Order Code RL30052
Report for Congress
Received through the CRS Web
Telephone Bills:
Charges on Local Telephone Bills
Updated June 12, 2002
James R. Riehl
Information Research Specialist
Information Research Division
Congressional Research Service ˜ The Library of Congress

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Telephone Bills:
Charges on Local Telephone Bills
Summary
Telephone bills are becoming more and more complex and such change and
complexity occasion congressional and regulatory attention as well as constituent
requests for explanation of new charges on their bills. As local telephone companies
provide additional caller services and continue to act as billing agents for long-
distance and information service providers, a customer’s local bill can include
charges for myriad options that did not exist a few years ago. Bills may now contain
charges labeled federal subscriber line charge, presubscribed interexchange carrier
charge, “national access fee,” “carrier line charge,” “federal universal service
charge,” or local telephone number portability. In addition, customers may now
receive bills for different telecommunications services from different
telecommunications service providers.
In the past, long-distance companies usually billed business customers directly
and residential customers through a local phone company. Recently, long-distance
companies have begun billing residential customers directly. One bill has become
two. Cellular telephone and personal communications services (PCS) providers,
competitive local exchange carriers (CLEC), and paging companies usually send bills
directly to the consumer. Some cable television companies are providing local
telephone service, and those charges may appear on a cable bill.
Although surveys show that consumers prefer one readable and understandable
bill, there is no federal regulation or law that dictates the layout or wording that is
used on bills. This report lists and describes the possible basic charges that
commonly appear on most local service telephone bills and discusses the practice of
“cramming,” the appearance of unauthorized and possibly illegal charges on
telephone bills. An overview of the Coalition for Affordable Local and Long-
Distance Services (CALLS) plan, implemented by the Federal Communications
Commission on July 1, 2000, is also provided.
This report will be updated as events warrant.

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Contents
Telephone Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Coalition for Affordable Local and Long-Distance Services (CALLS) . . . . 1
Access Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Subscriber Line Charge (SLC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2002 and 2003 Increases in the Subscriber Line Charge . . . . . . . . . . . . 3
Presubscribed Interexchange Carrier Charge (PICC) . . . . . . . . . . . . . . 4
Other CALLS Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Truth-in-Billing and Billing Format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Deniable and Non-deniable Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Charges on Local Telephone Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Local Telephone Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Directory Assistance Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Inside Wiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Toll Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Jamming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Sliding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Miscellaneous Caller Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Long-Distance Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Single Bill Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Slamming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Minimum Use Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Internet Access and Long-Distance Charges (Reciprocal Compensation)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal Telephone Excise Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excise Tax on Frequent Flier Miles . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Local Number Portability (LNP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Universal Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Interstate Tax Surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
911 Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Relay Center Surcharges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Cramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Internet Cramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Charges on Wireless Telephone Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Federal Communications Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
National Association of Regulatory Utility Commissioners . . . . . . . . . . . . 22

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Telephone Bills:
Charges on Local Telephone Bills
Telephone Companies
According to estimates of the Federal Communications Commission (FCC),
there are over 1,300 companies that provide local telephone services and over 700
companies that provide long-distance telephone services in the United States.1 There
may be almost that many ways of presenting a telephone bill to a customer. The FCC
does not dictate the form or wording of a telephone bill. State public utility
commissions, the entities that oversee telephone industry regulation within each state,
generally do not try to control form and wording of telephone bills either. A
collection of FCC Fact Sheets concerning various telephone industry issues is
available at [http://www.fcc.gov/cgb/information_directory.html] and also at
[http://www.fcc.gov/cgb/telephone.html].
Coalition for Affordable Local and Long-Distance Services
(CALLS)
In August 1999, six of the largest phone companies (AT&T, Sprint, Bell
Atlantic, BellSouth, SBC, and GTE) announced an industry plan to substantially
revise the complicated system of telephone access charges,2 which include the
subscriber line charge (SLC, see the section Subscriber Line Charge) and the
presubscribed interexchange carrier charge (PICC, see the section Presubscribed
Interexchange Carrier Charge). The plan, referred to as CALLS, was modified by the
coalition of phone companies after criticism from the FCC and consumer groups.
The FCC adopted the main provisions of this 5-year access reform plan on an interim
mandatory basis on May 31, 2000.3 The access charge rate structure is mandatory for
all major local phone companies with certain rate level components being mandatory
on an interim basis. The mandatory nature of the plan has been criticized by some
companies who do not believe that the plan does enough to guarantee affordable local
telephone service in rural, high-cost areas. The plan permits some companies to opt
out after the first year. Those who opt out will be subject to special cost studies.
Some major long-distance and local telephone companies that were not parties to the
1 U.S. Federal Communications Commission. Statistics of Communications Common
Carriers. 2000/2001 ed. Washington, 2001. p. v-vi.
2 Access charges are the fees that long-distance companies pay to local telephone companies
for access to the local phone network.
3 U.S. Federal Communications Commission. In the Matter of Access Charge Reform...,
FCC 00-193. Adopted May 31, 2000. Released May 31, 2000. Available via the FCC Web
site at [http://www.fcc.gov].

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CRS-2
proposal and certain consumer groups have criticized the plan. US West, recently
acquired by Qwest and the only large local phone company that did not agree to the
CALLS plan, and the National Association of State Utility Consumer Advocates
(NASUCA) both filed petitions in court for review of aspects of the CALLS plan.
US West believed the plan was “arbitrary, capricious and otherwise contrary to law.”
NASUCA representatives stated that the plan would actually raise phone bills. On
September 19, 2000, Qwest altered its position concerning CALLS and agreed to
carry out its provisions. Qwest also announced that it would drop various lawsuits
that it had filed and would review others.
Access Charges
Subscriber Line Charge (SLC). The subscriber line charge is a federally
regulated charge that first appeared on phone bills following the divestiture of the
American Telephone & Telegraph Company (AT&T) in 1984. It is also referred to
as an “access charge” and is intended to allow local telephone companies to recover
some of the fixed costs (telephone wires, poles, and other facilities) of connecting
phone customers to the interstate long-distance network. When a customer makes
an interstate long-distance call, in the vast majority of cases he/she must use a local
phone company’s network to connect to the long-distance network. Access charges
are paid to local telephone companies by both the end user (business or residential
customers) and the long-distance company carrying a long-distance call. The SLC
paid by end users appears on a bill as a specific itemized charge. The long-distance
company that carries an individual long-distance call pays access charges to both the
local phone company originating the call and the one terminating the call. The access
charges paid by the long-distance carriers do not appear on a telephone bill. Over the
past few years, the FCC reduced the amount of access charges paid by long-distance
companies. Access charges are kept by the local phone companies. They are not
forwarded to the federal government. Information on the subscriber line charge is
provided at the FCC Web site [http://www.fcc.gov/cgb/telephone.html].
In conjunction with decisions related to the implementation of the
Telecommunications Act of 1996, the FCC revised the SLC for residential and
business customers with more than one telephone line, although SLC charges for
customers with a single line did not change. In most cases, until the CALLS
revisions, the SLC for a primary residential line was $3.50 per month. Any
additional residential lines are considered non-primary lines. The SLC for non-
primary lines was capped at $5 per line per month through 1998. Starting in 1999,
the SLC for non-primary residential lines was adjusted for inflation and increased $1.
It was capped at $6.07. However, this did not mean that all non-primary lines
incurred a $6.07 charge on a telephone bill. If the local telephone company’s average
interstate costs of providing that line were less than $6.07, it could only charge the
actual amount of its costs to a consumer.
CALLS Revisions of the SLC. As of July 1, 2000, the SLC and PICC for
residential and single line businesses were consolidated into a new SLC. The PICC
charge was eliminated as a separate charge. The new primary line residential and
single-line business SLC was capped at $4.35 per month and on July 1, 2001, rose
to $5. Under this plan, the cap was scheduled to rise to $6 on July 1, 2002, and to
$6.50 on July 1, 2003. The increases after 2001 are subject to FCC validation. The

