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MINNESOTA TELEPHONE ASSOCIATION Telecommunications Guide June 2001
Understanding Your Phone
Bill Phone bills started to get complicated when people got their first chance to choose a long distance com- pany. But the enactment of the federal Telecommunications Act of 1996 – which turned all sorts of “hid- den” fees, charges and surcharges into more explicit line items – only made consumers’ confusion worse. It also opened the door to something called “cramming” – the illegal addition of unauthorized charges to a bill by unscrupulous companies. In order to cut cramming and make phone bills easier to understand, the Federal Communications Commission (FCC) adopted Truth in Billing requirements in 1999. The FCC’s three guiding principles in this area are: - Bills must be clearly organized, must clearly identify telecommunications service providers and must highlight any new providers. - Bills must contain complete, clear and accurate descriptions of all charges. - Bills must clearly and conspicuously disclose the information you need to inquire about or contest charges. Phone bills don’t have the space to provide detailed explanations of every charge, however, especially now that what used to be just a “phone bill” can now include charges for cable TV, Internet service, wireless phones and more. So, as a public service, this article is devoted exclusively to explaining some of the most common entries appearing on our phone bills. 5 Key Elements You pay for the following five things on the “phone section” of your phone bill: 1. Basic Service – This is what you pay monthly to get a dial tone on each phone line. (Rates have declined by more than 60 percent in inflation-adjusted dollars over the past 70 years, by the way, but added fees and surcharges obscure this fact.) Most customers pay a flat rate but can choose a lower rate if they also pay fees based on actual usage. Rates charged by local phone companies are determined in three ways. Minnesota’s Public Utilities Commission (PUC) still sets rates for a few companies. Smaller companies with an Alternative Form of Regulation (AFOR) plan can increase basic service rates after a waiting period. They remain in effect unless the PUC decides an increase is unreasonable. Larger companies with AFORs can also increase rates, but have a rate cap for basic service. 2. Optional Services – These are “add-on” features consumers request and pay for each month. Examples include call waiting, caller ID and voice mail. Rates for these services are clearly marked on every bill. 3. Long Distance – There is a separate area on each bill for long distance charges, usually from a different company – or companies – chosen by the consumer. The local phone company often includes these charges in exchange for a fee paid by each long distance company. While they may collect payments, local companies are not responsible for long distance charges, and failure to pay them cannot result in the termination of local phone service. 4. Federal and State Surcharges – Local phone companies collect various fees mandated by federal and state governments for specific purposes. The primary (sometimes the only) surcharge is for the Universal Service Fund (see back). 5. Taxes – Various governments also tax services on each phone bill. Local phone companies are required to collect these taxes (examples on back). Any additional telecommunications services should have their own section of your bill. Local Services The Local Services “section” of each month’s phone bill in Minnesota lists both Basic and Optional phone services, clearly identifying each. In addition, a number of line items, many applying to every line a residence or business has, appear in this section. These are surcharges and taxes and include: Federal Access Charge (or the Subscriber Line Charge) – Also called the Interstate Subscriber Line Charge, this was created by the FCC to compensate local phone companies for their costs associated with providing interstate services such as long distance calls. This charge is on each phone line. Federal Universal Service Fund – A fee charged all customers that helps pay for phone and Internet services for schools, libraries and hospitals, and for phone service for poor and expensive-to-serve (usually rural) areas. Local (or Service Provider) Number Portability – A federal fee designed to enhance competition. Money from the fee allows local phone companies to recover the cost of upgrading technology so consumers can keep their phone numbers when switching local carriers. 9-1-1 Charge – A state fee set by the Minnesota Department of Administration to pay for the state’s 9-1-1 emergency response system. Telephone Assistance Plan (TAP) – The PUC sets this fee for each phone line (except wireless). TAP pays for basic residential telephone service for low-income people. Telecommunications Access for Communication Impaired Persons (TACIP) – A fee set by the PUC on all lines, TACIP funds the Minnesota Relay System and the Equipment Distribution Program so people who are deaf, hard of hearing or with a speech impairment have access to phone service. This fee is also called “Telecommunications Relay Service” or “Tele-Relay.” Federal Excise Tax – A 3 percent tax imposed in 1898 to help pay for the Spanish-American War that now goes in the federal government’s general fund. State Tax – Minnesota levies its 6.5 percent sales tax on each phone line. The money goes in the state’s general fund Local/Municipal Tax – Some city or other governmental units are allowed to charge a sales tax, which is then applied on each phone line. The local services section should also include separate listings for any service additions and credits and for using such pay-for-each-use items as directory assistance and last call return. Long Distance The FCC says that long distance companies are not required to put any federal charges or surcharges on customers’ bills except for taxes. But many companies do list line items on bills with names like “carrier line charge.” Companies also use the terms “long distance access” or “national access fee” for what was once known as the Pre-subscribed Interexchange Carrier Charge (PICC). Many long distance companies also choose to charge specifically for their contribution to the federal Universal Service Fund. Charges are either a monthly rate or a percentage of calls made. Since none of these charges are prohibited, a consumer who doesn’t like them can look for a carrier that doesn’t have any or charges less for them. Additionally, a $1.50 “bill statement fee” is a fairly recent addition to the long distance portion of some phone bills. The larger long distance companies like AT&T, Sprint and MCI have implemented this fee for certain customers that receive their long distance charges as part of the local phone bill. However, according to the PUC, reimbursements that long distance companies make to local phone companies for use of their network for in-state long distance calls must be built into the long distance companies’ rates and not listed separately. Other Bill Sections An Internet section on a local phone bill should include a monthly plan fee and any charges for time beyond a plan’s limits. A wireless phone section should have clearly marked listings for equipment, monthly plans and airtime and roaming charges. Both sections will include taxes, and some companies add surcharges. Consumer Tips Basically, today’s phone bills consist of many sections whose sub-totals get added (and sometimes subtracted). The most basic section adds all new charges to any old charges, less any credits. The long distance section combines the cost of calls with taxes, surcharges and any monthly calling plan fee that customers have agreed to pay. Consumers are advised to do the following with every phone bill: - Read it carefully each month. - Be aware of services they have ordered and companies that should be listed. - Contact their local phone company if they see anything suspicious. - Call the relevant company (local, long distance, etc.) with billing problems that pertain to that company. More information about the Minnesota Telephone Association can be found online at www.mnta.org.
(c) 2001 Minnesota Telephone Association
Published by the Minnesota Telephone Association (MTA) |