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FCC fee cut
to lower Hawaii
phone bills

Some customers could
save $2 to $4 per month

By Rob Perez
Star-Bulletin

Hawaii residents and some businesses should realize savings on their phone bills beginning as early as this month thanks to a new plan the Federal Communications Commission has adopted affecting long-distance costs.

Consumers who make no or few long-distance calls are expected to see the most immediate benefits, saving around $2 to $4 a month, industry officials say.

Savings for other customers are expected to vary depending on their long-distance calling patterns.

The commission yesterday cut by $3.2 billion the "access fees" that local phone companies charge long-distance carriers to connect calls -- costs that are typically assessed to consumers. Long-distance companies have pledged to pass on the savings, meaning their customers should see lower rates.

In Hawaii, the major long-distance companies, such as Sprint Corp. and AT&T Corp., charge their customers about $1.50 each to recoup the access fees the carriers pay GTE Hawaiian Tel, the state's dominant local phone carrier.

The new changes should begin showing up on bills this month and next for residential consumers and businesses with single phone lines, industry officials said. Access charges for businesses with multiple lines will be reduced over time, the FCC order said.

Nonie Toledo, vice president and general manager for Sprint Hawaii, said the company's residential and business customers should all benefit from the changes.

"Everyone will be positively affected," she said.

Regulators have sliced access charges by several billion dollars over the past few years to better reflect local phone companies' connection costs. But yesterday's reduction is the most dramatic.

The changes actually will affect a variety of phone fees.

While the access charge is being scrapped, local phone companies will be allowed to raise what is called the subscriber line charge. In Hawaii, that charge will rise to $4.35, from the current $3.50.

A universal service charge, which averages 43 cents nationally and is used to subsidize local phone service to low-income residents and customers in high-cost rural areas, will be scrapped on the long-distance portion of bills. But a new federal fee, averaging about 36 cents and used for the same purpose, will be added to the local portion.

The order also requires long-distance carriers to offer at least one plan that eliminates a minimum-use charge, which typically is $3 a month.

Keith Kamasugi, spokesman for GTE Hawaiian Tel, said consumers should not assume they will automatically get all the benefits from the FCC order and should continue monitoring their long-distance plans to make sure the plans fit their needs.

"Customers still have to be smart about the way they select services," Kamasugi said.

Because of all the planned changes, Oahu residential customers who make no long-distance calls -- many people fit that profile -- will see their overall phone costs fall from roughly $27 to $23 monthly, Kamasugi said. Residents who make few long-distance calls will save an estimated $2 monthly, he said.

The changes will not affect the basic monthly charge of $17.85 for residential service on Oahu, he said.

Industry officials said the FCC plan is a major step in moving the long-distance business toward the trend of flat-rate -- rather than per-minute -- pricing. That's something that wireless carriers and Internet providers that offer phone service over their data lines have already latched onto.

"That's probably the trend of the future," said John Nakahata, spokesman for an industry coalition. "This will allow those types of plans to proliferate."

Still, Gene Kimmelman of Consumers Union said the public will only realize the benefits "if long-distance companies deliver on their promise to pass through the savings with rate reductions."

Sprint's Toledo said the changes to the universal service fee should eventually spur competition for local residential service -- a market GTE currently has to itself in Hawaii.

Much of the existing competition locally is focused on business customers and in the long-distance arena.

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The Associated Press contributed to this report.