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CRS-3
FCC noted that, for the first year, the new single SLC charge was lower than the
separate SLC and PICC charges combined.
The SLC cap for residential customers and single-line businesses remained at
$3.50 for smaller local telephone companies (approximately 1,300 carriers providing
service to less than 10% of total telephone access lines). On October 11, 2001, the
FCC adopted an order to reform these charges also.4 In this order, referred to as the
MAG (Multi-Association Group) Plan, the SLC caps for the smaller carriers were
increased to the same levels paid by most other telephone subscribers. As of January
1, 2002, the SLC cap for residential and single-line businesses increased to $5.
Beyond that date, the FCC will conduct cost review studies, and the cap may increase
to $6 on July 1, 2002, and to $6.50 on July 1, 2003.
2002 and 2003 Increases in the Subscriber Line Charge. On June 5,
2002, the FCC, following a cost review proceeding, determined that the scheduled
increases in the subscriber line charge were appropriate and necessary to fulfill the
Commission’s access charge reform plans.5 As a result, as of July 1, 2002, the
subscriber line charge cap for residential and single-line business customers will rise
to $6, and to $6.50 on July 1, 2003. The FCC noted that raising the cap does not
mean that all customers will necessarily see a charge at the cap level on their bill. If
a phone company’s cost of providing the line is less than the cap, it may only recover
that actual cost. The cap is the maximum charge that may appear on a bill and
applies to all carriers. In order to ensure the affordability of phone service for low-
income consumers, the FCC expanded the Lifeline support program, part of the
universal service mechanism, to cover the full amount of SLC charges.
Under the CALLS plan, non-primary line residential (two or more lines in the
home) SLC charges were increased and capped at $7 beginning July 1, 2000. The
charge will remain at this level for 5 years. However, if the telephone company’s
average interstate costs of providing the line are less than $7, it may only charge the
customer the amount of its costs. Not all non-primary residential lines will be
charged at the $7 cap. Prior to the implementation of CALLS, this charge was
capped at $6.07, but was scheduled to increase by $1 plus an amount for inflation on
July 1, 2000.
In the MAG Plan, the FCC adopted the MAG proposal to apply the same SLC
caps to primary and non-primary residential lines of the smaller carriers. The FCC
stated that several commenters in this proceeding indicated that higher SLC rates for
non-primary lines would limit the growth of these lines, which are often used for
4 U.S. Federal Communications Commission. In the Matter of Multi-Association Group
Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local Exchange
Carriers and Interexchange Carriers, FCC 01-304. Adopted October 11, 2001. Released
November 8, 2001. Available via the FCC Web site at [http://www.fcc.gov].
5 U.S. Federal Communications Commission. In the Matter of Cost Review Proceeding for
Residential and Single-Line Business Subscriber Line Charge (SLC) Caps, FCC 02-161.
Adopted June 4, 2002. Released June 5, 2002. Available via the FCC Web site at
[http://www.fcc.gov].

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CRS-4
advanced telecommunications services and are an important source of revenue for the
smaller carriers.
Prior to CALLS, the maximum SLC for businesses with multiple lines was $9
per line per month through 1998. In 1999, the multiple line business SLC was
adjusted for inflation and increased to $9.20 per line. This charge was adjusted for
inflation annually. As with the residential SLC, local phone companies could only
recover their costs. Thus, business customers with multiple lines did not necessarily
see a $9.20 charge for each line. The amount could be less, and according to the
FCC, the average SLC for businesses with multiple lines was $7.17. As a result of
the adoption of the MAG Plan order, the multiple line SLC cap for smaller carriers
increased to $9.20 on January 1, 2002.
Multiple line businesses will not see a consolidation of the PICC and SLC
charges. Under the CALLS plan, the multiple line business PICC is capped at $4.31
(its pre-CALLS cap) and will be reduced and eliminated in most areas over the next
several years (or sooner). The multiple line business SLC will be frozen for 5 years.
For business customers of the largest local phone companies, the SLC charge is $9.20
or the company’s average interstate cost of providing the line in that state, whichever
is less. Multiple line business customers of the smaller local telephone companies
will be charged $6 or the cost of providing the line in that state, whichever is less.
The FCC plans to reevaluate the multiple line business charges at the end of the 5-
year period covered by the CALLS plan.
The presence of a cap does not mean that every customer will be charged that
specific amount on their bill. The cap is the maximum charge that may appear. The
actual charge on an individual phone bill may be lower than the cap.
Presubscribed Interexchange Carrier Charge (PICC). The PICC began
appearing on telephone bills in January 1998. It was a flat-rate per-line charge that
long-distance companies paid to local telephone companies. It was charged in
addition to the SLC, because the FCC determined that the SLC did not allow local
phone companies to recover all of the fixed costs associated with the interstate
portion of the local loop. The FCC set PICC charges as ceilings, not absolute rates,
and thus specific PICCs varied from state to state depending upon the costs of
providing service within the state. The charge could be assessed for all telephone
lines regardless of whether a business or residential customer had actually selected
(presubscribed) a specific long-distance company.
As of July 1, 1999, the PICC for primary residential lines and businesses with
a single line was capped at $1.04 per month, up from $0.53 in 1998. The primary
line and single line business PICC was adjusted annually for inflation and increased
by $0.50. Through June 30, 2000, the maximum PICC charge for non-primary
residential lines was $2.53 per line per month, up from $1.50 in 1998. The cap for
business customers with multiple phone lines was raised to $4.31 per line per month,
up from $2.75 in 1998. The multiple business line PICC ceiling could be adjusted
for inflation and increased, if necessary, by approximately $1.50 per year. As with
the residential and single-line business PICC, the FCC estimated that, as its plans
were implemented, PICC charges would decrease and eventually reach zero in many
places.

