For Whom The Bells Toll

Are major long-distance carriers getting their cake and eating it, too? It appears so, at least to disgruntled small-business owners whose monthly long-distance bills have skyrocketed due to access-charge reform spawned by the Telecommunications Act of 1996 and FCC rulings that took effect January 1. Since we last reported on the fee hike (see "Business Beat," November 1997), a backlash has ensued, and the SBA Office of Advocacy is calling on the FCC to reevaluate key elements of the rulings.

What's behind the uproar? Large companies wielding high-volume buying power can negotiate lower rates that neutralize the impact of the surcharges. Meanwhile, small businesses are bearing the brunt of the reforms, as 60 percent of them don't seek competitive bids for their long-distance needs, says Eric Paulak of Gartner Group Inc., a Stamford, Connecticut, information technology research firm. He adds, "This should serve as a wakeup call [to small-business owners] to get out there and force the companies to compete."

This article was originally published in the May 1998 print edition of Entrepreneur with the headline: For Whom The Bells Toll.