Z-Tel Suggests '$20 Solution' To Solve Carrier Access Fee Problem

Z-Tel Technologies Inc. is hoping that its "$20 Solution" to the multibillion-dollar access-fee problem will cool the battle between the local telephone monopolies and other telecommunications firms seeking access to their networks.

In proposing that a flat, nationwide rate of $20 per line be charged by the major regional telephony firms--BellSouth, Qwest, SBC, and Verizon--for access to their local lines, Z-Tel--a company offering wireline and broadband telecommunications to consumers and businesses--hopes to draw the former regional Bells (RBOCs) into negotiations. "We've tried to negotiate for seven or eight years," said Z-Tel's Don Davis in an interview. "We may be at the point where the stars and the moon are aligned."

Z-Tel's proposal comes in the wake of a plea by FCC chairman Michael Powell, urging telephony companies to try to work out agreements on the access-fee issue that has plagued telecommunications companies for years. In turn, Powell's plea came after the U.S. District Court of Appeals for the District of Columbia favored the RBOCs by throwing out federal regulations that required them to lease their networks at government-set rates.

Davis, who is Z-Tel's senior vice president of corporate development, said Z-Tel reviewed the situation and realized that the two sides--the RBOCs and the firms seeking access to their networks--would never agree on cost issues. Noting there are other access issues in addition to price, Davis indicated the $20 proposal represents an effort to start negotiations. He added that the other issues complicating negotiations include access to advanced services, such as broadband and VoIP, and the difference between individual subscribers. For instance, it can cost three times more to connect a rural subscriber than it does to connect an urban user, where lines are shorter.

The access issue already has a success story, though: SBC Communications and local exchange carrier Sage Telecom reached a seven-year agreement over access charges, in which the charges per line are thought to be below $25. The two firms have declined to release exact figures, however.Z-Tel, with more than 500,000 subscribers to its local phone service, cited a report by investment banking firm UBS Warburg that cites average access charges as $15.91 per line, per month. In telephony jargon, the charges are referred to as "UNE-P"--unbundled network elements platform--and Z-Tel maintains that the $20 charge should be enough to fairly compensate the RBOCs.

As for the Court of Appeals decision, which was written by Judge Stephen Williams, a Reagan appointee, it divided the FCC in acrimonious rhetoric, and the three commissioners who saw their position on the issue overturned have vowed to appeal the decision to the Supreme Court. Consumer groups said the Appeals Court decision will likely lead to higher charges for subscribers.

Z-Tel's Davis isn't overly optimistic about a quick resolution of the access-fee problem, but he hopes the $20 proposal will, at least, lead to preliminary negotiations of substance on the issue.