This fee is a monthly charge to customers or other telephone companies by a local telephone company for the use of its local network.
When you make a long distance call, your long distance carrier must pay the local exchange carrier (CenturyLink) for starting, or originating, the call. In addition, your long distance carrier must pay the telephone company that provides local service to the person you are calling to complete the call. The charges that the long distance provider pays to CenturyLink to originate the call and the other local exchange company to complete the call are referred to as "access," as in the access the long distance provider must get to the local network.
Local exchange companies incur significant costs to provide service to their customers. The access revenues that local exchange companies receive from long distance companies help offset some of those costs to keep the cost of local service affordable. As the costs are associated with local service, the FCC determined that it was appropriate to allow local exchange carriers to recover a portion of the lost access revenues from their customers.
In an Order released on November 18, 2011, the FCC required local exchange carriers to reduce the rates they charge to long distance companies to complete or terminate long distance calls. The current system that is used by long distance companies to compensate local companies for use of the local network was first established in 1984, after the AT&T divestiture, and at a time when there was no competition for local service. Much has changed since 1984 and the FCC recognized that this system did not work well when there is competition for local service. In addition, the FCC believes the current system may make it difficult to develop and use new technologies, such as internet protocol networks.
The access revenues that local exchange carriers receive from the long distance carriers help offset the cost of providing local service. The FCC determined that the customer chooses to place a long distance call and the long distance carrier that is used; therefore the customer should bear more of the cost.
The FCC's order provided that only incumbent local exchange carriers may recover a portion of the lost access revenues from an ARC charge. While cable companies will also see access reductions, no provision was made to permit cable companies to implement an ARC charge.
Taxes and Fees
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