Phone Parity Bill Passes Senate

On March 24, 2011, in News 2011, by Mark Norris

By Joe White,
March 24, 2011

Tennessee’s Senate has approved a bill that would eventually all make long distance phone calls cost the same amount, no matter if they’re in- or out-of-state.

The proposal will phase out an “access charge” that small, rural phone companies use to support their overall cost of operations.

The rural companies say they need it because it costs a lot to run line through sparsely populated country to serve just one or two persons.

AT&T serves a more urban customer base and doesn’t have the same problem. That company is backing the parity measure.

Senate sponsor Mark Norris says the bill gives the companies five years to adjust, beginning by reducing the charge 20 percent this July.

“We really think that the five year, 20 percent a year, is a nice way, a smooth glide path, and a safe landing for all concerned.”

Backers of the bill say the rural phone companies no longer need the special charge because they have expanded into other businesses, like providing internet services.

Web Extra:

Most rural telephone systems were originally co-ops. Because of the costs they faced, they have gotten some federal help. For completing inter-state calls, for instance, they get a payment from an FCC “universal service fund.”

But there is no such fund provided by the state. Such a state fund could be established, says bill sponsor Mark Norris:

“If they [rural companies] find that they need additional funding to help buffer this – and that’s a real open question, most folks don’t think that’ll be necessary, in the final analysis – but they can go and apply for Universal Service Fund coverage. What they have to do, however, is to open their books, and subject their finances to that public scrutiny. And I’m not saying they should worry about it, but I understand that there are a number who just don’t want to go that route.”

Norris says that after many of the co-ops went private, they expanded into related telecommunications businesses, and now are fairly “robust.”

The bill is SB 598 Norris/HB 574 McCormick.

The 20 percent reduction per year is explained more fully in this legislative staff analysis of the parity bill.


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