Connect America Fund order details access charge reforms

The current access charge system has come under attack from many quarters. At a time when carriers are striving to operate their networks more cost-effectively, the terminating access charges that they pay to other carriers for completing calls are becoming increasingly problematic.

Originating carriers do not control who their customers call and therefore cannot predict what their access charge costs will be. As a result, some carriers have gone to great lengths to avoid paying per-minute access charges, even in some cases deliberately failing to complete calls to rural areas, where those charges tend to be the highest. The Connect America Fund order cracks down on access charge avoidance in the short term, while phasing out per-minute access charges in the long term. Within six years for price cap carriers and competitive carriers that benchmark access rates to the price cap carriers, the FCC aims to bring terminating access charges to zero. For rate-of-return carriers and CLECs that benchmark access rates to them, the transition will occur over nine years.

The FCC outlines two methods through which carriers will be able to recover some of the revenues lost as a result of this transition. One is by raising rates for basic local service. For incumbent carriers, the transition plan calls for an increase of up to 50 cents per month for residential and small business customers each year. For multi-line business customers, the maximum increase is $1.00 per month per year. There is a $30 cap on basic residential service, and customers who participate in the low-income Lifeline program are exempt from basic rate increases. Competitive carriers are expected to recover reduced access revenues solely through end user charges and are not subject to the limits on rate increases.