IP: Re: STOP THE FCC LINE CHARGE INCREASE JULY 1st, 2001, NNI Asks the FCC

[David Farber <dave@farber.net>]

>
>Date: Sun, 01 Jul 2001 19:05:10 -0400
>To: farber@cis.upenn.edu
>From: David Chessler <chessler@usa.net>
>Subject: Re: IP: STOP THE FCC LINE CHARGE INCREASE JULY 1st, 2001, NNI
>   Asks the FCC
>Cc: Bruce Kushnick <bruce@NEWNETWORKS.COM>
>
>What's the point of this press release? If "New Networks Institute," 
>whoever they are, really wanted to accomplish anything they should have 
>been petitioning the FCC (or the Congress, which has been, for years, 
>limiting FCC attempts to raise the subscriber line charge) months ago, 
>when something could have been done.
>
>Now the FCC has an NPRM out to institute "bill-and-keep" on a national 
>basis, and apparently for IXCs. (CC Docket No. 01-92; 
>http://www.fcc.gov/Bureaus/Common_Carrier/Notices/2001/fcc01145.doc ) From 
>the discussion in the NPRM, the FCC apparently expects to do this by 
>dropping terminating access charges. Thus, if there is over-earning, as 
>the press release alleges (and as appears to be the case from the FCC's 
>"Trends" and "Statistics of Common Carriers" Reports), the FCC may be on 
>the way toward solving it by reducing the per-minute toll revenue charged 
>interexchange carriers. (As early as 1987 I argued, at a regulatory 
>conference at the U of Missouri, that this was the FCC's strategy: to 
>de-load toll costs [and, hence, charges] and increase local costs [and, 
>hence, charges], thereby showing the "success" of the FCC's "competitive" 
>strategy because toll rates would be falling substantially; the increase 
>in local rates could be blamed on the state commissions.) It also 
>corresponds to the FCC's policy of putting the "non-usage-sensitive" costs 
>on the end-user consumers, and of not considering plans that might place 
>such costs on the interexchange carriers in anything other than per-minute 
>charges (in 1987 the FCC specifically rejected several access charge plans 
>that would have accomplished this: the FCC's apparent preference for 
>recovering non-usage-sensitive costs in flat charges for the end-user 
>customers of the LECs, and measured charges for the IXC customers has 
>always been puzzling to me on purely economic grounds).
>
>Anyhow, there's a lot more going on than the press release indicates that 
>the "New Networks Institute" understands. Moreover, the press release 
>shows very limited understanding of the regulatory process, petitioning 
>for a change in policy on the last business day before it is to take 
>effect. Where was NNI when the policy was adopted? What kept NNI from 
>petitioning months ago, when the FCC would have had time to respond to its 
>petition?
>
>
>
>At 06:42 AM 7/1/2001, David Farber wrote:
>
>>>From: Bruce Kushnick <bruce@NEWNETWORKS.COM>
>>>To: CYBERTELECOM-L@LISTSERV.AOL.COM
>>>
>>>NEW NETWORKS INSTITUTE
>>>Contact: Bruce Kushnick
>>>
>>>212-777-5418, News@newnetworks.com
>>>
>>>To Read the Complaint:
>>>
>>>TO BE RELEASED, Friday, June 29th, 2001
>>>
>>>DO NOT RAISE CUSTOMER PHONE RATES JULY 1ST, 2001, NNI ASKS FCC --- STOP 
>>>THE PHONEBILL SHELL GAME.
>>>
>>>NNI RECOMMENDS DROPPING THE ENTIRE "SUBSCRIBER LINE CHARGE" FROM PHONE 
>>>BILLS BECAUSE THE LOCAL BELL COMPANIES' PROFITS ARE EXCESSIVE AND 
>>>VOILATE "FAIR AND REASONABLE" STATUTES
>>>
>>>
>>>New York ---New Networks Institute today filed a Complaint with the 
>>>Federal Communications Commission (FCC) to not raise residential rates 
>>>on July 1st, 2001. Known commonly as the "FCC Subscriber Line Charge", 
>>>this obscure fee will rise to $5.00 a month, a 43% increase from the 
>>>long standing $3.50 per month. This charge was previously increased on 
>>>second lines, from $3.50 to $7.00 per month. For multi-line business 
>>>customers, the total amount has gone from $6.00 to as high as $9.20 per 
>>>line per month.
