Federal regulators will launch an inquiry next week into monthly minimums, typically $3, that some long-distance companies have begun imposing on certain customers.
The Federal Communications Commission, voting 4 to 1, approved the inquiry yesterday. "We're trying to be the least intrusive in terms of regulation, but at the same time I would like to be able to protect the low-volume users," said Yog Varma, deputy chief of the FCC's Common Carrier Bureau.
Earlier this year AT&T Corp. angered consumers groups and some customers by imposing a minimum monthly charge of $3 for people who subscribe to its basic-rate plan.
The minimum does not affect people who make more than $3 in calls, but those whose long-distance calls total less than $3 a month pay the $3 nonetheless.
MCI WorldCom Inc. also imposed a minimum monthly charge of $3 for basic-rate customers, who make up about 18 percent of its residential subscribers. Some of its other residential customers pay a $5 minimum for the company's calling plan of 10 cents a minute.
"It's at least a first step in recognizing a problem we've been talking about for a while," said Gene Kimmelman, co-director of the Washington office of the Consumers Union. "But it's unclear what's going to come out of this discussion."
AT&T and MCI WorldCom officials said competition was driving them to impose the charges.
"The cost of servicing accounts have been increasing over the past few years, to the extent that's happening, we've instituted a minimum usage charge," said Peter Lucht, MCI WorldCom's public policy spokesman. Service costs include billing and customer service.
Commissioner Harold Furchtgott-Roth, who voted against the inquiry, said in a statement that the FCC's "action demonstrates a refusal to accept the directive of Congress to refrain from intruding into competitive markets," adding that this action could only mean tighter re-regulation of a competitive market.
The inquiry stems from talks the FCC has had with long-distance carriers and consumers groups. The FCC is not "making any pre-judgments here," Varma said. "Maybe some of the questions we raise in the inquiry are not worth pursuing."
The minimum fees have come about partly because of the FCC`s reform of how long-distance carriers pay local phone companies for using their phone networks, Varma said.
Because of the reforms, many residential and business consumers have had overall reductions in long-distance rates. FCC officials acknowledged that a small number of customers who spend little each month on long-distance calls might have been harmed in the process.
There is no strict timetable for considering the issue. As soon as the commission releases the details of the inquiry, long-distance carriers, consumers groups and other concerned parties will have 60 days to comment and make suggestions.