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How Long-Distance Scams Work

        Money | Scams

More Phone Industry Charges

If you have looked at your phone bill very carefully, you've probably seen a lot of charges that you couldn't identify. Are these charges that you have to pay, or can you somehow get rid of them? Most of them are charges that the government allows local phone companies to charge to recover some of the costs of a local phone network. Let's take a look at what should be there and what you should watch out for.

Here are some of the fees you'll probably see. Keep in mind that some of these have nothing to do with your long-distance service.

  • Municipal Charge
    This is charged to pay for local community services such as 911 and other emergency services.

  • Number Portability Service Charge
    The telephone number portability charge is a fee paid to your local phone service provider that allows you to retain, at the same location, your existing local telephone number when you switch from one local telephone service provider to another.

  • Universal Service Charge
    This is a fee that goes into a Universal Service Fund that was created to help make phone service available to low-income customers, customers who are in rural areas with higher costs, and customers with disabilities. It is helps pay for Internet access for schools and libraries, and it also helps pay for links for rural health care providers to urban medical centers for advanced diagnostic and other medical services that are available. All telecommunications companies that provide services between states have to contribute to the fund. The fee they pay changes each quarter based on the needs of the fund. They have the option of charging their customers all or a percentage of this fee. Most charge customers based on a percentage of the total bill, a flat fee, or a percentage of just your out-of-state call charges.

  • Federal Subscriber Line Charge
    This is a fee the government allows your local phone company to charge you in order to pay for the telephone lines connected to your home. It isn't a tax that goes to the government, but rather a fee the phone company gets for putting in and maintaining those lines. The government does put a limit on the charge so that phone service stays at an affordable rate for everyone. The charge can be as high as $5.00 for your primary phone line and $7.00 for additional phone lines into your home.

  • Presubscribed Interexchange Carrier Charge
    This is the fee the local phone company charges long-distance carriers for accessing what is called the "local loop." The local loop is all of the outside wiring, underground conduits, telephone poles and other facilities that are necessary to get phone service into your home and connect you to the network. This charge picks up where the Federal Subscriber Line Charge left off in helping local phone companies pay for the lines, equipment, and their maintenance.

For more information on long-distance calling scams and related topics, check out the links on the next page.

About the Industry

When the telephone service industry was deregulated in 1984, AT&T, who had a monopoly on U.S. telephone service, was broken up into many regional services, known as the "Baby Bells." This all began as a result of MCI (at the time, only a small carrier) suing AT&T over the right to access local telephone exchanges. In 1996, the Telecommunications Act opened up the market for local and long-distance service to even more carriers.

Deregulation has improved the long-distance services you have access to tremendously by creating competition, which leads to better deals. You now not only have more choices, but the choices come with better deals like lower rates, more calling plans and smaller billing increments.

Now, there are over 1,200 long-distance phone services, but you've probably only heard of a handful of them. The largest and most well-known are AT&T, Sprint, MCI WorldCom, and recently Verizon. And there's virtually no difference in the quality of the call, because they all use the same fiber-optic networks. The differences you'll see will be in the operations of the companies, such as the billing practices, the calling packages they offer, their rates and their customer service.

Services are also offered through Long Distance Resellers. These are companies that have no facilities for phone service themselves, but purchase blocks of time from large long-distance carriers who do. They buy large blocks of time at a big discount, which allows them to then resell it at a lower price and at the same time make a small profit. Their strategy is to make money through the volume of time they purchase.

This can be a great deal for the consumer because they get the same quality at a lower price.


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