AT&T Proposes Law to Level Out Cost of Intrastate Calls

The state General Assembly is wading through a new argument between seventeen rural telephone companies and telecommunications giant AT&T.

Tennesseans all pay about the same for a call to another state. But if you call someone long-distance, but within the state, that local phone company may charge more for completing that call.

A state bill would require in-state rates be closer to out-of-state fees. AT&Tspokesman Chris Walker says that’s what his company wants.

“Inter-state rates are much lower, as we heard in the hearing today, sometimes to the tune of eighty percent lower. We feel that Tennesseans should not have to pay more to complete a call than somebody out-of-state has to pay.”

But rural phone companies say their “access charges” are higher because they don’t have any choice in who they serve. If it takes running a mile of cable to serve just two customers, the smaller companies say they are required to do it. Federal money kicks in to help them connect to out-of-state calls, but they’re on their own to bear the cost of in-state connections.

On Tuesday, the state Senate Commerce Committee put off a decision on the bill for at least two weeks.

Web extra:
The bill involved is SB 598 Norris/HB 574.

In the House, the bill is in the House Commerce subcommittee and scheduled to be heard
next week.

The two sides – AT&T versus the rural companies – agree that interstate phone calls
are cheaper.

The rural phone companies say the low inter-state rates are helped by a federal Service
Line Connector fee. And in states where intra-state rates have been successfully lowered,
such a state-level fund has been created.

While the argument is phrased in terms of phone companies, all sorts of electronic
service providers are involved. Chris Walker of AT and T listed some:

“Wire line telephone companies, wireless telephone companies, internet
companies, you’ve got Voice-Over-Internet-Protocol, which is also called ‘VOIP,’
for the technically challenged…”

Levoy Knowles, chairman of the company that owns Ben Lomand Telephone
Co-Op in Middle Tennessee, says losing those access charges will hurt the local economy
in those rural counties.

“For Ben Lomand Telephone it’s about one point nine million dollars a year, when
it’s fully implemented. To me that’s economic development, that’s infrastructure,
that’s jobs.”

Knowles says the southern Middle Tennessee company illustrates the
economic quandary that any rural company faces.
When customers lose income, they can’t buy as much, he notes.

“They can’t buy packages of internet, or TV service, or expand the products and
services they buy from us. So it’s been affecting us as well. So we have actually had to trim our costs, trim our employment headcount, and do the things that any other business across Tennessee would have to do, due to the downturn in the economy.”

Already the company has cut back to about 170 employees from a peak of 200, he says.
The company covers a good bit of country adjacent to south-bound I-24.

“Ben Lomand telephone serves 3200 square miles in Middle Tennessee, including all of Warren, White, most of Van Buren, all of Grundy a good slice of Marion, Coffee and DeKalb, And then small slices of Bedford, Rutherford, Cannon and Franklin.”

In those counties, Knowles says, the rural phone companies have a huge impact on
economic development.

“Jobs are very crucial. We did have a business that we thought was going to rely
very heavily on the Internet. We built infrastructure to that building, and then they
could not get funding, so they actually pulled the plug on the business.”

Rural operators say the larger “access fee” to connect an intra-state phone call is one of
three streams of revenue for the companies – operations (the customers pay their phone
bills), the access fees, and a Universal Service Fund from the federal government, paid
for by a “service line charge” (SLC, pronounced “slick”).

AT and T says the higher access fee to rural customers is a “subsidy.” The rural
companies argue that it is just a difference between two rates – the one AT and T can
charge and make money, and the rate they can charge and make money.

The legislature will be asked to make a decision between those two points of view.