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Federal Subscriber Line Charge (SLC) and Universal Service: What’s It all Mean to BTC Customers

The federal subscriber line charges (SLCs), also known as end-user charges, are flat monthly charges established by the Federal Communications Commission (FCC) and assessed directly to residential and business customers to help local telephone companies recover some of the costs they incur in constructing and maintaining their local networks. The FCC has capped the SLC charges at $6.50 for residential and single-line business customers, and $9.20 per line, for multi-line businesses. To promote competition, the FCC has sought to reduce the level of "access charges" that long-distance carriers pay local companies for their use of the local network.

17. What is the federal "subscriber line charge" (SLC)?

1. The FCC requires that local telephone companies recover some of the costs of the facilities they use to connect your home or business for telecom services through a flat, monthly charge assessed on the bills of all residential and business customers. Commonly referred to as the "subscriber line charge" (SLC) or the "federal subscriber line charge," this charge is part of the FCC’s ongoing effort to promote a competitive framework for the U.S. telecommunications industry.
   
   When it enacted the Telecom Act of 1996, Congress mandated that all consumers, rural and urban, should be assured of similar access to comparable telecom services at comparable rates. Congress made this commitment to universal telephone service knowing full well that it costs significantly more to serve rural areas than urban markets.
   
   Qualified low-income customers can receive support through the federal Lifeline service program for part of their cost for telephone service. More information on the Lifeline/Linkup programs can be found elsewhere here on the BTC website.

17. What about the Federal Universal Service Charge (FUSC)?

1. Your monthly bill from BTC also includes the "Federal Universal Service Charge" (FUSC). This charge is not part of your local rate; rather, the charge, also established by the FCC, helps to keep rates affordable for all Americans, regardless of where they live.
   
   The federal government has established national programs to support universal telephone service. The federal Universal Service Fund assists with the costs of providing "affordable" telecommunications service to low-income individuals and to customers in rural, high-cost areas. In addition, Congress has expanded the program to help schools, libraries, and rural health care providers obtain leading-edge services, such as Internet connection and high-speed access. All providers of telecommunications services contribute to the support of these universal service programs.

17. What is universal service, and what does it mean to BTC customers?

1. In 1934, the nation made a commitment to ensure that telephone service would be available to as many Americans as possible — rich or poor, rural or urban — when Congress passed the original Communications Act, creating the concept of universal service. Guided by this principle, the U.S. promoted the development and reach of the national telephone network by distributing costs across groups of services and users in order to connect all segments of the American public.
   
   Universal service recognizes the economic reality that the costs of providing telephone service to all parts of the country vary widely, but that the nation as a whole benefits from a network that connects as many Americans as possible. While it may be difficult to define, universal service can be looked on as a system by which everyone benefits from the fact that everyone else has a telephone.
   
   Thanks to universal service, independent companies in high-cost rural areas have been assured of appropriate recognition of their business costs, and all Americans have been assured of quality telephone service at reasonable rates, no matter where they live.

17. How is universal service support funded?

1. Long-distance carriers pay access charges to local companies for "access" to the local network to enable customers to make or receive toll calls. The access-charge dollars reflect a legitimate business cost, compensating local companies for the long-distance carriers’ use of their networks. The access-charge system works together with the federal universal service program to ensure that all Americans have access to "comparable service at affordable rates."
   
   Universal service support and access charge revenues are essential to community based telecom providers. These programs generate revenues that help local companies serving rural areas keep local rates affordable and comparable to rates in urban areas where the population is more densely clustered and costs are not as high. Many independent companies continue to rely on this support today, given the costs of the equipment and facilities necessary to make state-of-the-art service available to rural customers.

17. Is universal service or its objectives threatened?

1. Competition, technology, and new federal and state policies threaten to undermine the objectives of universal service. Without continued resolve to connect all Americans, what’s been labeled as "reform" could mean the significant reduction of access-charge revenues and universal service support for community based telecom providers.
   
   If programs designed to protect subscribers in high-cost rural areas fall victim to pro-competitive policies intended to benefit large, urban markets, the only place for community based telecom providers to make up the lost dollars is through increased local rates. Universal service support and access charge revenues are essential to the services BTC provides and the investments we make — these dollars help to ensure affordable telephone rates for our customers.
   
   Debates continue in Washington, DC and in state capitals across the land about how access charges should be reduced and how universal service should be funded. How these issues are resolved is critical, especially for rural consumers. The answers will affect us all, both as telecom users and as members of rural communities whose economic prosperity depends on continued connection. Universal service remains essential if rural Americans are to remain equal partners in the information economy.

17. Where do the federal SLC and FUSC fees go?

1. Both the SLC and FUSC fees collected from customers by BTC go to federal administrative agencies created by the FCC to oversee and manage the funds. The federal SLC fees are re-distributed to local companies based on their specific costs, to enable community based companies serving high-cost rural areas to recover some of the costs of the facilities they use to connect your home or business for service.
   
   The FUSC fees collected from customers allow BTC to recover the costs it is assessed by the administrator of federal universal service support. For most residential and single-line business customers, the FUSC is currently $0.66 per line, and for multi-line businesses, the FUSC is $0.93 per line. A portion of the funds collected from the Federal Universal Service Charge is distributed to keep rates in high-cost rural areas at or near the national average
.

17. Do all local telephone companies receive universal service support?

1. No, not all local companies qualify. While most telecom providers contribute to the support of federal universal service, companies that serve large, urban markets where costs are not as high as in rural areas are not likely to qualify for support from the federal Universal Service Fund. Companies that serve Atlanta, for example, and other urban areas here in Georgia usually do not qualify for federal or state universal service support. Thus, customers of the large, urban-based companies are helping, through their SLC and FUSC payments, to keep local rates "comparable" and "affordable" for customers of community based telecom providers and other small, rural companies. This mutual social benefit is the very objective that the universal service system was created to achieve.

17. What does this mean to me? What can rural customers expect next?

1. From the day BTC first wired our area for service, we’ve maintained a simple philosophy: to provide a variety of quality services at affordable rates to the residents and businesses we serve. All the while, we operated with a strong conviction that we do not serve merely "customers" — we provide essential services to our neighbors and friends. And, thanks to the country’s historic commitments to universal service and other programs that recognize that it costs significantly more to provide telecom services in rural areas than it does in large urban markets, BTC has been an active partner in the national telephone network.
   
   Now, in the Internet age, independent local companies face unprecedented challenges. Competition, advancing technology, and new policies have radically altered the way telecom service works. Ironically, these changes mean that community based providers confront obstacles as formidable as those BTC had to overcome when we first brought service to Brantley County. But, we’re ready for the challenge, and remain true to our mission of offering quality service to our customers and playing a vital economic role in our community. Rural America may be tough to serve, but it’s worth it. We hope you agree.

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