Think of your long-distance telephone bill like a health-club membership. If you use it a lot, you work off the monthly minimum charges and never feel any pain. But if you're a sluggard, you're going to get charged anyway.
Monthly long-distance charges now are similar. Monthly minimum usage fees are being tacked onto bills. Gone are the days when callers could pay solely on a per-minute basis.
This development concerns the Federal Communications Commission, which is looking into whether there is some inherent inequity between big talkers, who rack up bills far bigger than the minimum charges, and customers who seldom--or never--use the service but have to pay for not talking.
"I intend to look very carefully at whether consumers who make very few calls--even at these historically low per-minute prices--are disadvantaged by the flat charges that long-distance companies choose to put on their bills," FCC Chairman William E. Kennard said in a statement on June 10.
In the past few years, consumers' phone bills have begun to reflect the realities of a deregulated long-distance telephone market. Though calling rates have dropped dramatically--witness MCI WorldCom Inc.'s announcement this week of nickel-a-minute calls--the typical monthly phone bill now also has four to five charges and taxes.
The FCC said that AT&T Corp. charges a $3 flat minimum, plus other charges, that bring the total amount of fees, not including taxes, on a consumer's monthly bill to $5.50. MCI customers are subject to a minimum usage fee of $3 or $5, depending on when they signed up for long-distance service with the company. MCI also adds other fees that could bring the minimum for some customers to $4.07 or $6.07 per month.
Sprint Corp. does not have a monthly minimum charge, but it does have monthly charges as part of its discounted calling plans.
Yog Varma, deputy chief of the FCC's common carrier bureau, said up to 20 million consumers could be hit with the charges without ever making a call.
AT&T and MCI said monthly minimum usage fees are levied to cover the costs of billing, maintaining accounts and customer service. They likened the flat fee to the monthly charges that consumers pay to their local phone or cable company whether or not they use the service.
Much to the dismay of the long-distance industry, which also says it is recovering charges it pays to the federal government and to local phone companies for carrying long-distance calls, the FCC has asked the public to comment on the issue. It said it "wishes to inquire whether the flat charges imposed on consumers who make few long-distance calls are appropriate."
The FCC said it will explore whether "regulatory intervention" is warranted. It also said it wonders whether there are measures it might take that would give it greater control over how charges are passed on to consumers by long-distance companies. It also plans to consider whether it might forbid charging a minimum monthly fee.
The long-distance companies and other critics view the inquiry as a step toward re-regulation of the long-distance industry, which for years had to file all rate changes with the FCC.
AT&T said consumers who qualify for low-income help with their phone bills don't have to pay the $3 fee. "But low-volume doesn't mean low-income. They are all over the income spectrum," said James McGann, spokesman for AT&T.
AT&T said that probably 85 percent of customers spend more than the minimum each month. MCI also said fewer than 20 percent of its customers are not on a calling plan, leaving them subject to the minimum usage fee.
Bradford Burns, spokesman for MCI WorldCom, said customers who want to avoid the minimum can use "dial-around" services, some of which are owned by MCI, that allow them to pay by the minute and disassociate themselves from a long-distance carrier.
Not everyone at the FCC agrees that the subject needs to be examined.
Commissioner Harold Furchtgott-Roth has said that he was ardently opposed to questioning how long-distance companies charge their customers.
"The notion of unanticipated factors affecting regulatory action is, at its core, an archaic and anti-consumer concept that suggests a belief that federal bureaucrats . . . make better decisions than consumers ina competitive market," Furchtgott-Roth said.
Commissioner Michael Powell suggested it would be "over-regulatory and, indeed, paternalistic to take steps to minimize impacts on consumers" before educating them about their choices in the marketplace.
Consumer groups take an entirely different view. They have been complaining to the agency that long-distance telephone companies have had big reductions in the fees they pay to local phone companies to originate and complete long-distance calls. But they believe that long-distance carriers have not passed the savings along to consumers, especially those who are not high-volume users.
"If you fall into the bottom half of the market making long-distance calls, you probably aren't saving money on your phone bill compared to two years ago. In fact, you could be paying more. That's because of the new fees and surcharges tacked onto your bill," Gene Kimmelman, co-director of Consumers Union's Washington office, said after MCI announced its new discount calling plan.
The FCC's inquiry into the charges "is doing very little, very late," Kimmelman said in an interview. "You pay these new monthly fees before you pick up the phone. If you don't do a lot of minutes, you're in trouble."