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CRS-5
Long-distance companies took various approaches to including or not including
PICC charges on phone bills. In some cases, the charges appeared as an itemized line
on a bill, but they also may have been lumped in with other charges and labeled
“national access fee” or “carrier line charge.” The FCC did not order long-distance
companies to present PICC charges in a specific way, nor did the FCC order the
companies to charge the customer directly for PICC charges. The FCC stated that
its reductions in access charges which the long-distance companies pay to local
phone companies largely offset any increases in per-line or other charges, making
them revenue-neutral. Some long-distance companies chose to recover all or part of
the PICC charges from their customers and stated that they had to do so because their
costs rose and the FCC reductions in access charges were not enough and had already
been passed on to customers. Long-distance companies requested further reductions
of these charges.
CALLS Revisions of the PICC. Under the CALLS plan, on July 1, 2000,
the PICC charge was eliminated as a separate charge for residential and single line
business customers. The PICC and SLC (see section “Subscriber Line Charge”) were
consolidated into a single, new SLC charge. However, multiple line businesses will
not see a consolidation of the PICC and SLC charges. The multiple line business
PICC will be capped at $4.31 (its pre-CALLS cap) and will be reduced and
eliminated in most areas over the next several years (or sooner). As with SLC caps,
the presence of a PICC cap does not mean that all customers will be charged at the
cap rate. The specific charge may be less than the cap and must be based on the
actual cost of providing phone service in each area.
Other CALLS Provisions. Overall, according to the FCC, this action will
simplify charges and reduce the fees appearing on monthly bills, especially for low-
volume residential and business users. Due to the wide variety of billing formats, the
different fees on telephone bills, charges attached to different calling plans, and the
volume of calls a customer makes, it is not possible to state that any particular bill
will decrease by a specific amount or percent. The FCC has stated, however, that
low-volume users (30 minutes or less of long-distance calling per month) may save
between $10 and $50 per year. Various observers believe it is even more difficult to
quantify savings for heavy users of long-distance services. In addition, this action by
the FCC may result in an increase in local and long-distance competition and further
reductions in long-distance charges.
According to the FCC, some of the major consumer benefits of the CALLS plan
are:
! the elimination of the residential and single line business PICC. The
multiple line business PICC will be reduced over time and
eliminated in some areas.
! a $3.2 billion reduction in access charges paid by long-distance
companies to local phone companies.
Although major long-distance companies have agreed to pass these savings on
to their customers over the 5-year life of the CALLS plan, some consumer groups and
analysts question whether all of the savings would actually reach consumers, and

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CRS-6
when. The government cannot force the companies to pass on the savings. It is not
clear at this time whether per minute charges for long-distance calling will fall.
! availability of at least one long-distance plan (to AT&T and Sprint
customers) that does not have a monthly minimum use charge.
Monthly minimum use fees (see the section “Minimum Use Fees”) of
approximately $3 per month have been charged by some long-distance carriers to
customers who do not make large volumes of long-distance calls. Although this plan
does not abolish the use of minimum monthly fees and the FCC did not reach the
conclusion that such flat fees were unreasonable, inequitable, or inconsistent with the
Communications Act, companies agreed to eliminate or make avoidable some of
these fees.
As part of the CALLS proposal, AT&T and Sprint have agreed to make long-
distance plans available that would address the needs of low-volume users. Also,
members of the coalition agreed to work with the Consumer Information Bureau at
the FCC to develop a consumer education plan. The plan will address important
issues relating to long-distance and local phone service pricing and service. In
addition, the CALLS companies will create programs and materials to assist
consumers in understanding their telephone bills. In order to reach the maximum
number of consumers, the materials must be available in various formats and
languages. Within 90 days of publication of provisions of the Order in the Federal
Register, CALLS companies had to submit a compliance statement relating to their
consumer education plan to the FCC.6 Education efforts must continue over the 5-
year life of the plan. A report was filed with the FCC on September 19, 2000.
As part of the education effort, the CALLS member companies established Web
sites to provide phone bill assistance and other information to consumers. See
[http://www.phonebillcentral.org] and [http://www.lifelinesupport.org/li/lls/].
! identification of $650 million in implicit universal service support
and establishment of an explicit universal service support
mechanism to replace the implicit support.
According to the FCC, phone companies were collecting approximately $650
million in universal service (see the section “Universal Service”) support for high-
cost customers through their access charges. Under the new rules, this money is
removed from access charges and replaced with an assessment on all
telecommunications carriers’ interstate revenues. The money will be placed in a new
universal service mechanism (separate from the existing high-cost fund) and made
available to any carrier serving customers in high-cost areas. This new mechanism
is capped at $650 million and is targeted to density zones and study areas that have
the greatest need for it. As of July 1, 2000, price cap local phone companies must
create a separate line item to recover all contributions to the universal service support
mechanism.
6 Federal Register, June 21, 2000, p. 38684-704.

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CRS-7
For more information on the CALLS plan and its provisions, consult the FCC
Web site at [http://www.fcc.gov] or contact them at:
Federal Communications Commission
Consumer and Governmental Affairs Bureau
445 12th Street, S.W.
Washington, D.C. 20554
Call toll free: 1-888-CALL-FCC (1-888-225-5322)
Truth-in-Billing and Billing Format
On September 17, 1998, the FCC adopted a Notice of Proposed Rulemaking
addressing the issue of the clarity of telephone bills.7 The three main proposals of the
rulemaking were:
! Telephone bills should be clearly organized and highlight any new
charges or changes to consumers’ services;
! Telephone bills should contain full and non-misleading descriptions
of all charges and clear identification of the service provider
responsible for each charge; and
! Telephone bills should contain clear and conspicuous disclosure of
any information consumers need to make inquiries about charges.
The FCC received over 60,000 consumer inquiries concerning telephone bills
in 1998. On April 15, 1999, the FCC issued an Order generally adopting the
proposed principles and minimal, basic guidelines to help consumers understand their
telephone bills.8 The guidelines adopted implement three basic principles.
Consumers should know:
! who is asking them to pay for service;
! what services they are being asked to pay for; and
! where they can call to obtain additional information about the
charges appearing on their telephone bill.
The FCC chose to adopt broad, binding principles instead of detailed rules that
would rigidly control all of the wording and the format of a telephone bill. Thus,
telephone companies have wide latitude to satisfy the adopted principles in a way that
serves the needs of the carrier and the customer. In its Order, the FCC states that:

“We incorporate these principles and guidelines into the Commission’s rules,
because we intend for these obligations to be enforceable to the same degree as
other rules. Thus, while we provide carriers flexibility in their compliance, we
7 Federal Register, October 14, 1998, p. 55077-83.
8 U.S. Federal Communications Commission. In the Matter of Truth-in-Billing and Billing
Format, First Report and Order and Further Notice of Proposed Rulemaking, CC Docket 98-
170, FCC 99-72. Adopted April 15, 1999. Released May 11, 1999. Available via the FCC
Web site at [http://www.fcc.gov].

