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To: Kenneth V. McNutt who wrote (4723)	7/1/1999 6:49:00 PM
From: Anthony Wong	Respond to of 11568

Long-Distance Phone Companies Increase Phone Fees (Update1) Bloomberg News July 1, 1999, 5:35 p.m. ET Long-Distance Phone Companies Increase Phone Fees (Update1) (Adds details on three largest long-distance companies raising bills throughout, closing share prices.) Washington, July 1 (Bloomberg) -- AT&T Corp., MCI WorldCom Inc., and Sprint Corp. are increasing customers' long-distance telephone bills in defiance of federal regulators to help pay for a $2.25 billion government Internet subsidy program. The three largest U.S. long-distance companies structure their line-item fees differently and their various classes of customers will see different fees. In general, the fee increases will range from a few pennies a month to a 1.5 percent increase in the overall bill. Officials at the Federal Communications Commission contend long-distance companies don't need to increase line-item charges to pay for the subsidy because the FCC has been slashing the fees that long-distance companies pay their local counterparts to connect their calls, known as access charges. Earlier this week, the FCC said it had cut access charges by about $500 million. The line item charges ''create some political problems for the long-distance carriers'' at the FCC, said Paul Glenchur, a telecommunications analyst with Charles Schwab Corp.'s Washington Research Group. MCI WorldCom, the second-largest long-distance company, today said it will increase charges for to underwrite the program to 7.2 percent of residential monthly bills from 6 percent. Fees for small businesses will rise to 6.5 percent from 5 percent, and large companies will pay 4.5 percent of their monthly bills, up from 4.1 percent. MCIWorldcom passed on the cost of funding the Internet program to consumers because ''whenever we get an access charge reduction we pass it along to our customers'' in the form of lower rates, company spokesman Stephanie Elrod said. No. 1 AT&T Corp. yesterday said its customers will pay 99 cents a month, up from 93 cents. No. 3 Sprint is raising its fees for residential customers to 6.3 percent from 5.8 percent of the overall bill, and keeping its line item charges for businesses at 4.9 percent. The charges are shown on phone bills as line items called the ''federal universal service fee'' and began appearing last year. They help pay for a federal program to connect schools and libraries to the Internet and to keep costs of local residential phone service affordable across the country. The FCC increased funding for the schools and libraries portion of the program in May by almost $1 billion to $2.25 billion. Phone companies are required to pay for the program, and long-distance companies have passed along their costs to consumers. MCI WorldCom's shares rose 2 1/4 to 88 5/16. AT&T climbed 13/16 to 56 5/8. Sprint shares fell 2 to 51.