Slugfest Brews Over Phone Access Fees

With a $22-a-line proposal from SBC Communications as the latest offer in the great telephone access fee war, it's clear that the four regional telephone monopolies are taking different approaches

April 21, 2004

3 Min Read
Network Computing logo

With a $22-a-line proposal from SBC Communications as the latest offer in the great telephone access fee war, it's clear that the four regional telephone monopolies are taking different approaches to resolving their timeworn dispute with independent competitors.

The first reaction to the SBC proposal Tuesday came from AT&T, which said it would reject the offer.

Bolstered by a recent Court of Appeals decision throwing out the old rules regulating access fees, the former regional Bell operating companies -- BellSouth, Qwest, SBC and Verizon -- have been freed from the mandated fees that previously had been set by individual states.

Elsewhere Qwest agreed to mediate the issue with MCI and AT&T. Cheryl Parrino, former chairwoman of the Wisconsin Public Service Commission, will mediate.

BellSouth is proposing to hold its fees stable until the end of the year and then increase them incrementally until 2007 at which point they would be capped at $7 a month over the existing charges. So far Verizon is approaching the issue on an individual basis one competitor at a time."The problem is that everyone is selling the same product," said Pete Wilson, president and CEO of telephony consultancy Telwares Communications. "If you're reselling the same network, you're never going to make much money." Wilson said the former regional Bell operating companies "were always playing defense, they had a fear of failure." That is slowly changing, he added.

Chaos has marked U. S. telephony markets since early March after the Appeals Court decision. The Federal Communications Commission countered with a plea to the entire industry to work out differences on its own by June 15 before the court decision could be appealed to the Supreme Court.

AT&T has been the most outspoken challenger of the new approach to access fees. It complained in a statement that it is "troubled by the fact the Bells continue to negotiate from the position that consumers will have to pay more for local phone service." Most consumer groups say the Appeals Court decision will lead to higher phone bills. AT&T has been increasing its introduction of VoIP, possibly in reaction to the brouhaha over access fees. On Tuesday, AT&T introduced the VoIP service in California.

One thing about the access fees is clear: they will increase, some dramatically in some states In California, for instance, SBC can only charge $13.50 a line at present. A $22 per line charge would represent a 63 percent increase. Rates in other states vary -- in Illinois the fee has been $12; in Nevada, $30. As might be expected, fees were generally lower in urban/suburban areas than in rural areas where lines must often be strung over long distances.

Qwest has also reached an agreement with broadband provider Covad for rental of its lines in seven of Qwest's states. Telwares Wilson said Qwest seems to embody a new kind of thinking on the part of some of the former Bells -- a piece of the whole access fee pie is better than no pie at all. Under some circumstances Qwest often received no fee income at all and the deal with Covad gives it some income. Qwest and Covad had been talking for several months and finally made a deal after the Court of Appeals decision.A few weeks ago SBC announced that it had inked an agreement with Sage Telecom for access to the SBC network for seven years at charges below $25 a line. Both firms have declined to release exact figures on their agreement. Another telecommunications company, Z-Tel Technologies, has proposed a $20 fee, also hoping to break the logjam over the issue.

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights