NCPA - National Center for Policy Analysis

Calling Next County Can Be More Expensive Than Phoning Across Country

February 9, 2001

Competition between long-distance phone companies has reduced prices for calls between states. But since there is less competition between local phone companies, intrastate calling rates remain high, experts point out.

  • State-to-state calling prices have dropped 13.2 percent since 1996 -- even as in-state long-distance prices rose 1.9 percent, according to the Bureau of Labor Statistics.
  • While charges for intrastate calls are set by state regulators, federal regulators govern access charges for state-to-state calls.
  • The feds have slashed per-minute state-to-state rates by increasing a monthly fee -- called a "subscriber line charge" -- that customers pay to local phone companies.
  • Residential customers nationwide now pay a $4.35 monthly subscriber line charge -- which the Federal Communications Commission may raise to $6.50 in 2003.

Consumer groups point out that about half of all phone subscribers place less than $10 worth of interstate calls per month. But they must pay that $4.35 fee whether they pick up the phone or not.

So the system benefits those who call interstate frequently.

Source: Andrew Backover, "In-State Calls Cost More Than Coast-to-Coast," USA Today, February 9, 2001.


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