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CRS-8
fully expect them to meet their obligation to provide customers with the accurate
and meaningful information contemplated by these principles.”
Deniable and Non-deniable Charges. The Truth-in-Billing Order also
requires companies to identify charges on a customer’s bill that are “deniable” and
“non-deniable.” Generally, deniable charges are those that, if not paid, may result in
the termination (denial) of a customer’s local telephone service. Non-deniable
charges are those that, if not paid, will not result in termination of the customer’s
local telephone service. No specific format on a bill is required, although deniable
and non-deniable charges must be clearly and conspicuously identified. In addition,
carriers are free to choose other methods of informing consumers about charges that
may be contested. State laws may also address this issue.
The FCC views identification of charges into these two categories as protecting
consumers from paying questionable, unauthorized charges out of fear of having their
local telephone service disconnected. However, this guideline applies only to
companies who include both categories of charges on a single bill. Companies that
bill directly for a service that includes no basic local telephone service would not be
covered. For example, customers being billed directly by a wireless telephone
company for only wireless service would not have charges for wired basic local
telephone service on their bills. Although not paying charges on the wireless bill
would have no effect on their at-home wired service, non-payment of the wireless bill
may result in termination of their wireless service.
Essentially, customers should not conclude that every bill for a telephone service
has both deniable and non-deniable charges on it. Prior to withholding payment for
any charge on a bill, a customer should verify the status of the charge with the billing
company.
After reviewing petitions for reconsideration relating to truth-in-billing and
billing format, the FCC on March 29, 2000, released an Order on Reconsideration
that reaffirmed the requirement that telephone bills highlight new service providers
and prominently display a contact number for inquiries. This requirement is intended
to act as a deterrent to slamming and cramming by allowing consumers to more
easily identify changes in providers on their bills. The rule does not cover services
provided on a per-transaction basis like directory assistance. Changes in a
customer’s local or long-distance company would be covered.9
The Order also adopted proposals to require carriers to use standard industry-
wide language and clear descriptions for line item charges identified as resulting from
federal regulatory activity. The FCC felt that current presentations of these charges
on telephone bills are misleading, inaccurate, and confusing. As a result, through a
proceeding announced in the Federal Register, the FCC will seek comment from
consumer and industry groups concerning standard labels for these charges.10
9 Federal Register, July 13, 2000, p. 43251-58.
10 Federal Register, June 25, 1999, p. 34499-501.

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Finally, carriers must prominently display on each bill a toll-free number (or
numbers) that customers may use to inquire about or dispute any charge on their bill.
Provisions of this Order not subject to further rulemakings become effective 30
days after the publication of notice of the effective date in the Federal Register. That
notice was published in the October 12, 1999 Federal Register on pages 55163-64.
All other principles and guidelines adopted in the Order became effective on
November 12, 1999.11
The FCC provides consumer information on truth-in-billing, charges on
telephone bills, and other telephone issues at their Web site. See
[http://www.fcc.gov/cgb/phonebills/samplePhonebill.html],
[http://www.fcc.gov/cgb/information_directory.html], and
[http://www.fcc.gov/cgb/telephone.html].
Complaints concerning telephone service may be filed via the FCC Web site at
[http://www.fcc.gov/cgb/complaintfiling.html].
State regulatory authorities may also address telephone billing formats and
customer service practices of telephone companies operating in their state.
Charges on Local Telephone Bills
Local Telephone Service. This is the basic amount that a customer pays for
local dialing service, not including any taxes or additional services. State public
utility commissions regulate this charge, not the FCC.
The geographic size of a local dialing area and the structure of local dialing
service packages vary from company to company and from state to state. Typically,
customers may have local telephone service that allows an unlimited number of calls
within their local dialing area for a flat monthly fee or a service package that allows
up to a specific number of local calls during any one month. If a customer exceeds
that number of calls, the extra calls are subject to additional charges. Usually, the
various local telephone service plans are summarized in the front section of the white
pages of a telephone book. In many cases, companies providing local telephone
service list the individual component charges that are included in the fee a customer
pays for local service. Questions concerning any of these components or the fees
charged for each component should be addressed to the company providing local
phone service or the state public utility commission. The FCC does not establish or
regulate local plan prices or components.
Directory Assistance Charges. Local phone companies, in most cases,
assess charges for directory assistance (411) calls. Rates can be as high as $1.25 per
call. Charges for 411 calls are not regulated by the FCC. State authorities may
regulate these charges. In some states, there are extensive regulations. In other
states, the phone companies are given more freedom in assessing 411 fees. Local
11 A summary of this Order was published in the Federal Register on June 25, 1999, on
pages 34488-98.

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CRS-10
phone companies may allow a certain number of calls per month to 411 without
charging any fee. Above that number, fees are assessed. Customers seeking to avoid
these charges should contact their local phone company and ask about the number of
free calls that may be permitted; use a phone book; try the Internet; or call a friend
to get a number.
Inside Wiring. In some cases, a charge labeled “Inside Wiring” may appear
on a customer’s bill. This is an optional charge that customers may pay to a company
for service calls on the wiring inside their home. Monthly fees for inside wiring
“insurance” vary from company to company. Inside wiring is owned by the home or
building owner.
Customers paying this fee are not charged any additional monies if the company
is requested to repair inside wiring. Customers choosing not to pay this fee will be
charged by the phone company for any necessary inside wiring repairs requested.
Fees charged for inside wiring work vary from company to company. If a customer
has an inside wiring problem, there is no requirement to call the phone company.
Since the wiring is owned by the home or building owner, any company may be
called or the owner may choose to work on the wiring.
Toll Calls. Each telephone customer is permitted (within the parameters of
their local dialing plan) to call certain telephone exchanges in their geographic area
without incurring any additional charge on their telephone bill. Because of the
introduction of new area code overlays, local telephone calls may require seven-digit
or 10-digit dialing. Calls made outside of a customer’s local dialing area, but not
going far enough to be classified as long-distance, will incur additional charges on
a telephone bill. Local dialing areas are not determined by the FCC. State authorities
regulate the local dialing areas in their state and make the determination as to
whether calls to certain exchanges are within a specific local dialing area or are toll
calls.
Toll calls are often handled by the same company that provides local telephone
service to a customer. However, in many states, state authorities have permitted
long-distance carriers to compete in the toll call market. Toll call rates can vary
substantially depending upon the carrier chosen (in states where such competition is
permitted) and other factors. If there are any questions concerning toll call charges
or whether a specific exchange is included in a local dialing area, they should be
addressed to the company providing local telephone service or state authorities.
Jamming. With the advent of competition in the toll call market, complaints
have arisen that some customer accounts are being frozen so that customers cannot
use a company competing with their local phone company to complete a toll call.
This tactic is referred to as jamming. In cases where this is occurring, customers may
be paying more for their toll calls. Customers who feel that they have been jammed
and have inquiries about competition in the toll call market should address their
inquiries to state authorities.
Sliding. Some customers have also complained that their chosen provider of
toll call service has been switched without their permission. This practice has been
termed sliding. As with jamming, toll call rates can vary substantially from company

