Cagey Consumer

FCC True Savings

The FCC claims that its new access charge plan, effective July 1, 2000, will save consumers who make little use of long distance up to $4.71 per month. The details are shown below, but if you prefer, you can go directly to find the FCC true savings.

According to the FCC, consumers who make no long distance calls will save $4.71 a month under the new access fee plan. They didn't indicate how they arrived at that figure, but our best guess is that they combined the minimum monthly charge on AT&T's basic rate plan with the $1.51 presubscribed interexchange carrier charge (PICC) and an estimated $0.20 for the universal service fund (USF). They neglected to take into account, however, that the subscriber line charge (SLC), currently $3.50 for the first residential line and included on the local phone portion of their bill, will be raised to $4.50 under the new plan.

But there's never been any reason for people making few long distance calls to subject themselves to AT&T's minimum usage charge. Since last January, AT&T has offered their customers a rate plan of 19¢ a minute with no monthly charge or minimum. Prior to that, consumers had the option of using one of many long distance carriers that didn't impose such charges, or of simply closing their accounts with AT&T and telling the local phone company that they wanted to have "no-PIC" status, in which case, the local phone company could bill them for the PICC fee, thereby avoiding AT&T's minimum charge.

Compare for yourself:

charges for consumers who make no long distance calls
charge before
($3 minimum)
before
(no minimum)
after
(no minimum)
minimum charge $3.00 $0.00 $0.00
PICC $1.51 $1.51 $0.00
USF $0.20 $0.00 $0.00
SLC $3.50 $3.50 $4.35
total $8.21 $5.01 $4.35

The FCC also claimed that that customers who make less than 10 minutes of long distance calls will save $2.52 per month. It's unclear how they came up with this number, especially in light of changes AT&T is making to the pricing structure of its basic residential plan, but we've assumed that customers who make less than 10 minutes of long distance calls make an average of 9 minutes of calls.

charges for consumers who make less than 10 minutes of long distance calls
charge before
($3 minimum)
before
(no minimum)
after (new
no minimum plan)
after (existing
no minimum plan)
actual or
minimum charge
$3.00 $1.71 $2.05 $1.71
PICC $1.51 $1.51 $0.00 $0.00
USF $0.20 $0.11 $0.14 $0.11
SLC $3.50 $3.50 $4.35 $4.35
total $8.21 $6.83 $6.54 $6.17

FCC True Savings

Comparing the lowest charge available to residential customers before and after the access fee changes, we're able to calculate just how much price-conscious consumers will save under the new plan:
FCC Promised Savings FCC True Savings
$2.52-$4.71/month
for consumers who make less than 10 minutes of long distance calls per month
66¢/month
Note: The FCC True Savings only applies to the first year of the FCC Access Plan. After the first year, the SLC increases by $0.65, effectively eliminating any future savings.
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Updated June 11, 2000