The US Federal Communications Commission is proposing two alternative approaches to reduce the $23,000m a year that long- distance telephone companies pay local phone companies in access fees, saying it could either impose a schedule of long distance access charge reductions or simply rely on market forces to drive fees lower. The access charges were introduced with the break-up of the Bell system in 1982 but the Telecommunications Act of 1996 transforms the landscape. Long-distance operators complain that the access fees are excessive and want deep government-mandated cuts, but while local phone companies acknowledge the fees exceed their actual costs in carrying long distance calls, they would prefer a gradual market-based reduction. Under the Commission’s market-based approach, new entrants into the local telephone market would compete with the Baby Bells to connect long-distance calls and the Commission would over time ease and ultimately remove price caps and access fee schedules, leaving it to competition to drive fees down.
