The Federal Communications Commission yesterday approved a plan to allow residential telephone rates to rise by as much as $2.35 a month by June 1986, provoking protests by consumer groups and guarded support in Congress.
Under the plan, residential users and businesses with a single telephone line would begin paying a $1-per-month subscriber charge in June for the access they already have to the long-distance network. The "access charge" would increase to $2 per month in June 1986.
The FCC made the decision while releasing two reports justifying the charges as a way to hold down local phone costs in the long term.
One report said that the access charges would not threaten universal telephone service. The other found that high local phone costs are forcing large firms to lease private lines or build their own facilities to connect with the long-distance network, thus "bypassing" the local network. The loss of that revenue could force the local telephone company to raise residential rates even higher, the FCC staff said.
The FCC order also authorizes state regulators to allow local telephone companies to impose an additional monthly surcharge of up to 35 cents on residential rates, if necessary, to provide additional discounts to the big customers.
FCC Chairman Mark S. Fowler said, "My view of this decision is, if we don't move this way, local telephone rates are going to be higher, much higher."
The FCC argues that the access charges are a step toward ending the traditional subsidy of local phone service through overpriced long-distance rates. The charges will bring residential rates closer to the true cost of service, said Albert Halprin, director of the FCC's common carrier bureau.
Larger businesses began paying a $6-per-line access charge earlier this year.
Low-income telephone users could get a 50 percent reduction in the access charge if they qualify under rules established by the states. The "lifeline" plan would be implemented at the option of the states.
Yesterday's ruling represented a retreat from the FCC's proposal last year to impose access charges of as much as $4 a month, which drew a storm of congressional opposition.
Rep. Timothy E. Wirth (D-Colo.), chairman of the House subcommittee on telecommunications, consumer protection and finance, called yesterday's decision "a major rollback from the commission's ill-advised, original access charge plan . . . which would have unfairly shifted billions of dollars in costs to the local consumer."
Wirth said that any effort to raise access charges above $2 a month "will be carefully scrutinized by Congress."
Wirth's subcommittee will follow closely the "lifeline" plan as it develops, he said. "We expect the commission to establish a plan that will maintain the universal availability of affordable telephone service for all Americans."
A panel with representatives from the FCC and state public utility commissions, which developed the compromise access-charge plan, was directed by the commission to study additional lifeline assistance measures.
Consumer groups protested the decision, chanting "no access, no access," and placing a giant telephone outside the building to dramatize what they consider inflated costs.
The Consumer Federation of America, a coalition of more than 200 consumer organizations, simultaneously released a study that said the additional $1 billion a year raised through access charges will "force over a million more people to give up phone service."
This comes after $2 billion in 1984 local rate increases, which will force 2 million people to go without phones, said CFA legislative director Gene Kimmelman. "These rate increases are unnecessary and inequitable," he said.
The FCC "has hung up the phone on residential and small business consumers," said Joan Claybrook, president of Public Citizen.
The U.S. Public Interest Research Group called on Congress to overturn the FCC decision. "This plan unfairly puts the burden on the average telephone consumer so that big business will not leave the telephone system because of increasing rates," said a spokeswoman for the group, a non-profit research and advocacy organization.
Rep. James T. Broyhill (R-N.C.), the ranking Republican on the House Commerce Committee, called the FCC order "a positive step forward. . . . "