Over the past few years, the telecommunications industry has undergone several regulatory changes that have resulted in lower rates, and some new taxes and surcharges. So if you’ve been wondering what a universal service fee is, or what a subscriber line charge is, this site will help answer these and other questions.

Tips for Reading Your Bill

1. Take a look at your current bill

• Whether you get a combined bill from your local phone company that includes your long distance charges or you get separate bills, the taxes and surcharge section will generally appear towards the end of your bill.
• Read all sections very carefully each month to make sure that you are getting the services you want from your carrier of choice.

2. Know what each item represents

• If you don't understand a term, take a minute to review the definitions included in this site.

3. Know your calling habits

• Every so often, review your calling patterns. What time do you usually make calls? And what types of calls are they? State to state? Within your state?
• Do you rarely make long-distance calls? If you don't make local toll calls, in state or long distance calls, or you spend less than $2-3 per month on average on state to state calls, you may choose not to have a long distance carrier. However, please check with your local phone company because they may charge a fee for not having a long distance carrier.
• If you decide not to use a long distance carrier, you still can make long distance calls and avoid a long distance minimum charge on your phone bill by using one of these options:
  • use a prepaid phone card
  • a dial-around service that best suits the call you will be making. You dial the access code to reach the carrier’s network (10-10-XXX), 1 + the area code and number you are calling. You’ll be billed on your local telephone bill. Understand the offer, rates and per use charges.

Q & A

Q. Are there calling plans for low-income consumers?

A. If you qualify for low-income assistance from your state government, you may be exempt from paying some fees. To find out if you are eligible, contact the state agency that regulates telecommunications services or your local telephone company. If you receive certain types of low-income assistance, you may also qualify for a low-income plan with your long distance company. Call your carrier’s customer service number and ask if you qualify and if that plan would serve your calling needs.

Q. Why do telecom companies charge the Federal Excise Tax or other taxes?

A. Taxes assessed by local, state, and federal governments are merely collected by telecommunications carriers and returned to the government to contribute to government subsidized programs.

Q. Why do telecom companies charge a Universal Service Fee?

A. Telecom companies are permitted to recover surcharges assessed to them by regulatory authorities, in this case, the federal government. The funds collected through these fees are then returned to the subsidizing authority.

Q. Why do carriers charge monthly spending minimums and calling plan fees?

A. Spending minimums were designed to recover costs associated with billing, servicing, and maintaining user accounts. Different carriers may charge different minimums depending upon the calling plan in which you are enrolled.

• A spending minimum means that a customer pays the difference between what they spend each month and the minimum charge. If you spend up to or more than the minimum, you will not have a minimum for that month.
• Monthly calling plan fees, on the other hand, permit consumers to receive calling plans offering certain rates. They are in addition to the amount charged for the services you use and apply against any minimum fee. Again, they will vary by carrier and the type of calling plan you have.

Definitions of Taxes, Fees and Surcharges

Carrier Cost Recovery Charge — This is a monthly surcharge assessed in order to recover costs the Company incurs with regard to TeleRelay Service, national number portability, and federal regulatory fees. This surcharge, assessed on your state-to-state and international charges, is 3.5% per account per month and will not appear as a separate line item on your invoice.

Federal Excise Tax — This is a flat 3% tax on all telecommunications usage. Originally, this tax was established to fund the Spanish-American war. Today, it goes into the U.S. Treasury general fund.

Federal Subscriber Line Charge — This charge is assessed by local phone companies to recover some of the costs of telephone lines connected to your home or business.

Federal Universal Service Fund Fee (FUSF) — The 1996 Telecommunications Act requires all long distance companies to contribute a portion of their revenues to the Federal Universal Service Fund which provides discounted telecommunications services to schools, libraries and low income consumers. The current rate may be found by visiting www.mci.com/FUSF.

State Universal Service Fund Fee — Some states collect universal service fees that may be added to your phone bill to fund the State Universal Service Fund. Check with your state to see whether they require telecom companies to contribute to a state universal service fund.

Federal, State and Local Surcharges — This MCI category covers business and property taxes, and surcharges. For customers enrolled in a frequent flyer program, it also includes an amount for the federal taxes on the new miles awarded to you each month.

State and Local Taxes — These taxes are generally sales taxes levied by state and local governments on telecommunications services.

State-Specific Charges — Each state government may add additional taxes to your phone bill. Check with your state to see what state specific charges may be added to your bill.

MCI Consumer Billing Principles

1. Consumer bills should be clear and easy to understand.
   • Customer service and contact numbers such as a toll free number and an email address should be on your bill.
   • Bills should be written in plain, everyday language.
   • Charges for services should be separated from charges for subsidies and federal programs.
2. Consumer bills should be timely and accurate.
3. Consumer bills should be concise and there should be one bill for multiple services such as a second line and/or Internet service.