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CRS-11
to company. Consumers who believe that they have been victims of sliding should
contact their chosen toll call provider or state authorities.
Miscellaneous Caller Services. Local telephone companies offer a wide
variety of caller services such as: caller ID, call waiting, call forwarding, call
rejection, call trace, call return, priority ringing, and voice mail, among many others.
Both the types of caller services offered and the charges for these optional services
vary from company to company. Charges may include monthly fees or per-use
charges. The FCC does not regulate these charges.
Long-Distance Services. Long-distance charges are wholly dependent upon
the long-distance company that a consumer chooses as his/her long-distance carrier,
the particular calling plan (if any) chosen, and the number and length of calls made
during a billing period. Usually, customers designate a specific long-distance
company as their primary long-distance carrier. When a customer dials a long-
distance call by dialing 1+(area code)+telephone number, a telephone switch
automatically routes the call to the customer’s designated long-distance carrier.
However, customers are not required to use their designated long-distance carrier to
handle any of their long-distance calls. If customers use “dial around” long-distance
carriers (reached by dialing the appropriate 10-10-XXX code for a particular
company) instead of their chosen long-distance carrier, charges for those calls can
also be included on a local bill. In addition, customers may use different types of
pre-paid phone cards or long-distance company calling cards to complete a long-
distance call. Rates and conditions for these cards vary widely, and the charges billed
to a card can vary depending upon whether a payphone, business, or residential phone
is used.
Many long-distance companies are now billing their residential customers
directly instead of billing through a local telephone company. As a result, customers
may receive a minimum of two bills for telephone service.
On March 1, 2000, the FCC and the Federal Trade Commission (FTC) issued
a joint Policy Statement concerning advertising practices relating to long-distance
services, especially dial-around (10-10) numbers.12 The agencies took this action
following thousands of complaints from consumers and issued the Statement to “...
encourage industry to adhere to the standards offered in the joint Policy Statement.”
According to the FCC and FTC, the Policy Statement does not preempt any existing
state law.
Suggested guidelines for advertising of long-distance services are:
! All claims must be truthful, non-misleading, and substantiated;
! Carriers should disclose all costs consumers may incur, such as per-
call minimum charges, monthly fees, and universal service charges;
12 Joint FCC/FTC Policy Statement For the Advertising of Dial-Around And Other Long-
Distance Services To Consumers, Policy Statement, File No. 00-72, FCC 00-72, released
March 1, 2000.

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CRS-12
! Advertising should disclose any time or geographic restriction on the
availability of advertised rates;
! The basis for comparative price claims should be disclosed, and only
current information used in making claims; and
! Information should be disclosed in a clear and conspicuous manner,
and without distracting elements, so that consumers can understand
it and make fully informed choices.
Consumers are usually charged a fee of up to $5 by a local telephone company
when they change the long-distance carrier selected as their primary carrier. Often,
the newly designated long-distance carrier will pay the fee as an incentive to obtain
new customers. The fee has been capped at $5 since the 1984 divestiture of AT&T.
On March 14, 2002, the FCC began a proceeding to examine this charge.13 The
agency will seek to determine if the charge is outdated and may, in fact, hinder
competition by discouraging consumers from switching companies. As part of the
proceeding, the FCC will attempt to determine whether it should set a lower cap or
rely on market forces to set reasonable rates.

The FCC provides Consumer Fact Sheets at its Web site, see
[http://www.fcc.gov/cgb/information_directory.html] and
[http://www.fcc.gov/marketsense/welcome.html].
Single Bill Fees. Customers who receive a single bill for local and long-
distance services may be charged a fee by the long-distance company for this service.
The fee is not mandated by the FCC and is not a federal charge. In some cases,
customers are informed in advance about the fee. In other cases, no advance notice
is given. Should this charge appear on a phone bill, a customer must contact their
long-distance company and inquire about separate billing for long-distance calls. The
fee will then not apply. Single bill fees are approximately $1.50 per month. An FCC
Fact Sheet is available at [http://www.fcc.gov/cib/consumerfacts/singlebill.html].
Slamming. Generally, slamming is the unauthorized change of a customer’s
long-distance service provider.14 There are existing FCC rules and policies designed
to protect telephone customers from this practice, and sections of the
Telecommunications Act of 1996 prohibit carriers from changing a customer’s long-
distance company without following specific verification procedures. On April 13,
2000, the FCC adopted additional rules to combat slamming.15 As a result, state
regulatory agencies will be responsible for resolving slamming disputes. In cases
where a state elects not to administer the slamming rules, the FCC will resolve
disputes. The new rules also require slammers to compensate both the consumer and
the authorized carrier.
13 Federal Register, May 15, 2002, p. 34665-69.
14 For an overview of the slamming issue, see CRS Issue Brief IB98027, Slamming: The
Unauthorized Change of a Consumer’s Telephone Service Provider, by Angele A. Gilroy.
15 Federal Register, August 3, 2000, p. 47678-93.

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CRS-13
Consumers may verify the long-distance carrier connected to their home phone
by calling 1-700-555-4141 from their home phone. A recording will state the name
of the long-distance carrier connected to that line. This is an automated service.
Consumers cannot call the 700 number from another location to verify service on
their home phone. Calls must be made from the line for which one wishes to verify
service.
If there is a problem, customers should contact their local telephone company
and chosen carrier and arrange to be switched back to the chosen carrier at no charge.
If there was a charge for switching or higher rates when slammed, customers have the
right to demand a refund. Consumers may also choose to contact their state’s
Attorney General, public utilities commission, or a consumer protection group or
agency.
The FCC provides information on telephone slamming at its Web site at
[http://www.fcc.gov/cgb/consumerfacts/slamming.html]. Complaints concerning
slamming may be filed electronically at the FCC’s Consumer Information Bureau
Web site [http://www.fcc.gov/cgb/complaintfiling.html]. Complaints may also be
filed directly with the FCC:
Federal Communications Commission
Consumer and Governmental Affairs Bureau
445 12th Street, S.W.
Washington, D.C. 20554
Call toll free: 1-888-CALL-FCC (1-888-225-5322)
Minimum Use Fees. Certain long-distance carriers charge minimum use fees
to some of their long-distance customers. In most cases, basic rate customers (those
customers who are not on any calling plan) are assessed the charge. However, in
some circumstances, customers on calling plans may also be charged. The
companies stated that it was necessary to assess the charge because of the expenses
of billing, account maintenance, and customer service. Consumer advocates
condemned the charge as punishing low volume callers. The fee, if assessed, can be
$3 or more per month.
Long-distance carriers may exempt qualifying low-income customers from
paying the fee and, usually, long-distance calls made during the month are applied
against the fee. If a customer makes $2.50 in long-distance calls during the month,
50 cents will be added to the bill to bring charges up to the $3 minimum. If calls
exceed $3, there is no additional fee. Questions about the structure of these fees or
company policies concerning the fees should be directed to a customer’s long-
distance carrier.
Consumers should note that a minimum use fee is different from the monthly
charge that may be assessed by a particular company’s calling plan. A customer
might pay $5.95 per month to be on a plan that offers long-distance rates of 10 cents
per minute, 24 hours per day. This charge does not increase or decrease regardless
of the volume or cost of calls made during the billing period.

