Both PIC-C & USF charges are fairly new and unfamiliar to
consumers. The following is condensed from information provided by the
Federal Communications Commission (FCC).
USF
Universal Service Fee is federal tax imposed on interstate and
international usage, was set up to provide telecommunications access to
school and colleges in rural and low income areas where the likely hood
of technology would be slim. The amount imposed varies depending on your
state and/or local area because every state has a different level of
need.
It is very difficult to give a uniform answer as to where you can
locate this charge on your phone bill. All of our services follow the
state and local policies when assessing USF Fees.
PIC-C
Presubscribed Interexchange Carrier Charge (pronounced
"pick-see") is a specific amount for residential vs commercial
accounts. This charge is paid to the Local Exchange Carrier for use and
maintenance on the telephone lines.
The following information about PIC-C and USF
fees has been extracted from the FCC's web site. The views expressed here
reflect those of the FCC and do not necessarily reflect the views of
DLD2000.com or the carriers we represent.
What is the Presubscribed Interexchange Carrier Charge?
The Presubscribed Interexchange Carrier Charge is a charge that long
distance companies pay to local telephone companies to help them recover
the costs of providing the "local loop." Local loop is a
term that refers to the outside telephone wires, underground conduit,
telephone poles, and other facilities that link each telephone customer
to the telephone network.
The monthly service fee that consumers pay for local telephone service
is not enough to cover all of the costs of the local loop.
Historically, the local telephone companies have recovered the
shortfall through per-minute charges to long distance companies.
Now, however, part of these costs are recovered through flat-rated
charges to long distance companies, who use the local networks to
complete their long distance calls. Because the costs of the local
loop do not depend on usage, this flat-rated charge better reflects the
local telephone company's costs of providing service.
A long distance company pays this charge for each residential and
business telephone line presubscribed to that long distance company. If a
consumer or business has not selected a long distance company for its
telephone lines, the local telephone company may bill the consumer or
business for the Presubscribed Interexchange Carrier Charge.
Has the PIC-C Increased?
Yes. As of July 1, 1999, the Presubscribed Interexchange
Carrier Charge went up - but the per minute charge long distance
companies pay to local companies for each call made by their customers
was reduced by an even greater amount. Consumers should therefore
expect to continue to see reductions in the per-minute rates they pay for
long distance calls.
What is the maximum PIC-C for residential telephone lines and
single-line business lines?
As of July 1, 1999, the maximum Presubscribed Interexchange Carrier
Charge paid by the long distance companies for primary residential lines
and single-line business lines is $1.04 per line per month. For
non-primary residential lines, the maximum Presubscribed Interexchange
Carrier Charge paid by the long distance companies will be $2.53 per line
per month. (Local telephone companies treat a line as non-primary when it
serves the same address as the primary line, even if the bill is in a
different name at the same address.)
It is important to remember that these amounts represent maximum
Presubscribed Interexchange Carrier Charge levels. The actual
Presubscribed Interexchange Carrier Charge paid by the long distance
companies may vary, based on the actual cost of providing local phone
service in each area, and may be less than this maximum amount.
What is the maximum Presubscribed Inter-exchange Carrier Charge
paid by long distance companies for multi-line business lines?
As of July 1, 1999, the maximum Presubscribed Interexchange Carrier
Charge paid by the long distance companies for each multi-line business
line is $4.31. Like the residential Presubscribed Interexchange Carrier
Charge, this is a maximum; the actual charge may be less than this
maximum amount.
Each year, the maximum multi-line business Presubscribed Interexchange
Carrier Charge will increase by $1.50, as adjusted by
inflation. However, as various phases of the FCC's plan are
implemented, it is estimated that the average Presubscribed Interexchange
Carrier Charge for multi-line business lines will dip below $1.00 in 2001
and, in most places will eventually be zero.
Did the FCC require long distance companies to bill consumers for
Presubscribed Interexchange Carrier Charges?
No. The FCC does not require long distance companies to put the
Presubscribed Interexchange Carrier Charge -- or any other charges or
surcharges -- on your telephone bill.
Because the long distance market is competitive, the FCC does not
directly regulate long distance company charges for service. As a result
of this flexibility, long distance companies are taking very different
approaches to whether and how they are changing charges to their
customers to reflect the Presubscribed Interexchange Carrier Charges they
pay. Some long distance companies may not charge any separate fees
related to the Presubscribed Interexchange Carrier Charge. Others have
added charges to their customers' bills -- such as a "national
access fee" -- to recover the Presubscribed Interexchange Carrier
Charges they pay to local telephone companies.
The maximum Presubscribed Interexchange Carrier Charge long distance
companies pay to local telephone companies is generally lower for primary
residential lines than it is for non-primary residential lines. Many long
distance companies, however, are charging all of their residential
customers the same rate. Other long distance companies are charging
monthly fees that match the Presubscribed Interexchange Carrier Charge
they pay to the local companies.
