Press Release Wednesday, June 9, 1999	Contact: David Butler, Consumers Union (202) 462-6262, ext. 1119 Consumers Union Washington DC Office

WASHINGTON, D.C. -- Consumer groups are calling on Congress to overturn the Federal Communications Commission's pricing system for telephone rates, which has added almost $5 billion a year to consumers' bills since the passage of the 1996 Telecommunications Act.

In a letter to key members of the House and Senate, Consumers Union, Consumers Federation of America, and the Texas Office of Public Utility Counsel asked that lawmakers put a stop to the "regressive, unfair rate increases that result from FCC policies."

Gene Kimmelman, co-director of Consumers Union says that the FCC will act this Thursday to allow the latest round of rate increases to take affect on July 1. Kimmelman estimates that the tab for the new fees will come to over $1 billion a year.

That amount includes an increase in the charges paid by long distance companies to local phone companies to connect long distance calls. Known as "pre-subscribed inter-exchange carrier charges (PICCS)," these charges are handled differently by each long distance company. But at AT&T, which handles about 70 percent of the nation's residential customers, the fee is expected to rise about 75 percent to $1.50. The increases will also include a 20-cent rise in the fee that funds the wiring of schools and libraries.

"This $1-billion rate hike comes on top of almost $4 billion that has already been tacked onto customers' bills thanks to the FCC's misguided management of telecommunications deregulation," Kimmelman charged. "It's time for Congress to put a stop to this pricing system and send the FCC back to the drawing board. This system isn't fair to consumers and it goes against what Congress intended the FCC to do."

Including the rate increases that take affect July 1, FCC policies have resulted in $3 being added to the monthly bill of the average residential long distance customer with one telephone line since the Telecommunications Act became law. The customer with two phone lines is paying more than $7 every month in additional charges. Plus, companies like AT&T and MCI have added their own minimum charges of $3-5 every month.

The FCC has claimed that increased rates would be offset by reductions in long distance prices. But these reductions have failed to materialize for most residential customers. In fact, since the majority of consumers are relatively infrequent long distance callers (known as "low-volume users"), these proposed reductions would not be enough to offset their rate increases.

In addition to allowing the newest rate increases to take effect next month, the FCC plans to vote Thursday on a plan to collect more information to determine who is not being served by competition, saying it is very concerned about low-volume users.

But, as Kimmelman says, "It doesn't do much good for the FCC to say 'We feel your pain, and, by the way, we're raising your bill.'"

The consumer groups are sending the letter today to Sens. John McCain, R-Ariz., Ernest Hollings, D-S.C., and Conrad Burns, R-Mont., as well as Reps. Tom Bliley, R-Va., Billy Tauzin, R-La., and Edward Markey, D-Mass.

To receive a copy of the letter, call Consumers Union's "fax back" line at (202) 238-9258 and request document number 3700. To receive a chart of new phone charges added since the passage of the '96 Telecommunications Act, request document number 3701.