However, cutting access outside of broader Universal Service reform would have disastrous effects on the local phone industry and its ability to provide affordable residential phone service, particularly in rural areas. Access charges are currently a significant source of implicit support for Universal Service. The FCC should reform access only in the context of broader Universal Service reform. The Commission has reportedly been considering represcribing rates for rate of return companies. This, in conjunction with reduced access charges without Universal Service reform, would jeopardize the financial viability of hundreds of small rural phone companies.
Access charges are a primary source of revenue for many small, rural local phone companies.
Local companies use access charges to offset this cost. The revenue associated with access charges is critical to Universal Service in that it is used to offset the cost of providing local service below cost to residential customers in rural and high cost areas. The long distance company campaign to slash access may be a veiled attempt to boost their own bottom lines. Access reform should include granting local companies pricing flexibility and forbearance from regulation where competition exists. Full, fair and open competition cannot occur in a regulatory environment still dependent on monopoly pricing distortions.