Junior Boomers

A new year - and a phone line fee hike.

By Janean Chun

The Federal Communications Commission (FCC) is changing telephone fee rules, and guess who's footing the bill? As of January 1, 1998, any business or residential consumer using more than one phone line should expect a monthly increase in costs of between $6 and $9 per line.

Considering many consumers establish second lines in their homes for Internet access, many predict the demise of some smaller Internet companies. "In a roundabout way, [the FCC order is] taxing the Internet," says Maura Colleton, vice president of information services and electronic commerce for the Information Technology Association of America.

The new rules are being implemented for two reasons: to revamp the fees that local phone companies collect to complete long-distance calls and to support a Universal Service Fund, which subsidizes service to rural and low-income phone customers while connecting schools and libraries to the Internet.

"In essence, they're putting the burden of universal service onto multiline businesses," says Colleton. "Businesses already pay into the Universal Service Fund as large users. So they're now being taxed twice. This is a subsidy, a back-door way of doing it. It's not in the spirit of the [Telecommunications Act of 1996], which says universal service support mechanisms should be transparent and explicit. We're supposed to be trying to get out of regulation, not back into it."

Still, Colleton says the rule is far from a done deal. "Several entities have questioned the order," she says. "This may be battled out in the courts."

This article was originally published in the November 1997 print edition of Entrepreneur with the headline: Junior Boomers.