Beginning April 1, 2003 carriers that elect to recover their Universal Service contribution costs through a separate line item (as many carriers do) on a customer invoice, may not mark-up the line item above the relevant FCC/USAC contribution factor. For example, given the current contribution factor of 7.28%, a carrier's federal Universal Service line item cannot exceed 7.28% on each customer's bill. Contributors will still retain the flexibility to express the line item as a flat amount or a percentage, as long as the line item does not exceed the total amount associated with the contribution factor, or the actual percentage thereof. Carriers may find that this means they will need to amend FCC price lists and state tariffs and reprogram switch software and billing systems and possibly restructure their rates to account for the lost revenue.

The rule specifically states that the restriction applies to carries which recover USF charges "through a line item on a customer's bill." Although, prepaid calling card providers do not use a customer billing statement or invoice, and would thus appear from the language of the new rule not to be subject to its requirements, the FCC has stated that it does intend to enforce the restriction against prepaid providers. Thus, some prepaid providers may find that substantial expense will be needed to revise surcharge disclosure language on point of sale materials as well as prepaid cards themselves.

The FCC's decision states that any carrier applying a Universal Service line item charge about the applicable assessment amount could be subject to enforcement action for violation of the new rules. As such, carriers should take the necessary precautions to ensure they are in compliance when the regulations take effect on April 1, 2003.

Universal Service Fund Fee Hikes from AT&T, MCI, Sprint 1/1/02

Long Distance Ruling from the FCC 8/1/01

Up to now, customers were caught by surprise when their long distance bills arrived with higher rates than they thought they were getting. Hopefully now, with advance warning mandated, consumers have a chance to shop other carriers for a better rate plan before their current carrier's rates go up.

Finally, the FCC has made a ruling that may benefit long distance consumers. As of August 1, 2001, long distance carriers MUST inform their customers when an interstate rate increase is coming. However, they have given carriers have a choice as to how they will disseminate the news - they can mail you a letter, they can place a notice in your bill envelope, or call you on the phone and leave a message. Or, apparently they are allowed to simply post the notice on their web site. We believe this is one major flaw of the ruling. After all, how many long distance customers will go to the AT&T web site and look for rate hike information regularly??? The FCC needs to hold carriers accountable and not allow them this kind of sneaky loophole. Carriers raise rates all the time and count on you to simply accept the new terms either because you do not notice, you can't be bothered, and/or the company makes it difficult to talk with someone to correct a problem. They make you jump through "hoops" to talk with a human, and you can usually plan on being on hold for an hour or so.

As far as we can tell, this rule applies only to your state-to-state rates and international rates, thus, another major flaw.

MCI and Sprint have followed the lead of AT&T and are now charging $1.50 additional fee each month to receive your long distance bill on your local phone company bill.

AT&T Rate Hike Coming July 1, 2001

AT&T explains their (excessive) USF charge - (hmmm, not completely...)

From the AT&T website: "The amount telecommunications carriers are required to pay into the Universal Service Fund is based on a percentage of the carrier's revenues." (Note: They neglect to mention what that percentage actually is...) "Most carriers are charging it as a percentage of their customers' long distance charges and the amount of the percentage charge does not vary significantly among the major carriers." (Note: Notice the term "major" carriers. This is the qualifier. The rate charged DOES VARY SIGNICANTLY - between 3% to 5.9% difference compared to smaller carriers!)

Sprint explains other added charges (hmmm- a carrier property tax recovery fee of 1.08%??? Who gave them permission for this one? Do consumers realize this is not an "official" mandated fee? This charge doesn't appear on any of the smaller carriers' bills that we have seen...)

From the Sprint website: "Beginning February 1, 2001, Sprint implemented a new charge that will appear on your invoice called the Carrier Property Tax. Sprint is the last major carrier to pass this fee on to its customers. Currently, AT&T, MCI and Qwest bill for this fee. The Tax Allocation is a flat rate of 1.08% (.0108) and is calculated only on state-to-state and international usage. The percentage is the same for all states. Your invoice will show the Property Tax Allocation in the Tax Section." (Again, notice the term "major." This charge does not appear on the bills of smaller carriers we have seen.)

More Sprint Added Fees

MCI attempts to explain added fees - (hmm...they have conveniently left out what THEY specifically charge you for these fees, so in our opinion, it explains nothing!)

MCI Beware MCI's All Week Plan and 12 Cents Anytime Plan add a whopping 12% to your bill for the Universal Service Fund. (The FCC only takes 6.9% from the carriers for this fund, so where does the extra 5.1% go???). Not only does MCI take 12% of your out-of-state calls, they also take 12% of the $5.00 monthly plan fee as part of their USF assessment!

FCC Telecom Glossary

Consumer Action News - 1999 Long Distance Teephone Survey

Shopping for Telephone Service

FCC Consumer Information

FCC Consumer Tips

You have NOTHING to lose EXCEPT your big phone bill!