The nation's top phone regulator lashed out at AT&T's plan to add a surcharge on residential long-distance calls to pay for federally mandated telephone subsidy programs, calling it "premature, unwarranted, and inconsistent." On Capitol Hill, however, a key lawmaker skeptical of the subsidy saw the giant teleco's move -- which MCI said it would emulate -- as reason to "rein in" the program.
Under the 1996 Telecom Act and Federal Communication Commission rules, long-distance carriers are required to support programs subsidizing phone service in sparsely populated and low-income areas and which defray the cost of Internet connections for schools and libraries. The FCC hasn't yet pegged how much the carriers must contribute for the second half of the year, but AT&T didn't wait for the FCC's decision: It said that beginning in July it would add a 1.8 percent charge to in-state calls and a 5 percent charge to international and interstate calls.
"This is to fund our portion of the universal service funds," AT&T spokesman Wayne Jackson said. Although the amount consumers pay will be going up, Jackson said the company "is not characterizing this as a rate increase."
FCC officials had expected the carriers would offset new universal service program charges with planned decreases in access charges the companies pay to local phone companies. Access charges have dropped by billions of dollars in the past year with another $700 million or more decline expected in July.
Commission chairman William Kennard criticized AT&T's decision, and said on Thursday that the FCC would "ensure that consumers get the full story: no hidden charges on their bills and full disclosure of the significant cost reductions they receive."
On Capitol Hill, news of the AT&T surcharge bolstered efforts by some lawmakers to curtail the Internet connection subsidy program, which was created by the 1996 Telecom Act.
Representative Billy Tauzin, chairman of the House Commerce Committee's telecommunications subcommittee, may seek legislation to "rein in the schools and libraries program which has become an unlimited entitlement," a spokesman for the Louisiana Republican said. "Congress may place some institutional controls on the size of the program."
Consumer groups have urged the FCC to delay the universal service programs until a better funding mechanism is developed.
"We've told the FCC to stop collecting the money until they find a way to do it without increasing people's bills," said Mark Cooper, research director of the Consumer Federation of America. "AT&T can call this whatever they want, but it's an increase in my bill."
No. 2 long-distance carrier MCI said Thursday it could announce a universal service fund surcharge next week. The surcharge could be similiar to AT&T's or much lower depending on the FCC's decision on how much to raise for the subsidy programs, an MCI official said. And a spokeswoman for Sprint said, "We haven't made any changes from what we're already doing."
