Deregulation May Increase Telephone Rates

When Daniel P. Chung '00 calls his southern California home, he places a collect call, then hangs up when the operator asks his mother to accept charges.

His mother, knowing that her son wants to speak with her, then makes the call on her lower rates.

Chung may consider Harvard's long-distance rates high enough to warrant such complicated maneuvering, but other students say that compared with other schools', Harvard's rates are acceptable.

Peter H. Takeyama '98, who studied at Yale in his first year at college, said that when he transferred, a minute of calling time to Japan cost 10 cents less at Harvard than at Yale.

"Harvard offers a pretty good rate for international calls--it's not unreasonable," he says.

Not only is there no consensus on the value of Harvard's telephone services, but the confusion may only increase with the recent renegotiation of Harvard's long-distance contract with MCI and with the 1996 Telecommunication Act, which takes effect Jan. 1.

The act--which is intended in part to deregulate long-distance service across America and to help subsidize telecommunications hook-ups for local libraries and schools--may create an unforeseen side effect: higher rates for Harvard students.

Rising Rates?

Under the Telecommunications Act, the Federal Communications Commission (FCC) is mandated to bring about two main changes, which are expected to have counteracting effects on Harvard telephone rates.

First, the act aims to reduce the charges that long-distance carriers pay to local phone companies, according to Nancy Kinchla, associate director of telecommunications for University Information Services.

Under the current system, local phone companies charge long-distance vendors on a per-minute basis. In the Boston area, for example, long-distance carriers pay Bell Atlantic $.035 per minute for every call that terminates in its service area.

The Telecommunications Act, however, will replace the per-minute charge with a per-line charge--long-distance vendors will pay local phone companies a fixed fee for every line that they service.

The long-distance companies plan to pass the per-line charges on to their customers, Kinchla says.

The second major thrust of the act mandates the expansion of a subsidy fund, known as the Universal Service Fund.

The current Universal Service Fund underwrites telecommunications in rural areas, but under the act it will also subsidize Internet access and data networks in schools and libraries across the country.