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DATE: 9/1/00

FEDERALLY ITEMIZED CHARGES ON MONTHLY TELEPHONE BILLS

Federal telephone charges are not under the statutory oversight of the Rhode Island Division of Public Utilities and Carriers and are considered long distance in nature. Complaints regarding rates and charges for interstate services must be filed with the appropriate governmental entity that has statutory regulatory jurisdiction, the Federal Communications Commission (FCC).

1.Subscriber Line Charge (SLC)

The Subscriber Line Charge (sometimes called the "FCC Line Charge") is regulated and capped by the FCC. The SLC is not a charge by the government and is not considered a tax. The charge is assessed to every telephone user in the United States for the purpose of partially recovering the non-traffic sensitive costs incurred by local telephone companies to process interstate calls through their equipment. The charge is part of an overall federal plan to reduce per-minute long distance phone rates and was implemented in 1984 at the time of the Bell system divestiture.

Primary and Non-Primary Lines

The second line and any additional telephone lines connecting consumer's residential telephone service to the telephone network are called non-primary lines. Effective July 1, 1999, FCC rules require incumbent local telephone companies to use a service location (address) definition, meaning that any additional line billed to the same address is considered a non-primary line, subject to a higher subscriber line charge cap, even if the bill is in a different name at the same address. The FCC's access reform plan reduces subsides for non-primary residential lines. The FCC decided to allow the local telephone companies to raise the flat fee on non-primary residential telephone lines so that those lines are no longer subsidized, or at least receive less subsidy. The consumers pay for the cost of the facilities they use. This is part of an overall plan to substantially reduce per-minute long distance phone rates. With the increased use of the Internet and other data services, the number of secondary lines to homes is increasing. As part of its access charge reform effort, the FCC reduced the subsidies for residential customers by increasing the cap on the subscriber line charge for non-primary lines. Starting January 1, 1999, the FCC increased the maximum amount that incumbent local telephone companies may charge for additional lines to $6.07 per line per month. Starting July 1, 2000 through June 30,2005, the subscriber line charge for non-primary residential lines is capped at $7.00 per month, however, the incumbent local telephone company can only charge the residential consumer the amount of its costs.

Residential Lines

For the largest local telephone companies that provide service to over 90% of the telephone access lines in the country, the subscriber line charge cap for primary residential lines increases from $3.50 to $4.35 on July 1, 2000 and to $5.00 on July 1, 2001. The FCC will then review the local telephone companies' costs before allowing the caps to increase further. For the smaller local telephone companies that provide service to less than 10% of the telephone access lines, the subscriber line charge cap for a residential line remain at $3.50.

Business Lines

The subscriber line charge for single-line business customers is capped at a maximum charge of $3.50 per line per month through June 30, 2000. For the largest local telephone companies that provide service to over 90% of the telephone access lines in the country, the subscriber line charge cap for single-line businesses increases to $4.35 per line per month on July 1, 2000. For these largest companies, this subscriber line charge cap increases to $5.00 per line per month on July 1, 2001. The FCC will then review the local telephone companies' costs before allowing the caps to increase further.

For the smaller local telephone companies that provide service to less than 10% of the telephone access lines, the monthly subscriber line charge cap for single-line business customer remains at $3.50. For multi-line businesses that are customers of the largest local telephone companies that provide service to over 90% of the telephone access lines in the country, the maximum subscriber line charge is the incumbent local telephone companies average interstate cost of providing a line in the state, or $9.20 per line per month, whichever is lower. In 1999, the average subscriber line charge was $7.17 per line per month for multi-line businesses that are customers of the largest local telephone companies that provide service to over 90% of the telephone access lines in the country. For multi-line businesses that are customers of the smaller of the local telephone companies that provide service to less than 10% of the telephone access lines, the maximum subscriber line charge is the incumbent local telephone company's average interstate cost of providing a line in the state, or $6.00 per line per month, whichever is lower.

2. National Access Contribution

Some long distance telephone companies have combined two federal-mandated charges on customers' bills– the Universal Connectivity Charge and the Carrier Line Charge.

A. Universal Connectivity Charge (UCC)

Long distance companies are required to support the Universal Service Fund (USF). The fund was established to offset the high cost of providing telephone service in rural areas and also assist low-income customers in obtaining service. The long distance telephone companies decided not to include these costs into the per-minute charges, but instead chose to pass the cost on to their customers as a fixed separate item on the bill. Congress mandated in the Telecommunications Act of 1996 that the USF include support for Internet access of eligible schools (grades K-12) and public libraries. Prior to April 2000, the flat rate was $1.38 per line for interstate and international usage. Every telecommunications carrier collects this fee and forwards it to a national administration group for disbursement. Beginning with the April 2000 bills, the charge will change from a flat monthly fee to 8.6% of interstate and international long distance charges as well as any other interstate service charges. This fee is not waived except for those customers enrolled in the interstate carriers' Lifeline program.

B. Carrier Line Charge (CLC)

(sometimes known as the "Presubscribed Interexchange Carrier Charge" (PICC)) Long distance companies are required to pay flat monthly fees to the local phone companies based on the number of residential lines subscribed to them. The charge is designed to assist local phone companies cover their costs for connecting long distance calls to and from your residence to the long distance carrier of your choice. The FCC left it up to each individual long distance company to determine how it will recover the expense. In 1998, interstate carriers began assessing a separate monthly charge called the "Carrier Line Charge"(CLC). The monthly charge is $1.51 per account. Customers who have a CLC of $3.02 or $4.53 have a billing period that represents more than one month. As of July 1, 1999, the FCC established the PICC at $1.04 for the first residential line and $2.53 for each additional line, however, some long distance companies chose to average these charges for all customer lines.

3. Local Number Portability (LNP)

Number portability permits both residential and business customers to keep their local telephone numbers if they switch from one local telephone company provider to another. The FCC allowed local telephone companies to recover the costs of providing local number portability. The charge became effective February 1, 1999 and can last no longer than five years. The local number portability charge per residential line is typically $0.50 or as low as $.23 a month, dependent on the individual cost of the local telephone companies.

4. Federal Excise Tax

A permanent 3% tax on all monthly telephone statements was established by Congress in the Revenue Reconciliation Act of 1990. An interstate billing or service complaint may be filed with the:

Federal Communications Commission
Common Carrier Bureau, Consumer Complaints
Stop Code 1600A2, Washington, DC 20554
(http://www.fcc.gov/ccb/enforce/) or by calling 1-888-225-5322


RI Public Utilities Commission, 89 Jefferson Boulevard, Warwick, RI 02888
Voice: 401-941-4500 • Email: thomas.kogut@dpuc.ri.gov

State of Rhode Island Web Site
RI Coat of Arms
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