Rural telephone customers are paying more for same telecom servic...

cost recovery from long distance carriers to end users and govt. support mechanisms. “The FCC’s recent regulatory proposals to reduce access charges even further and the growing questions about the sustainability of the universal service fund mechanism suggest that rural customers are likely to see even more end- user charge increases,” NECA’s Demand Forecasting & Rate Development Dir. Victor Glass said: “While the drafters of the Telecommunications Act of 1996 expected that opening the local telephone network to competition would lower rates and lead to better service, these outcomes are not evident in rural areas.” Study said average cost of line per year in rural telco service areas was $337, with average of 10.5 lines per square mile, compared with 134 in nonrural areas. That’s partly because customer base of rural telephone companies is primarily residential, he said: “For example, special access revenues account for only 18.9% of total interstate revenues, in sharp contrast to its 63.3% share for nonresidential carriers. That means that rural telephone companies have much smaller customer base.” Study said rural customers were less able to absorb increases in end-user charges than were urban customers. Rural median annual household income is $40,600 per year, compared with $46,000 per year for nonrural households, research said. People aged 65 and over represent 14% of rural telcos’ population base, he said, but only 12.2% of other telcos’ population base. However, rural customers’ bills continue to rise, he said. Since 1994, rural basic service rates have risen 36% -- to $28.08 a month in 2002 from $20.69, report said. It said Federal Subscriber Line charge increases alone accounted for 1/3 of that increase, or $2.50 per month. Although rural end users have faced bigger increases in their charges than urban customers, “they are not necessarily sharing in the benefits that should accrue,” NECA said. Only 57% of customers have access to long distance discounts, report said. FCC documented that average long distance rates had dropped to 9 cents per min. in 2002 from 14 cents per min. in 1994, but many rural customers were paying 18-1/2 to 35 cents. Average share of local to total min. in rural areas is 58% compared with 79% in nonrural areas, study said. “That means that rural customers make a lot of long distance calls, but don’t have access to discounts… that is a burden,” Glass said. NECA projected rural interstate access rates would increase 50% to 3.68 cents per min. by 2007. “Rural customers have seen their bills rise more than nonrural customers,” Glass said. Report said nonrural basic service rate increased 10.25% between 1994 and 2001, to $21.84 per line per month from $19.81 to $21.84 or $2.03 per line per month.