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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Stephen B. Temple who wrote (1985)	11/24/1998 8:41:00 AM
From: Stephen B. Temple	Read Replies (4) \| Respond to of 3178

Federal Phone Subsidies Face Change November 24, 1998 WASHINGTON - The Associated: Federal subsidies that help make phone service affordable for people in rural and expensive-to-serve areas won't be reduced and actually could grow a little under a recommendation made Monday by a board of federal and state regulators. The Federal Communications Commission is considering revamping these phone subsidies to prepare for the day when there is widespread competition in the local phone market. It is up to the FCC to implement the board's recommendations when it decides how to revamp the subsidies in the spring of 1999. The board's recommendations _ and the FCC's ultimate action _ would affect only the amount of subsidies going to big telephone companies, such as the Baby Bells and GTE, that serve rural customers and others living in high-cost areas. It would not affect small carriers. Right now, federal subsidies cover one-quarter of the costs of keeping phone service affordable in these expensive areas, with the rest coming from states. The board recommended doing away with this funding split. Under the new approach, states whose costs to provide phone service are well above a yet-to-be-determined national average would kick in as much money as they can to help make phone service affordable. Federal subsidies would cover the rest. Still, the board _ to ensure that phone rates in expensive areas don't go up _ also recommended that no state should receive less federal subsidy than it does now. This pleased local phone companies. ''This general framework strikes me as logical and fair,'' said FCC commissioner and joint board member Susan Ness. US West President and Chief Executive Officer Solomon Trujillo said in an interview that the board's recommendations ''directionally, seem good ... but the devil is in the details.'' Federal subsidies are mostly paid by fees the FCC imposes on AT&T, MCI, Sprint and other long-distance companies, which pass them on to customers. Big phone companies now get $250 million in federal subsidies to help make local phone service affordable in high-cost areas. Of that, $140 million goes to the main phone company in Puerto Rico. Alabama and California are two other big recipients. Because details have yet to be determined, FCC officials said it is impossible to determine the total amount of federal subsidies that would be available under the recommendations. Separately, the $1.45 billion in federal subsidies that now go to small phone companies would not be affected. The board also recommended that long-distance companies not mislead customers when they break out fees in telephone bills that help make local phone service affordable. Historically, these charges have been included in long-distance rates, but this year MCI, Sprint and AT&T began spelling them out in separate line items. Specifically, the board recommended the FCC adopt rules barring companies from creating a line-item charge that is greater than their share for supporting affordable phone service. The board also suggested that companies be barred from depicting the fees as a tax. These line items should not be used ''as a smokescreen for unjustified rate increases,'' Ness said. [Copyright 1998, Associated Press