AT&T customers began paying 16% more for out-of-state toll calls January 1 in order to fund telecommunications discounts for public libraries and schools. Long-distance carriers must contribute 6.5% of projected revenues to the $2.5-billion universal service fund, which also subsidizes phone service for low-income and hard-to-reach customers. The surcharge passed on to consumers is now 11.5%, up from 9.9% in 2001; this translates to an extra 32 cents per month for every $20 in toll charges.
The Associated Press reported December 31 that AT&T expects consumer long-distance revenues to drop by 25% or more in 2002. “Because of our declining revenues, we need to recoup the money in order to pay the fund,” company spokeswoman Claudia Jones said. “This isn’t a revenue generator for AT&T.”
Representatives of MCI and Sprint stated that their companies had no plans to raise their current 9.9% e-rate fees. Industry analysts as well as the telecom companies have suggested that the Federal Communications Commission should change the way it calculates the fee and shift the burden away from the ailing long-distance sector.
The increase will not affect the amount available to schools and libraries through the Universal Service Administrative Company that distributes the funds.
Note: An erroneous amount of $5.5 billion for the annual Universal Service Fund was reported in an earlier version of this story.
Posted January 7, 2002.