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CRS-14
Customers who wish to avoid minimum use charges may contact their long-
distance carrier and inquire about discount calling plans, switch to a long-distance
company that does not charge minimum use fees, or cancel their designated long-
distance carrier. Most long-distance calling plans, regardless of the company, may
carry basic monthly charges. These charges often exceed $3. Should a customer
cancel the designated long-distance carrier, they will still receive incoming long-
distance calls, but would only be able to make outgoing long-distance calls by using
dial-around carriers, prepaid calling cards, or cell phones. Customers choosing this
option should pay strict attention to the details of the price structure of dial-around
or prepaid services. Prices for these methods vary significantly.
CALLS Revisions. Neither the FCC nor the states currently regulate
minimum use fees charged by long-distance companies. On July 9, 1999, the FCC
announced that it would begin an inquiry into how these fees affect low volume
callers.16 This inquiry was concluded as part of the CALLS proposal adopted on May
31, 2000 (see section “Coalition for Affordable Local and Long-Distance Services”).
Although minimum use fees were not abolished, companies agreed to eliminate them
or make these fees avoidable through special calling plans with no minimum monthly
charge.
The FCC provides a series of tips at their Web site for choosing a long-distance
provider. See [http://www.fcc.gov/marketsense/welcome.html].
Internet Access and Long-Distance Charges (Reciprocal
Compensation). Members of Congress and the FCC have been inundated with
inquiries concerning the classification of telephone calls to Internet Service Providers
(ISP) as long-distance instead of local. Those complaining believed that Congress
and the FCC were about to enact provisions that would make all calls to ISPs subject
to long-distance charges. There were and are no bills in Congress to do this.
The FCC conducted a proceeding at the request of telephone carriers to clarify
how local telephone companies should compensate each other (reciprocal
compensation) for carrying telephone traffic to ISPs. Essentially, when Telephone
Company X (a local phone provider) delivers a local call to the ISP, who has chosen
Telephone Company Z to handle its local calls, X pays Z to deliver the call to the
ISP. If the ISP calls someone, Z pays X to deliver the call. Charges paid from X to
Z or Z to X are based upon the length of time that the call is connected or some other
basis determined by X and Z. X and Z enter into an agreement for a specified period
of time to compensate each other for carrying calls. This compensation is paid
between X and Z and does not involve any charges to the ISP or its customers and
has no direct bearing on the fees that an ISP charges its customers.
However, calls to ISPs tend to last a long time, since using the Internet is usually
not a speedy endeavor, but outbound calls from ISPs do not (in most cases). Thus,
local phone companies like X end up paying a lot more to Z than Z pays to X since
the compensation is often based upon the length of time that the call is connected.
X and other local phone companies in the same position petitioned the FCC to
16 Federal Register, August 5, 1999, p. 42635-37.

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CRS-15
reconsider the status of these calls and designate them as interstate instead of local.
Reciprocal compensation applies only to local telephone calls.
On February 25, 1999, the FCC ruled that “... Internet traffic is jurisdictionally
mixed and appears to be largely interstate in nature” and in a Notice of Proposed
Rulemaking is seeking to determine a federal inter-carrier compensation
mechanism.17 Designation of these calls as interstate by the FCC is a purely
jurisdictional designation. Although this ruling means that the structure and method
of reciprocal compensation (payments between X and Z) will change, it does not
change the status of local calls to ISPs to long-distance for the purposes of billing
individual customers. It also does not require an end to reciprocal compensation.
The U.S. Court of Appeals for the District of Columbia ruled, on March 24, 2000,
that the FCC had not adequately justified its analysis of phone calls to Internet
service providers as interstate. The case was sent back to the FCC for further
explanation.
In an Order released on April 19, 2001,18 the FCC concluded that
telecommunications traffic delivered to ISPs is interstate access traffic and is not
subject to reciprocal compensation. However, the FCC did not abolish reciprocal
compensation. Instead, it established a gradual reduction of the rates over the 2 years
following the effective date of the order.
The FCC does not regulate the fees that ISPs charge their customers for Internet
access. ISPs construct their own packages of monthly, weekly, hourly, or per-minute
charges for their customers.
Additional information is available via the FCC Web site at
[http://www.fcc.gov/Bureaus/Common_Carrier/Factsheets/nominute.html].
Federal Telephone Excise Tax. The federal telephone excise tax first
appeared in 1898 as a temporary tax to finance the Spanish-American War. The tax
reappeared in 1914 as a tax on long-distance service necessitated by World War I.
It has been repealed and reinstated several times since then. The tax was made
permanent by the Revenue Reconciliation Act of 1990 (P.L. 101-508) and is
currently assessed at a rate of 3% on local and long-distance telephone services.
Monies collected from this tax are not kept by the telephone companies but are
forwarded to the U.S. Department of the Treasury for general revenue purposes.19
The Telecommunications Act of 1996 (P.L. 104-104) did not alter this tax.
Legislation to repeal this tax was introduced, but did not become law, in the 106th
Congress. Similar legislation has been introduced in the 107th Congress.
17 Federal Register, March 24, 1999, p. 14203-6 and 14239-43.
18 U.S. Federal Communications Commission. In the Matter of ... Intercarrier
Compensation for ISP-Bound Traffic, Order on Remand and Report and Order, CC Dockets
96-98 and 99-68, FCC 01-131. Adopted April 18, 2001. Released April 27, 2001.
Available via the FCC Web site at [http://www.fcc.gov].
19 For additional information on the telephone excise tax, see CRS Report RS20119,
Telephone Excise Tax and CRS Report RL30553, The Federal Excise Tax on Telephone
Service: A History, both by Louis Alan Talley.

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CRS-16
Recent telephone excise tax collections have been as follows: FY2000 ($5.6
billion), FY1999 ($5.2 billion), FY1998 ($4.8 billion), FY1997 ($4.7 billion), and
FY1996 ($4.2 billion).
Excise Tax on Frequent Flier Miles. Some long-distance companies offer
their customers the chance to earn frequent flier miles based on their long-distance
calling plan. The long-distance companies purchase the miles from airlines and
award them to their customers according to the rules of the promotion being offered.
Congress, in the Taxpayer Relief Act of 1997, established an excise tax of 7.5% on
the purchase of frequent flier miles. The airlines collect the tax from the companies
that purchase the miles. Some long-distance companies have chosen to pass all or
part of this tax on to their customers who receive the miles. They are free to do so,
but are not required to do so. Although the long-distance companies collect this
charge via the telephone bill, it is not a telephone-related charge and although the
charge is the result of a federal excise tax, it is not related to the 3% federal telephone
excise tax mentioned above.
Local Number Portability (LNP). The Telecommunications Act requires
implementation of local number portability. LNP permits telephone customers to
retain their telephone number even if they switch telephone companies. LNP is being
implemented in stages and will initially be available in the 100 largest metropolitan
areas. Phone companies reportedly have spent approximately $3 billion to
implement LNP.
As of February 1, 1999, local phone companies may, but are not
required to, assess a monthly charge on customers’ telephone bills to
recover some of their costs incurred in implementing LNP.
A monthly charge for LNP may appear on customers’ bills only in areas where
LNP has been implemented. The charge will vary from company to company and
region to region depending upon the costs incurred to implement LNP. According
to various reports, LNP charges that have been assessed have been in the 20 to 60
cents range. In most cases, residential and business customers will be charged the
same amount. The charge is permitted to continue for 5 years from the date it first
appears, but should not increase during that time.
Since LNP is being implemented in stages, customers in the largest metropolitan
areas will probably see the charges first, while customers in other areas will not see
any charge until LNP is implemented in their area. Any carrier assessing an LNP end
user charge must file a tariff with the FCC.
Wireless and competitive local exchange carriers (CLEC) and long-distance
companies have also incurred costs associated with LNP. These companies are not
subject to the same restrictions regarding cost recovery and are free to charge their
customers as much or as little as they want over a period of time of their choice to
recover the costs associated with LNP implementation. As a result, customers may
see wireless, CLEC, and long-distance companies assessing an LNP charge also.

