NEWS RELEASE
COMMITTEE ON ENERGY AND COMMERCE DEMOCRATS
Congressman John D. Dingell, Ranking Member

Washington, D.C. – Congressman John D. Dingell, D-Mich., today raised serious questions regarding recent long distance rate increases and whether long distance phone companies are using universal service line-item fees to gouge consumers. In particular, Congressman Dingell requested that Federal Communications Commission (FCC) undertake an investigation of the books and records of AT&T.

"Irrespective of the rate charged, no carrier should be permitted by law to charge its customers more for the universal service line-item fee than it actually contributes to the Government for this purpose," Dingell said. "It appears that AT&T may be padding its pockets by doing just that."

AT&T recently announced that it increased its universal service line-item fee to 11.5 percent of the monthly bill for residential customers effective January 1, 2002. AT&T justified this major rate hike by saying the Universal Service Fund (USF) formula used by the Federal Communications Commission is flawed because it relies on historical instead of current revenues. The company argues that if the FCC corrected this six-month "revenue lag" problem, AT&T could reduce its universal service line-item fee to approximately 9 percent of the monthly bill.

Dingell contends that AT&T’s "claim is puzzling at best." The Commission’s current USF factor is only 6.9 percent of revenues, yet AT&T has charged its customers 9.9 percent for quite some time. The company suggests that this large and growing discrepancy in rates is necessary to adjust for the revenue lag problem. Yet AT&T admits that if the Commission were to eliminate the revenue lag, the new rate would be closer to 9 percent.

"The question begs to be asked, why is AT&T charging its customers 11.5 percent to accomplish the same thing?" said Dingell. "Such behavior potentially jeopardizes the E-rate program for public schools and libraries, as well as the affordability of basic telephone services for rural and low-income consumers."

Dingell further requested that if the FCC does determine that AT&T has collected more for this line-item fee than was actually paid into USF that an order be issued to refund overage to its customers in an equitable manner.

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