Increases in per-line and other charges paid by the long distance
companies, such as the Presubscribed Interexchange Carrier Charge, have
been offset by reductions in per-minute charges paid by the long distance
companies to local telephone companies.
If I don't have a long distance company, do I have to pay the fees?
A long distance company pays the local phone company a Presubscribed
Interexchange Carrier Charge for each residential and business telephone
line presubscribed to that long distance company. If a consumer or
business has not selected a long distance company for its telephone line,
the local telephone company may bill the consumer or business for the
Presubscribed Interexchange Carrier Charge.(*see Tips for Lowering Your
Long Distance Bill Fact Sheet)
It is important to remember that:
- The long distance companies' interstate access charge payments did
not increase. Their Presubscribed Interexchange Carrier Charge
payments, and payments they make to ensure that all Americans have
affordable access to telephone services, are largely offset by
reductions in the amount of per-minute charges the companies pay for
each call made by their customers.
- Because there is competition for long distance service, the FCC
does not regulate how long distance companies compute their charges
or the amount of those charges. The FCC did not tell the long
distance companies how to adjust their customers' rates in response
to changes to access charges, including the companies' new
Presubscribed Interexchange Carrier Charge payments. The long
distance companies have decided what to do, and some have implemented
charges significantly different from other companies.
The FCC's Universal Service and Access Reform Decisions
On May 7, 1997, the FCC adopted changes to its system of interstate
access charges to make them compatible with the pro-competitive
deregulatory framework established by the Telecommunications Act of
1996. The Commission took a series of actions to reduce
long-distance rates and to allow the costs of phone service to be
recovered in a more economically-efficient manner. Included in this
package were changes in the rate structure for additional phone lines
used by residential customers. At the same time, the FCC also
adopted rules to implement a new system of universal service, as directed
by Congress in the 1996 Act. This fact sheet addresses some of the
questions that have been raised about what the FCC did -- and did not do.
MYTH: The FCC is taxing additional residential phone
lines.
FACT: The FCC's order reduces existing "access
charge" subsidies for additional phone lines--it does not impose a
tax. Local phone companies recover some of the costs of the phone
line connected to your home through a monthly charge on your bill called
the "subscriber line charge" (SLC). Currently, the
remaining costs of those lines are recovered through per-minute charges
to long distance carriers. The SLC for residential lines is
currently capped at $3.50 per month, to ensure that all Americans are
able to afford basic phone service. The FCC's decision merely shifts the
method by which large (price cap) local phone companies recover these
costs, in the context of an overall plan to reduce long-distance phone
rates substantially.
MYTH: Phone rates will go up for the residential user
in order to connect schools and libraries to the Internet.
FACT: Under the Telecommunications Act of 1996, Congress mandated
that universal service include for the first time support for schools,
libraries, and rural health care providers. Although the discounted
services that eligible schools, libraries, and health care providers
receive will be paid for by telecommunications providers' contributions
to universal service, we anticipate that this new assessment will be
offset by other changes resulting from the Act, such as the reductions in
access charges that long distance companies will pay. Although it
is too early to determine the precise combined effects of these changes,
we do not anticipate that they will result in higher rates. The
goal of universal service is to make telecommunications affordable.
Among the primary objectives of the FCC has been to ensure that rates
do not rise. All payments into the universal service fund are used
to support all of the goals outlined by Congress in the 1996 Act,
including affordable rates for rural telephone customers, rural health
care providers, schools and libraries. As directed by Congress in
the 1996 Act, the FCC has, through its Universal Service and Access
Charge Reform proceedings, adopted a universal service funding mechanism
that promotes competition in the telecommunications industry.
Competition ultimately will deliver multiple benefits to consumers,
including lower rates, greater choice, and improved service. The
FCC also has taken steps to ensure that expenditures that are made on
behalf of eligible schools, libraries and rural health care providers are
delivered effectively and efficiently. For example, the FCC has required
that contracts for supported services for schools, libraries, and rural
health care providers be subject to competitive bidding
requirements. These requirements should help ensure that services
to schools, libraries, and rural health care providers are provided at
the lowest possible prices. In addition, consistent with the 1996
Act's mandate, the FCC has imposed reasonable limitations on the types of
discounted services that eligible schools, libraries, and rural health
care providers may receive and has imposed annual caps on expenditures
under these programs.
MYTH: Businesses are paying an unfair share to support
universal service.
FACT: The FCC has defined the methods for paying into the
fund so as to be competitively neutral, shared fairly by providers and
users, and so as to maintain local rates at current levels. No
group of users or providers is paying for any one piece of universal
service. The 1996 Telecommunications Act defined which companies
should contribute. Under the Telecommunications Act of 1996, all of
universal service, including affordable rates for residential consumers
in all areas of the country, is supported by a broad based group of
telecommunications carriers. All payments into the universal service
fund are used to support all of the goals outlined by Congress in the
1996 Act, including affordable rates for rural telephone customers, rural
health care providers, schools and libraries. In the past, the
universal service fund was supported almost exclusively by interexchange
carriers. Starting in 1998, this support will be much broader
based, as directed by the 1996 Act.