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CRS-17
On July 1, 1999, following a 5-month investigation, the FCC announced that it
had directed several local phone providers to reduce their charges for LNP.
According to the FCC, this action will result in a savings of $584 million to
consumers.
Universal Service. Section 1 of the Communications Act of 1934, as
amended, states that one of the reasons for creation of the FCC is to

“... make available, so far as possible, to all the people of the United States,
without discrimination on the basis of race, color, religion, national origin, or
sex, a rapid, efficient, Nation-wide, and world-wide wire and radio
communication service with adequate facilities at reasonable charges ...”
The Telecommunications Act of 1996 added section 254 (Universal Service) to the
Communications Act. This section states that policies for the preservation and
advancement of universal service shall be based upon, among other things, quality
service at just, reasonable, and affordable rates and that access to advanced
telecommunications and information services should be available in all regions of the
nation.
The concept of universal service can trace its roots to the turn of the century and
the early years of the telephone system in the United States. During these years, a
complex system of cross subsidies developed to fund telephone services for all
citizens of the United States. Wiring rural areas was much more expensive than
wiring urbanized population centers. Profits generated in the urbanized areas were
used to subsidize rural wiring. Higher rates were charged for business customers and
long-distance calls, enabling lower residential charges for local calling. Later,
assistance was provided for low-income households. As the years passed, revenues
continued to increase, and these complex cross subsidies enabled the funding of
universal service at affordable rates for all citizens.
Up until the present time, telephone bills for the most part did not include
itemized charges for universal service. While, technically, all telephone customers
have contributed to universal service for decades, such charges were built into the
rate system. The companies that currently pay into the universal service mechanism
do so based upon their revenues, not according to a specific fee. The FCC has not
established rules mandating or forbidding phone companies from itemizing their
universal service costs on telephone bills, and there is no specific federal universal
service charge that must be charged directly to customers. Presently, phone
companies are taking different approaches to itemizing universal service costs on
customers’ bills. Some phone companies feel that they must pass on the costs of
universal service directly to their customers and are itemizing charges on bills to
reflect this. Any charge on a phone bill labeled as a “federal universal service
charge” or “universal service connectivity charge” or something similar has been
added as a specific item by the company issuing the bill. Questions about any such
charges should first be directed to that company.
With the divestiture of AT&T in 1984, the expansion of competition, and
advances in technology, the structure of the telecommunications industry in the
United States began a complex transformation that continues today. No longer was

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CRS-18
the system of cross subsidies applicable mainly to a single major provider of
telephone service. At divestiture, seven “Baby Bells” were created. Now, there are
three. The number of local and long-distance providers mushroomed, and the
country entered the information age. Telephone service was no longer limited to a
wired connection in a home or business. New questions arose relating to the concept
of universal service. What type of connections should be included? Who should
contribute to a universal service mechanism? How much should they pay? How
should they pay?
As a result of the Telecommunications Act of 1996, the FCC attempted to
answer some of these questions. In its May 7, 1997, universal service and access
reform decisions, the agency, in compliance with the provisions of the 1996 Act,
expanded the field of entities eligible for universal service to include schools and
libraries (known as the “E-rate”20) and rural health care providers. The pool of
companies paying to fund universal service was enlarged and access charges were
restructured.
On May 8, 2001, the FCC initiated a review of the way that telecommunications
carriers contribute to the universal service fund. Part of the review will be to ensure
that the carriers’ contributions are recovered (from customers) fairly, accurately, and
equitably. In a Federal Register notice published on March 13, 2002, the FCC
invited additional comments on reforming the universal service contribution recovery
process to make it more fair and understandable for consumers.
For extensive information on the FCC’s actions relating to universal service and
copies of documents see [http://www.fcc.gov/wcb/universal_service/welcome.html],
as well as the FCC Consumer Fact Sheets on universal service at
[http://www.fcc.gov/cgb/information_directory.html].
The universal service fund is administered by the National Exchange Carrier
Association (NECA), which can be reached via their Web site [http://www.neca.org]
or at:
National Exchange Carrier Association
80 South Jefferson Road
Whippany, NJ 07981-1009
(800) 228-8597
NECA’s subsidiary, the Universal Service Administration Company (USAC),
provides detailed information on the various components of the universal service
mechanism at [http://www.universalservice.org].
Local Taxes. The county, city, or state in which an individual lives often has
its own tax on telephone service. Local taxes may be much higher than the federal
excise tax and can exceed 20%. Local taxes may include: franchise, gross receipts,
state sales, local sales, municipal, special district, or earnings taxes, and state
20 For more detailed information on the E-rate, see CRS Issue Brief IB98040,
Telecommunications Discounts for Schools and Libraries, and CRS Report 98-604, E-Rate
for Schools: Telecommunications Discounts Through the Universal Service Fund.

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CRS-19
mandated universal service surcharges.21 Some or all of these charges may appear
on a customer’s telephone bill. Questions about these taxes should be directed to
local phone companies, state public utility commissions, or local tax authorities.
Property Taxes. In some cases, a telephone company may include a charge
on the bill to recover the property taxes that it pays to local governments. It may be
called the Carrier Property Tax or something similar. Assessing this charge on a
customer is the company’s choice. The FCC does not regulate this practice, and it
is not a federal tax.
Interstate Tax Surcharge. This charge, also known as a gross receipts tax,
applies to interstate revenues generated by long-distance telephone companies within
an individual state. It is not a federal tax. State or local tax authorities can provide
information on this tax.
911 Charges. Local government authorities are responsible for the
construction and maintenance of 911 emergency calling systems within a state. Any
911 charges or taxes appearing on a bill are dependent upon a local government’s
actions relative to 911 and will vary from locale to locale. Implementation of an
enhanced 911 (E911) system is underway for wireless service providers. As a result,
customers of cellular and personal communications services and other wireless
service companies may see 911 charges on their bills.
Relay Center Surcharges. Also known as Telecommunications Relay
Services (TRS), this charge is used to provide operator-assisted telecommunications
services for people with hearing or speech disabilities. Costs for intrastate TRS
services are paid by the states. Costs for interstate TRS services are borne by the
Interstate TRS fund, administered by the National Exchange Carrier Association and
funded by all interstate carriers. The NECA collects funds from approximately 3,000
companies based on their interstate revenues. Charges on customers’ bills are usually
a few cents per telephone line. TRS services are required by Title IV of the
Americans With Disabilities Act (P.L. 101-336). For additional information on TRS,
see [http://www.fcc.gov/cib/dro/trs.html].
Cramming. Customers who cannot determine what a specific charge is for
might have been “crammed.” Cramming refers to the inclusion of unauthorized or
possibly illegal charges that appear on a customer’s bill. An amount might be labeled
as “monthly fee,” “membership,” or “information service.” Contact should be made
with the local telephone company or bill provider to obtain the name, address, and
phone number of the company for whom they are collecting the fee in question.
Consumers should request that the charge be removed from the bill if they believe
they are a victim of cramming. Since the local phone company is usually only acting
as a billing agent for a company, they cannot resolve individual disputes. However,
they should be made aware of the situation.

