NCPA - National Center for Policy Analysis

An Array Of Phone Fees

March 7, 2000

Some phone companies may only charge five cents a minute for long distance, but customers are still hit with a bewildering array of fees imposed by regulators and century-old federal levies. "Hardly anyone in the planet understands how all of the access fees are built into the system," says Scott Cleland, an analyst with the Legg Mason Precursor Group.

  • The subscriber line charge -- which the Baby Bells price at $3.50 for the first line and $6 for each additional line -- is an attempt by regulators to make phone rates more equitable, on the theory that those who can afford multiple lines should subsidize poorer customers who only have one phone.
  • Even those who don't use long-distance must pay a monthly Carrier Line Charge of about $1.50 for access to the nation's phone network.
  • Another set of access fees is built into the basic charge for local service, and yet another is part of the per-minute rate charged by long-distance companies.
  • A monthly 46 cents to $1 "portability fee" per line is charged to let customers keep their phone numbers if they change carriers -- payable whether they change or not.

Long-distance carriers also assess customers a $1.38 universal connectivity charge to subsidize rural service, Internet access for schools and phone service for the poor.

The 3 percent federal excise charge that appears on every phone bill dates to 1897, when the government needed money to fund the Spanish-American War.

Source: Rebecca Blumenstein, "The Fees that Ate my Phone Bill," Wall Street Journal, March 6, 2000.


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