Press statement of FCC Commissioner Rachelle B. Chong
                      Re: Access Charge Reform
 

                            May 7, 1997


     If you look up "access charges" in a thesaurus, the synonyms you will find include: 
"complicated, intricate, bewildering, unfathomable."  For all of its complexity, our existing
access charge system has remained a constant landmark in our telecommunications landscape
during the past decade.  With the passage of the Telecom Act, however, the days of the access
charge system are numbered.  In the Act, Congress told the FCC to make implicit universal
service subsidies explicit -- and thereby, create a universal service program that would make
sense in a new competitive world.

     No one can deny that access charges create distortions in the marketplace and vast
economic inefficiencies.  Both because of its structure and pricing level, the current access
charge system results in higher costs to interexchange carriers.  These costs, of course, are
eventually passed through to consumers and show up on our long distance bills in the form of
a higher per minute rate.  

     I believe our actions today -- both in this docket and the price cap proceeding will
bring about a drop in access charges.  These per-minute price reductions, however, will not
come about with the wave of a magic wand.  They will occur because of the three step process
we implement today.

     First, we create a framework so that the rates charged for the components of access are
more reflective of costs.  Second, we will move residual costs that were traditionally recovered
on a per minute basis into a more efficient flat-rated charge system.  Finally, multi-line
business and multi-line residential customers will pick up a greater share of costs through
increased subscriber line charges and flat-rated charges.

     The one major concern I have about this approach is the impact that these increased
flat rate charges will have on small business users during the early years of the transition. 
Because we seek to protect single line customers, the new flat rate charges fall
disproportionately upon the shoulders of multi-line customers and may have a disparate 
impact on small businesses and people who have a second line at home.  I have worked hard
with my colleagues to soften the blow of these new charges on small businesses, particularly
those who do not make many long distance calls and will not experience the full benefits of
lower per minute calling rates that will be enjoyed by a large business.




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