Phone Companies File Plan to Phase Out Connection Fees

Phone companies file plan to phase out connection fees

Bloomberg News

Tuesday, August 17, 2004

SBC Communications Inc., AT&T Corp. and seven other U.S. telephone companies filed a plan with federal regulators that would phase out most of the billions of dollars of fees they pay to connect each other’s calls.

The three-year plan presented Monday to the U.S. Federal Communications Commission would overhaul rules for the “broken” compensation system, said Gary Epstein, a former FCC official who mediated talks on the proposal with the carriers. Consumers would pay more for phone service to make up some of the lost revenue, Epstein said in a Washington press briefing.

The carriers are seeking to end legal disputes and simplify a system that requires payments based on different per-minute rates, depending on the type or distance of the call.

AT&T and other long-distance phone companies pay higher fees and provide revenue to local providers such as SBC, which was the only one of the four U.S. regional carriers to endorse the plan.

Other carriers who support the proposal include MCI Inc. and Sprint Corp., Global Crossing Ltd. and Level 3 Communications Inc., which operate fiber-optic networks, as well as three closely held phone carriers in Texas, Iowa and Alaska, Epstein said.