Access Charges The major questions –What services did IXC’s require in order to provide their interLATA toll and private line services? –What to do about the over-allocation of local loop costs to the interstate jurisdiction –No more AT&T “toll pot” to take care of that

What services did IXCs require? Access to the local loop Access to the telco switch (or switches depending on routing of traffic) Access to inter-office trunks Access to customer information Access to billing and collection Access to directory assistance and in some cases long distance operators

Establishment of Access Charges Switched access Special access Billing and collection –Started out as a tariffed service; then moved to a contract basis

Switched Access Access required by IXC to provide regular toll service Charges include: –Rates to cover local loop (Subscriber Line Charge and Carrier Common Line Charge) –Local switching (end office charge) –Transport “Equal charge rule” to give new entrants a chance to compete against AT&T

Special Access Access required by IXC to provide dedicated or private line service Charges include: –Local distribution channel –Channel mileage –Channel mileage termination –Other services like multiplexing or special line conditioning

Access charge process Part 32 chart of accounts Jurisdictional separations Part 69 Access Rules Allocation between regulated and nonregulated nonregulated State Other Access rates

How do you file access rates for companies? Creation of National Exchange Carrier Association (NECA –Administered pools for access charges Voluntary pools for switched access (except loop); and for special access—RBOCs didn’t participate –Mandatory pool for local loop access charges until 1988 RBOCs got out as soon as they could, but continued to provide subsidy to the pool

What do you do about universal service? Remember that the local loop has been over-allocated to the interstate jurisdiction Decide to allocate only 25% of the local loop costs to interstate; phase down period; How to recover the interstate cost of the local loop? –From the IXC or from the subscriber? –On a flat-rate basis or per minute?

The CCL and the SLC Subscriber Line Charge is established –Paid by the subscriber –Initially the FCC wanted it to be $6.00; big outcry –Phased in and capped at $3.50 for residential and small business; $6.00 for multi-line business Carrier Common Line Charge –Paid by the IXC –Per minute charge, originating and terminating –Targeted to recover the loop RRQ not covered by the SLC; started at $.0524 per minute each way

More on the SLC and CCLC Shifting of loop costs from the long distance provider to the subscriber –As SLC CCLC IXCs continually object to paying the CCLC

Other universal service provisions Universal Service Fund –High cost support for carriers with higher-than- average loop costs –Fund calculated by NECA based on cost information provided by all LECs (about $700M at its high point) –Charged monthly on a presubscribed line basis to IXCs

Presubscribed lines Just a reminder about equal access provisions –Equal access required dialing parity (1+ access for all long distance carriers) –This created an interesting problem for AT&T Lots of presubscribed customers (most of the residential market) Lots of low-volume customers (residential users who made few long distance calls) Proportionately large payment by AT&T for USF support

Even More on Universal Service Implicit subsidies that are part of the jurisdictional separations process and so flow into access rates –No way to know exactly how much this amount is, estimates from $2B to as much as $20B Lifeline and LinkUp plans –Direct aid to low-income subscribers to keep them on the network –Paid by IXCs on a presubscribed line basis

The continuing challenge How do you get all of the subsidy out of access charges? How do you decide if you need to continue some sort of support for high cost providers in order to keep rates affordable? And the big question? –What do you do when you add local competition to all of this?