Non-Negotiable FCC Regulated Telecommunication Charges Explained

Have you ever received your firm’s telecommunication bill and noticed a number of unexpected charges? Many of these fees can be attributed to regulations set forth by the Federal Communications Commission (FCC).

Since these charges are not always straight forward or easily understood, we have compiled a reference list of the most common non-negotiable FCC charges our clients are seeing on their telecom invoices. We have included brief explanations of each to help you understand what these fees are and why they are being incurred.

• 911 – This charge is imposed by local governments to help pay for emergency services such as fire and rescue.

• Federal Excise Tax – This is a 3% tax mandated by the federal government (not the FCC). It is imposed on all telecommunications services, including local, long distance and wireless bills.

• (Federal) Subscriber Line Charge – This was instituted after the break-up of AT&T in 1984 to cover the costs of the local phone network. This charge may appear as one of the following:

  - "FCC Charge for Network Access"
  - "Federal Line Cost Charge"
  - "Interstate Access Charge"
  - "Federal Access Charge"
  - "Interstate Single Line Charge"
  - "Customer Line Charge"
  - "FCC-Approved Customer Line Charge"

  The FCC caps the maximum price that a company may charge for this. This is not a government charge or tax, and it does not end up in the government’s treasury.

• Local Number Portability Charge (LNP) – The FCC allows local telephone companies to recover certain costs for providing "telephone number portability" to its customers. This charge provides residential and business telephone customers with the ability to retain, at the same location, their existing local telephone numbers when switching from one local telephone service provider to another.

  
  This is a fixed, monthly charge. Local telephone companies may continue to assess this charge on their customers’ telephone bills for five years from the date the local telephone company first began itemizing the charge on the bill. This is not a tax.

• State & Local Municipal Tax – This charge is imposed by state, local and municipal governments on goods and services. It may also appear as a "Gross Receipts" tax in some states.

• (State) Subscriber Line Charge – This charge is mandated by some states’ public service or utility commissions to compensate the local phone company for part of the cost of providing local telephone lines associated with state services, i.e. intrastate long distance and local exchange services.

• Telecommunications Relay Services Charge – This state charge helps to pay for the relay center which transmits and translates calls for hearing-impaired and speech-impaired people.

• Universal Service Fund (USF) (Also called the Universal Connectivity Fee) – Because telephones provide a vital link to emergency services, government services and surrounding communities, it has been our nation’s policy to promote telephone service to all households since this service began in the 1930s.

  The USF helps to make phone service affordable and available to all Americans, including consumers with low incomes, those living in areas where the costs of providing telephone service is high, schools and libraries, and rural health care providers. Congress has mandated that all telephone companies providing interstate service must contribute to the USF. Although not required to do so by the government, many carriers choose to pass their contribution costs on to their customers in the form of a line item, often called the "Federal Universal Service Fee" or "Universal Connectivity Fee."

Eze Castle Integration has extensive experience in helping alternative investment firms and hedge funds handle their telecommunication needs. Our team would be happy to answer any questions you have about these items or discuss how you can enhance your voice, Internet, FIX or mobility systems. 

To make things easy, you can always subscribe to Hedge IT so new articles automatically appear in your inbox!

Phone Photo Credit: Alan Clark via Flickr