Press Release Monday, January 31, 2000

Contact: Gene Kimmelman202/462-6262 Consumers Union's Washington, DC Office

 CONSUMER AND BUSINESS GROUPS
JOIN TO PUSH FEDERAL GOVERNMENT
TO CUT TELEPHONE PRICES

WASHINGTON, D.C. - A broad coalition of consumer and business groups is unveiling a major proposal for the federal government to cut monthly telephone fees and long distance prices.

Consumer groups -- including Consumers Union, AARP, Consumer Federation of America, the National Association of State Utility Consumer Advocates, and the Texas Office of Public Utility Counsel - are joining forces with large and small business users - the National Retail Federation and the International Communications Association -- to propose a $4-billion-a-year cut in line items charged on telephone users' monthly bills (i.e., "subscriber line charges" and "federal access charges").

The coalition's proposal to the Federal Communications Commission (FCC) would reduce monthly fees and long distance prices for all consumers, regardless of how long they spend making telephone calls.

The coalition's plan would save telephone customers $4 billion a year by:

· Cutting the subscriber line charges on consumers' and business' phone bills by $1 a month, saving consumers and businesses $2 billion a year

· Eliminating the "primary interexchange carrier" charge (a federal access charge), saving consumers and businesses $1.8 billion a year

· Cutting "special access" charges, paid by many business users, saving them $200 million a year

The coalition is asking the FCC to incorporate its plan into an industry proposal to reform the telephone access fee system submitted by an organization called the Coalition for Affordable Local & Long Distance Service (CALLS), an industry group including AT&T, Bell Atlantic, BellSouth, GTE, SBC, and Sprint.

According to the consumer and business groups, the CALLS plan would radically change the federal system of telecommunications rates, adding $2 billion a year in new fees to consumers' phone bills.

The consumer and business groups say the CALLS plan fails to preserve even the limited cost-cutting mechanisms in today's FCC rules. They say that studies claiming that all consumers will benefit from the CALLS plan (including one study paid for by CALLS) are incorrect because they are based on false assumptions about the pricing behavior in the telecommunications industry.

Most consumers are not seeing the benefits of telephone deregulation. According to a recent study by CU, CFA, and the TOPUC, the majority of consumers are paying more for long distance than they did two years ago. 56 percent of American consumers make less than one hour of long distance calls each month, yet pay an annual net increase of more than $2 billion a year. The only consumers who are seeing substantial savings are those who spend the largest amount of time making long distance calls.

Under the consumer and business coalition's plan, those price increases would be cut and all consumers would finally be able to enjoy the savings promised when the Telecommunications Reform Act became law in February 1996.