You may have seen or heard the advertising war raging through the media, pointing out how it is cheaper to call from Dallas to Honolulu than Dallas to Marfa . . . statements not challenged for truth but justified as a cross-subsidization of cheaper local rates. The history of this reality starts in 1995 when the Legislature froze the access charge for long distance phone calls at a maximum rate of 12¢ per minute and capped the charges for local service until September 1, 1999. Under the same law, the Public Utility Commission of Texas no longer regulates a phone company's earnings, but rather, its prices.
Many of the state's long distance companies believe that the state should reduce the 12¢ rate. They argue that the cost for completing the long distance call is really much less than 12¢, and the local service company is "overearning" at the expense of millions of Texans. Even if a reduction in long distance access charges may lead to a slight increase in local rates, they say, Texans will realize a significant savings in their long distance bills. They say that the long distance access charge in California is only 1.9¢ while the monthly local charge is $11.25.
Those that think the current system is fair say that Texas made a public policy decision in the 1980s to make local rates artificially low so that poorer Texans would still have affordable local service to make local calls, especially for emergencies. Supporters suggest that higher long distance access rates help subsidize lower local rates. In addition, they say that the cost for local service in Texas is among the lowest in the nation. They point out the fact that, for example, California's rate for local service of $11.25 per month is for a 452 square-mile area, whereas Houston's $11.05 local rate covers a 1,256 square-mile area and the $8.05 monthly local rate for Marfa, Texas (mentioned in some advertising on the issue) covers a 3,025 square-mile area. Additionally, 10¢ a minute service is available now so people are not required to pay 12¢.
The defense of these higher long distance rates, in order to ensure the availability of emergency phone services, can be resolved rather easily with today's technology. However, providing phone service to those that can least afford an increase does create a societal dilemma.
These are complicated telecommunications issues facing the State. It is likely that there will be legislation introduced that would affect, to some degree, the above mentioned issues. I am interested in your thoughts on the how we can lower our intrastate long distance rates and still provide affordable local service. Please contact my Capitol office with your comments.