Cagey Consumer

MCI Forced to Change Billing Practices

This story, as described in the Idaho Attorney General's press release, is a lot less than it first appears to be.

It's about the way that some long distance carriers, MCI in particular, have recovered the PICC (pronounced "pixie"), or "presubscribed interexchange carrier charge," which the FCC imposed in 1998 when it lowered per-minute access charges that long distance companies paid to local phone companies (perhaps you'll recall advertising claiming that local phone companies were overcharging long distance companies for long distance access... the long distance carriers got their wish, and the public got taken).

MCI eventually chose to call this a "National Access Fee" and trained its customer service representatives to state that this fee was mandated by the FCC. Of course, the FCC did mandate that MCI and other long distance carriers pay this fee, but they never mandated that the fee be passed along to MCI's customers. MCI's statements gave customers the impression that all long distance companies were imposing these charges at an identical rate.

It's gratifying that MCI got some sort of comeuppance for its practices, including charging single-line residential customers an amount in excess of the actual charges that were imposed on it

MCI even imposed these charges on customers who used MCI but were not presubscribed to them, which had the effect of discouraging a competitive marketplace by imposing additional costs on those customers who would divide their long distance among multiple carriers. MCI also chose to charge a "blended rate" that averaged the costs for single-line and multi-line customers, further confusing the effect of using multiple long distance companies.

Furthermore, long distance companies should never have been allowed to add on the PICC until and unless they also reduced their per-minute charges to customers by the full amount of the per-minute access charge reductions they received.

In truth, the FCC deserves the bulk of the blame It's created a tortuous system, in which customers pay for a fixed charge which is imposed per phone line, but the charge is first paid by their long distance company, which can only recover that charge by passing it on to the customer.

The obvious intent of this approach is to reduce the complaints of consumers to the size of this government-mandated charge, even if it does result in lower per-minute long distance charges. And what does the FCC say about this?

The FCC blames consumers for not doing a good enough job of shopping around, which certainly has a lot of truth to it. Yet, if a consumer decides not to do business with any long distance carrier, they'll find that the local phone company bills them for the PICC anyway. So who's lying now?

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Updated November 21, 1999