>>>
>>>For a family or an at-home-worker with two phonelines, they have been 
>>>hit with an additional $60 a year for service, while for businesses, 
>>>these increases have meant hundreds of dollars monthly in extra charges.
>>>
>>>The increases to residential customers mean an increase to the Bells' 
>>>revenues of approximately $2.4 billion dollars for 2002.
>>>
>>>What's wrong with this increase? Just follow the money. These added 
>>>revenues are being given to the Bell phone monopolies: BellSouth, SBC, 
>>>Qwest and Verizon, who have become some of the richest, most profitable 
>>>companies in America. According to the Business Week Corporate 
>>>Scoreboard, (2/26/01) Bell profits in 2000 were 256% above the Business 
>>>Week 500, 212% above other utilities and 170% above America's top 9 
>>>companies --- including GM, Ford, GE, EXXON, Wal-Mart, IBM, AT&T, Enron 
>>>and Citicorp. (For a detailed discussion of the Bells profits see our 
>>>new report "Bell Profits Are Outrageous". 
>>>http://www,newnetworks.com/Bellprofits2001.htm )
>>>
>>>In our Report we contend that the current Bell monopolies' profits are 
>>>excessive and violate state and federal 'fair and reasonable' 
>>>regulations ---laws that are in place to make sure that the customer is 
>>>protected from rate gouging, in lieu of competition offering better or 
>>>cheaper alternatives. For example, the Telecom Act of 1996 states:
>>>
>>>"...Consumer Protection: The Commission and the States should ensure 
>>>that universal service is available at rates that are just, reasonable, 
>>>and affordable"
>>>
>>>"With this increase, the FCC is giving these monopolies, who are already 
>>>making unjust profits, more money. How can the FCC have such blinders on 
>>>as to not examine the overall profits that customers pay the local phone 
>>>company? It is a total revenue shell game with the customers always 
>>>losing" states Bruce Kushnick, Executive Director of New Networks Institute.
>>>
>>>The counter-argument for increasing this charge has been that as the 
>>>Subscriber Line Charge goes up, charges to Long distance carriers go 
>>>down. Local becomes more expensive and long distance becomes cheaper. 
>>>However, since this charge is a total monopoly --- there are virtually 
>>>no competitors to lower this charge and it must be paid as part of local 
>>>service ---- then it is still supposed to be regulated and therefore, it 
>>>must also be considered under the 'fair and reasonable" statutes of the 
>>>Telecom Act.
>>>
>>>The Money goes to the Bells: The Subscriber Line Charge (SLC) has 
>>>various names and definitions used on phonebills. It is usually called 
>>>the "FCC Subscriber Line Charge" but other names referring to the FCC 
>>>are also common.
>>>
>>>"Though the name implies that the money goes to the FCC, the revenues go 
>>>directly to the local Bell companies. It's curious that America's 
>>>phonebills don't tell you that this charge is really more Bell profits," 
>>>added Kushnick.
>>>
>>>Based on the overall profits of the Bell companies from local service, 
>>>NNI is calling on the FCC to not only drop the planned increase to the 
>>>Subscriber Line Charge on July 1st, 2001, but to remove the entire fee 
>>>from all phonebills. To read the FCC's information see: 
>>>http://www.fcc.gov/cib/consumerfacts/SLC061500.html
>>>
>>>Please note that the figures presented are only for residential 
>>>customers and are an approximation based on available data. The total 
>>>amount of SLC charges would have been $4.4 billion for 2001, but with 
>>>the increases, the total collected for a full year will be $6.8 
>>>billion---- a $2.4 billion dollars increase. The total "End User" 
>>>charge, both for residential and businesses, collected by the Bells and 
>>>GTE for 1999 was $9.7 billion, based on the FCC's annual report 
>>>"Statistics for Common Carriers".
>>>
>>>A companion New Networks Institute report "The Real Truth in Billing: 
>>>Phonebills Held Hostage", will be released July, 2001. It compares Bell 
>>>profits to the charges on phonebills. For more information contact Bruce 
>>>Kushnick at: 212-777-5418, or to read the full Complaint, visit New 
>>>Networks Institute at http://www.newnetworks.com
>>
>>
>>
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