MYTH: The charge for primary residential lines will
increase.
FACT: The subscriber line charge for primary residential
lines remains the same. The FCC's order maintains the existing $3.50 cap
on the monthly subscriber line charge for primary residential lines.
MYTH: Increased charges for additional lines will be
significant.
FACT: These charges represent a fraction of the costs that
the average user with additional lines pays for phone service, and an
even smaller fraction of what Internet users pay for computers, modems,
additional lines, and Internet access. The maximum subscriber line
charge for additional residential lines would increase by $1.50 per month
in 1998. On average, an Internet user with a second line spends
$19.95 per month for connectivity through an Internet service provider,
and $20.00 per month for the second line, for a total of about $40.00 per
month. The $1.50 increase in the line charge represents less than
4% of this total.
The FCC also created a "presubscribed interexchange carrier
charge" (PIC-C), which is a flat charge assessed on long-distance
companies. For additional residential lines, the maximum PIC-C will
be $1.50 per month in 1998. The caps on these charges will increase
gradually in future years, and rates will vary from state to state based
on the actual cost of providing local phone service in each area.
MYTH: Today's system is better for residential users
and shouldn't be changed.
FACT: No. In fact, residential rates today are
subsidized by shifting costs, resulting in higher long-distance
rates. This system of subsidies, therefore, forces everyone
to pay higher long-distance rates and stifles competition, because new
entrants must compete against a subsidized rate charged by incumbent
local phone companies. Most users with multiple residential lines
will be better off under the new system, especially those that make many
long-distance calls.
MYTH: This schools and libraries program duplicates state
and local efforts as well as voluntary activities.
FACT: The FCC's plan complements the effort underway by
states and localities to bring the information superhighway to America's
classrooms and libraries. According to data collected by U.S. Department
of Education last year, only 14% of all public school instructional
classrooms are connected to the Internet. In order to broaden the
reach of technology to classrooms and libraries, the Telecommunications
Act of 1996 specifically designed assistance for schools and libraries
that matches state and local efforts and builds on voluntary
efforts. A 1995 cost study by McKinsey and Co., found that 85% of a
school's total costs of connection are allocated to computers, software,
training and maintenance, yet none of these components is eligible for
universal service discounts under the Act. While many state, local
and voluntary efforts bring wires to schools or put computers in
classrooms, schools must still find and pay for the telecommunications
services that make technology a uniquely valuable educational
tool. Therefore, the FCC's program is designed to make significant
discounts available for schools and libraries purchasing these
telecommunications services. In the case of a school,
administrators will first negotiate with local carriers the best and most
cost-effective package of services, and then apply for a discount of 20
to 90 percent, depending on the school's particular need and location.
MYTH: The FCC is unfairly forcing wireless providers,
including paging companies, to pay in to the universal service
fund. This will increase prices for wireless services.
FACT: The Telecommunications Act of 1996 requires all
interstate telecommunications carriers to contribute to universal
service. Congress contemplated that a broad base of contributors
would spread out the cost of universal service, reducing the cost to any
one class of service provider. It would not be competitively neutral
if certain classes of carriers were exempt from contributing to universal
service. It is also worth keeping in mind that the Commission's
interconnection decision reduced the rates, in some areas by as much as
4.5 cents per minute, that wireless carriers pay to wireline carriers for
transport and termination. This decrease, combined with the
increasing amount of competition in the wireless industry, should help
ensure that prices for these services generally remain the same or
continue their downward trend. In addition, the 1996
Telecommunications Act and the Commission's rules also afford wireless
telephony providers the ability to be universal service providers and
recipients of universal service payments.
MYTH: Internet service providers (ISPs) and cable
companies are getting a free ride, they can take money from the
universal service fund but they don't have to pay in.
FACT: The Telecommunications Act of 1996 specifies that
carriers that provide interstate telecommunications services are required
to contribute to universal service support. The statute also
requires that the Commission implement universal service support in a
competitively neutral manner. The Commission has adopted rules that
meet these directions. ISPs do not meet that definition of
providers of interstate telecommunications services and therefore do not
contribute directly to the fund. At the same time, contributions to
the fund will be based on telecommunications revenues so ISPs will
contribute indirectly through their purchase of telecommunications
services. Allowing ISPs and cable companies that provide Internet
access to schools and libraries and rural health care providers to
receive support meets the goal of competitive neutrality and facilitating
their access to advanced services. Otherwise, ISPs affiliated with
telecommunications carriers would be favored over independent ISPs, and
schools would have far fewer options and likely have to pay more for the
services they need.