advocates. The funds could be financed with money long-distance companies would save once residential access charges were implemented, sources said.
State regulators "emphatically oppose a life-line fund," said one state regulator, who said the program could be quite expensive. Regulators believe a life-line program should be a state, not a federally mandated, solution. "We can solve the problem," the regulator said, suggesting special rates for low-income customers be implemented.