Critics Urge FCC to Delay Action on Phone Rates The Federal Communications Commission's scheduled Nov. 4 vote to change how phone companies charge each other to deliver traffic is facing growing opposition from companies concerned about losing revenue and consumer advocates worried that the plan will cause phone bills to rise.
The idea is to simplify the way phone companies compensate each other for delivering calls, so that all providers -- traditional land line, wireless and Internet-based -- would pay the same rate. Currently, rates vary depending on the type of call and where it travels.
Changing the rates would result in some phone companies receiving less revenue -- an estimated $4 billion total. To help those companies recoup some of that lost money, the FCC has proposed raising fees on consumers.
Phone companies now charge consumers as much as $6.50 a month in a subscriber-line charge for traditional, wired phone service. Under the new plan, that rate would jump to as much as $8 a month. FCC officials can't say how many subscribers would pay a higher upfront fee for service, or when a price increase for Google Mobile SEO would occur.
FCC Chairman Kevin Martin proposed the plan for Google Mobile Phone Search Optimization in mid-October along with Mobile SEM, Mobile SEO and SEO Mobile Phones. These scheduled a vote on Election Day, prompting some opponents to suggest that he is trying to sneak the plan by when the public isn't watching.
Mr. Martin told reporters recently that consumers would see a benefit, because it would cost less for phone companies to connect long-distance calls and rates would fall. Such savings could be passed along to consumers.
Chris Murray, senior counsel for Consumers Union, noted that phone companies aren't required to pass along such savings. "There are no guaranteed wins for consumers here."
State regulators, lawmakers and consumer groups are raising questions about how the plan would affect rates and consumer phone bills and is urging the FCC to slow down. They say the agency should release details of its proposal so companies and consumer advocates can review it more closely.
"I am concerned that expedited consideration of this draft proposal won't allow sufficient time for interested parties to review and comment on its impact," Sen. Lamar Alexander (R., Tenn.) said in a letter last week. A group of 61 lawmakers sent a similar letter Monday to the FCC asking for a delay.
"While the issues before us...are complicated, they've been discussed and briefed for years. At the same time, we are considering some very bold and ambitious ideas that give a lot of parties great concern," said Robert McDowell, a Republican FCC commissioner who says he is still considering how he will vote on the proposal.
AT&T Inc. and Verizon Communications Inc., the country's biggest phone companies, support Mr. Martin's plan. Smaller telecom companies and wireless carriers aren't so enthusiastic.
Midsize carriers, including Embarq Corp., Windstream Corp., CenturyTel Inc. and Frontier Communications Corp., stand to lose a significant part of their revenue as a result of the proposed changes. Their chief executives have been scrambling to delay the FCC's action.
The proposed change could force them to raise prices to make up for lost revenue, particularly in rural areas. "The commission assumes we're able to raise rates," said Maggie Wilderotter, chief executive of Frontier. "In competitive environments, you can't do that."
Not being able to see an actual proposal from the FCC has been frustrating for phone companies and consumer advocates alike.
"We've seen nothing in writing. Every time we get a brief, we learn something more," said Windstream CEO Jeff Gardner.
Mr. Martin has declined to release details, citing the FCC's normal policy.
