Virginia Panel Orders MCI to Remove Fee From In-State Long-Distance Calls.

Knight Ridder/Tribune Business News

May 8--The State Corporation Commission has ruled that long-distance carrier MCI had a wrong number.

The SCC this week ordered MCI to stop applying a universal service fee to in-state, long-distance calls.

Business customers have been paying the fee since January, and MCI had planned to impose it on the in-state calls of residential customers in July. MCI handles a little more than one-fourth of all long-distance calls in Virginia.

After a Thursday hearing, the SCC also told MCI to refund with interest the part of the fee that it has collected on in-state calls. The commission said that under federal rules the fee should be collected only on long-distance calls made between states.

The universal-service rules were established by the 1996 Telecommunications Act, but a similar policy has been in effect since 1930. The rules aim to ensure that poor and rural consumers have affordable phone service and that schools and libraries are connected to the Internet at the lowest possible cost.

All long-distance companies are responsible for paying into the fund but are not required to pass the cost onto their customers.

MCI has argued that the way it has collected the fees is proper. The company asked the Federal Communications Commission this year to clear up any confusion about the federal rules. It also asked the FCC to declare that MCI has properly been collecting the fees on customers' total long-distance bills, which include in-state and between-state calls.

Reacting to the Virginia commission's order this week, MCI said it was disappointed that the state acted while its request for more information from the federal government was pending.

"MCI believes that it has complied with all applicable FCC rulings and is properly tariffed at the federal level," MCI spokesman Peter Lucht said.

"MCI does not believe the State Corporation Commission has jurisdiction to enjoin us from collecting the Federal Universal Service Fee and order any refunds," Lucht added. The company is reviewing its legal options and has made no decision whether to appeal, he said.

The ordered refund will be made in the form of credits on business customers' phone bills, unless a customer has changed long-distance carriers, in which case MCI will have to mail a check, SCC spokesman Ken Schrad said. The fee on small-business customers is 5 percent and on larger business customers 4.4 percent.

In another matter, the state ordered MCI to refund roughly $250,000 it had collected from Virginia business customers for a national access fee, which goes to local phone companies for completing MCI calls over their local networks.

The fee, which was converted to a per-line charge in April, amounted to 13 percent to 30 percent of a customer's phone bill. The SCC said the per-line charge, which ranges from $2.75 for a single business line to $5.50 for multiline customers, is allowed under federal rules.

The SCC said it discovered MCI had been incorrectly collecting the fees after it began receiving complaints from customers about the charges showing up on their bills.

MCI is the long-distance phone company for Virginia state government.

Visit Gateway Virginia, the World Wide Web site of the Richmond (Va.) Times-Dispatch, at http://www.gateway-va.com

(c) 1998, Richmond (Va.) Times-Dispatch. Distributed by Knight Ridder/Tribune Business News.