21 Telecommunications Tax Policies: Implications for the Digital Age, National Governors’
Association, February 2000.

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CRS-20
Complaints concerning questionable charges for calls placed within a
customer’s state should be directed to a local consumer office or the state public
utility commission and the company that initiated the charge in question.
If the charges involve information services (900 numbers, psychic hotlines, etc.),
not telephone services, a customer may register a complaint with and obtain
information from the FTC Web site [http://www.ftc.gov] or:

Federal Trade Commission
Consumer Response Center, Room 130
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Toll free: (877) 382-4357
Should the complaint involve telephone-related issues, interstate or international
services, or charges, a complaint may be registered in writing with the FCC:
Federal Communications Commission
Consumer and Governmental Affairs Bureau
445 12th Street, S.W.
Washington, D.C. 20554
Call toll free: 1-888-CALL-FCC (1-888-225-5322)
The FCC is currently conducting an inquiry into invalid and unclear charges on
telephone bills. The FCC provides further information at their Web site
[http://www.fcc.gov/Bureaus/Common_Carrier/Factsheets/cramming.html].
Information on the FCC’s anti-cramming best practices guidelines is provided
at [http://www.fcc.gov/Bureaus/Common_Carrier/Other/cramming/cramming.html].
See [http://www.fcc.gov/cgb/consumerfacts/cramming.html] for a fact sheet on
cramming.
Internet Cramming. Recently, a cramming scam that targets small
businesses, religious groups, charities, foundations, or any small organization
desiring an Internet presence has generated thousands of complaints. Companies,
usually through some type of telemarketing22 operation, will contact consumers and
offer a “free trial” for the design and maintenance of a Web site. In many cases, such
companies fail to disclose that, unless the free trial is specifically canceled by the
consumer, a monthly fee (for continued maintenance of the Web site) will be
collected and charged to a customer’s telephone bill. In some cases, even when the
free trial is canceled by the customer, the charges continue to appear on the
customer’s phone bills.
The FTC has filed Internet cramming cases against various companies and
provides information at their Web site. Complaints may be filed at the FTC Web site
or by contacting the FTC at the address or phone number listed above.
22 For more detailed information on telemarketing, see CRS Report RL30763,
Telemarketing: Dealing with Unwanted Telemarketing Calls, by James R. Riehl.

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CRS-21
Charges on Wireless Telephone Bills
Many of the charges that appear on local (wired) telephone bills also appear on
bills issued by wireless companies. Most notably: monthly service charges, itemized
call charges (local and long-distance, depending upon the calling plan a customer
chooses), federal telephone excise tax, 911 fees, any applicable state or local taxes,
universal service charges, LNP, and TRS fees. As with local phone bills, wording
used on wireless bills can vary from company to company. Also, wireless companies
are not subject to the same truth-in-billing and billing format principles discussed
earlier in this report. However, the FCC is currently conducting an inquiry into
whether its truth-in-billing requirements should apply to wireless carriers and what
uniform labels should be used to identify charges resulting from federal action.23
Neither SLC nor PICC charges appear on wireless bills. However, some
wireless companies use the wording “Interconnect/Landline Charges,” or “Landline
Connection Fee” on their bills. This charge is not a result of the FCC access charge
mechanism. It is a charge assessed by a local phone company to connect a wireless
call through their network to the called party. The charge varies company to
company and calling plan to calling plan.
Although many charges on wireless bills are similar to or the same as those on
wireline bills, there is a series of charges that are particular to wireless. For instance,
wireless customers in many cases are billed for both incoming and outgoing calls,
and wireless companies may start billing for a call as soon as the send button is
pressed. Unlike wireline calls, a charge may appear on a wireless bill for a call that
did not go through. In addition, wireless companies often bill by the minute, not by
the second. As a result, a call lasting 61seconds may be billed as a two minute call.
Also, there may be substantial termination fees assessed on customers who try to
cancel their service before a certain date, and there are usually geographic limits for
coverage provided by different companies and plans.
The FCC has no regulatory authority over these various fees or billing practices.
Essentially, when customer signs up for wireless telephone services, they have
entered into a contractual agreement with a company. Customers must read the
contract carefully and fully understand the terms. In cases where customers believe
they have been misled or have been the victims of some questionable business
practice, they may wish to contact the office of the attorney general in their state.
The FCC provides information on wireless phone bills and issues at their Web
site. See [http://www.fcc.gov/cgb/phonebills/WirelessPhonebill.html] and
[http://www.fcc.gov/cgb/cellular.html].
Federal Communications Commission
The FCC Consumer Information Bureau has developed a Web site devoted to
various telephone-related issues. The site includes several FCC fact sheets on
23 Federal Register, June 25, 1999, p. 34499-501.

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CRS-22
specific telephone-related issues and summaries of enforcement actions, and it allows
consumers to file complaints electronically.
See [http://www.fcc.gov/cgb/information_directory.html].
Federal Communications Commission
Consumer and Governmental Affairs Bureau
445 12th Street, S.W.
Washington, D.C. 20554
Call toll free: 1-888-CALL-FCC (1-888-225-5322)
The FCC Web site provides a list of main, complaint, and in-state, toll-free
telephone numbers for the telecommunications regulatory authorities in each state.
The list is available at [http://www.fcc.gov/wcb/iatd/state_puc.html]. No mailing
addresses are provided.
National Association of Regulatory Utility Commissioners
The National Association of Regulatory Utility Commissioners (NARUC) is an
organization of state and federal regulatory commissioners having jurisdiction over
public utilities. Individual state public utility commissions (PUC) may provide
assistance to consumers concerning telephone bills and any state laws and regulations
that may apply to companies providing telephone services within the state.
Web site connections and addresses for state PUCs are available through the
NARUC Web site at [http://www.naruc.org]. Also, NARUC can be contacted at the
following address:
National Association of Regulatory Utility Commissioners
1101 Vermont Avenue, N.W., Suite 200
Washington, D.C. 20005
(202) 898-2200

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