In a July 31 editorial, The Post defends the Federal Communications Commission's recent access charge decision as a step toward "bringing the price of local service up to full cost." This is a misunderstanding that incorrectly defines the issue. The real issue is whether long-distance and other companies that benefit from local telephone facilities will pay their fair share of the cost of those facilities. Under the FCC decision, the entire cost will be borne by local subscribers, and it is AT&T, ITT, MCI and others that will be subsidized.
The decision shifts billions of dollars of costs associated with the copper wires, telephone poles and drop lines that are used for both long-distance and local service from long-distance companies to local customers. Some believe that the long-distance share of these costs is too high. Others disagree, and cite studies such as the one just completed for the Kansas Public Utility Commission concluding that local telephone companies are undercompensated for investments they have made to upgrade the local network for long-distance service.
But no one, until now, has questioned the principle that both local and long-distance users of local equipment should share the cost of jointly used plant. The FCC, however, in a radical reversal of telephone industry pricing philosophy, decided that long-distance companies should pay nothing at all for the use of this local equipment.
The FCC claims that if long-distance companies do not have to pay anything for access to local facilities, they will be dissuaded from bypassing local companies and building their own facilities directly to large customers. However, placing all costs on local consumers and thereby increasing the price of local service will simply encourage a different kind of bypass--by cable companies, for instance. The FCC did not remove the incentive to bypass; it merely shifted the incentive to another point in the system--to the detriment of rate-payers and consumers.
A more effective response to the potential bypass would require all users and providers of telecommunications services who benefit from the public telephone network to pay a fair share of the costs of maintaining that network. By treating all competitors, including bypassers, in a similar fashion, this approach would be neutral. A small fee on each contributor would reduce the overall incentive to bypass.
The Post characterizes the congressional reaction to this decision as "the usual shrieks of protest." However, U.S. District Court Judge Harold Greene, the widely respected jurist who is overseeing the AT&T divestiture cannot be so easily dismissed. He has charged that the FCC's unprecedented reshuffling of costs "unnecessarily jeopardizes" the national goal of universal service. Unfortunately, he admits, "the court has no authority to countermand these decisions."
The Post's editorial also disregards the threat to universal service posed by the 26 pending rate increases, totaling $7 billion. All but two of these increases relate in part to recent FCC decisions and divestiture, and some would result in at least a doubling of basic monthly customer charges. State regulators expect another 22 rate increases to be filed within the year.
In another recent decision, the FCC has stripped states of the power to set depreciation rates for local telephone plant and equipment. Without control over this key element of local rates, state regulators may be unable to maintain affordable telephone service.
Some increase in local rates will take place no matter what Congress does. But Congress can and must act to mitigate rate increases, to rein in federal policy-makers who have been guilty of regulatory overkill, and to preserve the universal service goal of the 1934 Communications Act, which mandated policies that would "make available, so far as possible, to all the people of the United States a rapid, efficient, nationwide and worldwide wire and radio communications service with adequate facilities at reasonable charges . . ."
Rep. Tim Wirth and I have introduced the Universal Telephone Service Preservation Act (H.R. 3621), which would:
* Overturn the FCC's access charge decision;
* Create a more equitable system of access charges;
* Establish a Universal Service Fund to provide financial support for high-cost service areas;
* Ensure that state regulatory commissions have sufficient authority to maintain affordable telephone service;
* Require state regulators to offer discount rates for low-income subscribers.
Long-distance companies and other special interest groups that do not want to pay their fair share of telephone network costs have already mounted a media and congressional campaign to defeat this legislation. They will try to focus exclusively on subsidies for poor people. However, universal telephone service is not a welfare scheme to be provided through telephone stamps. A universally available telephone network is a vitally important component of our economic infrastructure from which all benefit, rich and poor alike.
The subsidy issue is a smokescreen. The real issue is a fair apportionment of the costs of preserving our universal telephone network.