FCC Proposes to End Subscriber Line Charges

March 19, 2020 | by Andrew Regitsky

FCC Proposes to End Subscriber Line Charges

FCC Proposes to End Subscriber Line Charges They have been a staple of customer bills since the mid-1980's, but if the FCC follows through on a Notice of Proposed Rulemaking (NPRM) that will be released at its upcoming March 31, 2020 meeting, ILEC assessed subscriber line charges (SLCs) along with several other so-called “Telephone Access charges” will be eliminated.

Subscriber line charges were created at the beginning of the interstate access system as a way for ILECs to recover a portion of the non-traffic sensitive costs of providing local loops to residents and businesses. SLCs are monthly flat-rated charges to reflect the fact that some loop costs do not vary regardless of whether they carry no traffic or thousands of minutes. They have always been capped to ensure that local dial rates do not rise enough to threaten universal service especially in high-cost areas. There are separate charges for residences/single line businesses, non-primary residential lines and multi-line businesses. The current monthly caps are:

  • Residential/Single Line Business - $6.50
  • Non-Primary Residential - $7.00
  • Multi-Line Business - $9.20.

Because they were never regulated as heavily as ILECs since they lack market power, CLECs have never been required to assess SLCs. Instead, they are free to recover loop charges in whatever manner they chose, with the only requirement that those rates be just and reasonable.

In its proposal the FCC notes that although SLCs and other ILEC-assessed Telephone Access Charges have existed forever, the telecommunications industry has changed drastically in the last 25 years, and it is now time for them to go.

The communications marketplace today is dramatically different from the one that existed twenty-five years ago. As a result of the Telecommunications Act of 1996, local telephone markets are open to competition. And consumers and businesses continue to rapidly migrate away from traditional telephone service provided by local telephone companies (known as incumbent local exchange carriers) to a multitude of voice service options offered by providers of interconnected VoIP service, mobile and fixed wireless services, and over-the-top voice applications. In light of the sweeping changes in the competitive landscape for voice services, many states have begun to deregulate the intrastate portion of local telephone service provided by incumbent local exchange carriers. And yet, the FCC continues to regulate the various end-user charges associated with interstate access service offered by incumbent local exchange carriers—“Telephone Access Charges” for short. In addition to remaining subject to federal price regulation and complicated federal tariffing requirements, these Telephone Access Charges are difficult to understand, and the opaque way they are sometimes described on telephone bills reduces consumers’ ability to compare the cost of different voice service offerings. (FCC Docket 20-71, March 10, 2020 Fact Sheet).

In addition to SLCs, the Commission is also proposing to eliminate the following monthly charges:

  • Access Recovery Charges (ARCs) - Transitional charges that enabled ILECs to recover a portion of their lost revenues when ILECs began a transition to bill-and-keep in 2011 for their switched access rates.
  • Presubscribed Interexchange Carrier Charges (PICCs) - Charges assessed to presubscribed interexchange carriers – the long-distance carrier to which a call is sent by default – of a multi-line business customer. These charges have already been eliminated by most ILECs.
  • Line Port Charges - Monthly end-user charges that recover costs associated with digital lines, such as integrated services digital network (ISDN) line ports, to the extent those port costs exceed the costs for a line port used for basic, analog service.
  • Special Access Surcharge - A $25 per month charge assessed on trunks that could “leak” traffic into the public switched network in order to address the problem of “leaky private branch exchanges (PBXs).” This surcharge is rarely assessed today.

Here is what the Commission is proposing for these charges, including SLCs:

  • Eliminating ex ante (after the fact) pricing regulation.
  • Mandatory detariffing.
  • Modifications to its truth-in-billing rules to explicitly prohibit all carriers from assessing any separate Telephone Access Charges on customers’ bills after those charges are deregulated and detariffed.
  • Finding ways to provide certainty in calculating contributions to the Universal Service Fund and other federal programs as well as high-cost universal service support to ensure stability in such funding and support following pricing deregulation and detariffing of Telephone Access Charges.

The Commission suggests two alternatives to provide such certainty to the Universal Service Fund:

Adopting an interstate safe harbor of 25 percent for local voice services provided by local exchange carriers, with the option for such carriers to file individualized traffic studies to establish a different allocation, or

Adopting bright-line rules for the allocation of interstate and intrastate revenues for all voice services—those offered by local exchange carriers as well as those offered by other voice service operators like interconnected VoIP providers and mobile operators.

To allow carriers sufficient time to amend their tariffs and billing systems, the agency proposes a transition period that would permit carriers to detariff Telephone Access Charges with a July 1 effective date, consistent with the effective date of their annual access charge tariff filings following the effective date of the Order in this proceeding.

Carriers would be required to detariff these charges no later than the second annual tariff filing date following the effective date of the Order in this proceeding.

In the interest of parity, to the extent they too have tariffed Telephone Access Charges, CLECs would also have to detariff these charges.

Industry comments on these FCC proposals are due 30 days after this NPRM appears in the Federal Register.