The Telecommunications Act of 1996 restructured the way costs for long distance services are allocated. Congress gave the Federal Communications Commission (FCC) the responsibility of implementing these changes. To this end, the FCC issued two orders: the Universal Service Order and the Access Charge Reform Order. As a result, many of us see new charges on our local or long-distance telephone bills.

The Universal Service Order expanded the Universal Service Fund which will support modern telecommunications services for schools, libraries, low-income consumers, rural health care providers, and high cost service in rural and isolated areas. The FCC has chartered a non-profit corporation, the Universal Services Administration Corporation (USAC), to administer the fund, and a percentage of interstate long-distance usage goes into the fund. Long distance providers collect the money and remit it to the USAC.

Local exchange companies (the companies that provide local telephone service) charge long distance providers fees for their use of their services, phone lines, dial tones, etc. The Access Charge Reform Order restructured the way these fees are collected and established the Presubscribed Interexchange Carrier Charge (PICC) or Carrier Line Charge. Fees vary based on the number and type of phone lines. This fee goes to the local service provider to cover part of the cost of providing telephone service to a customer. Long distance providers now collect this fee from their customers and remit it to the local exchange companies. Unfortunately, for you—the consumer—how the charge is billed and how much the charges are varies. You should always ensure your monthly fees are in line with what you expect to be billed.

The Federal Excise Tax started out as a temporary luxury tax in 1898 on telephone service to pay for the Spanish-American war. By congressional mandate, all proceeds go to the U.S. Treasury for general revenue purposes. All local telephone services, toll telephone services, and teletypewriter exchange services are subject to this tax. RATE: 3% on amounts paid for the above services. Beginning July 31, 2006, consumers will no longer pay this tax on long-distance calls and bundled services.  EXEMPTION(S): Texas state agencies, political subs., & non-profit schools; answering services, mobile radio telephone service, coin-operated telephones, communications installation charges, common carriers and communications companies, news services and radio broadcasts of news and sporting events, common carriers and communications companies, military personnel serving in a combat zone, international organizations and the American Red Cross, nonprofit hospitals, nonprofit educational organizations, and communications serving federal, state, and local government. STATUTE(S): 26 U.S.C. § 4251, 4252, 4253 (i) & (j), & 4254.

Designed to remove a major barrier to local telephone competition, this fee in theory allows residential and business customers (with access to a public switched network) to retain their phone numbers when changing from one local services provider to another. Congress directed local telephone companies to offer "telephone number portability" in accordance with requirements prescribed by the FCC. In May 1998, the FCC began permitting--but did not require--local telephone companies to recover costs of implementing and providing telephone number portability through two kinds of charges: (1) charges paid by other telephone companies that use a telephone company's number portability facilities to process their own calls; and (2) a small, fixed monthly assessed on telephone end users (i.e., "customers", originally scheduled to begin on February 1, 1999). Recoverable costs include the costs of creating new facilities, physically upgrading or improving the existing public switched telephone network, and performing the ongoing functions associated with providing long-term number portability. FCC rules prohibit local telephone companies from passing on to their customers any of the costs they have incurred in establishing telephone number portability until telephone number portability service is actually available in the customers' service area. Carriers may not impose the monthly long-term telephone number portability charge on customers of the Lifeline Assistance Program. Before the costs of telephone number portability can be passed on to a telephone company's customers, companies must: (1) prove that the costs are directly related to providing number portability; (2) spread the costs out over a five-year period; and (3) charge the same amount each month so that customers would know what to expect on their monthly bills. RATE: variable per company, depending upon the costs incurred by your local telephone provider. The LNP charge per residential line is typically $0.50 or as low as $0.23 a month, depending on the individual cost of the local telephone companies. Business customers pay more than residential. Charge assessment period: 1999 - 2004. EXEMPTION(S): Lifeline Assistance Program. NOTE: As of September 1, 2001, Texas state agencies & non-profit entities are no longer exempt. STATUTE(S): 47 CFR § 52.33; FTA of 1996 § 251(e)(2); TEX. CONST, art. III, § 44, 51; FCC 99-72, 32; FCC 98-82, 9, & 139.

If you have toll-free service or use a calling card, you are subject to this surcharge. In October 1997, the FCC ruled that payphone owners could charge (long distance operators) for use of toll-free numbers from their payphones. Thus, if your 800/888 number receives a call from a payphone, the call will be assessed an additional FCC per-call payphone surcharge. In addition, different phone cards have different pay phone surcharges, ranging from $0.35 to $1.00 per call. Please note that a payphone surcharge may be applied to failed payphone calls, school dormitory phones, office phones, and phones in hotels, motels, and inns. Cellular phones calling toll free numbers could also be identified as a pay phone call.  RATE: $0.284 per call (assessed to the toll-free number provider or 800-access number calling card provider). Providers are then passing the charge to the end user, often at a rate ranging between $0.24 and $0.35 per call (NOTE: The FCC mandates a payphone surcharge of 65¢ per call for toll-free numbers); EXEMPTION(S): Payphones must provide certified evidence (quarterly) of payphone ownership, number (within service territory), and operation. For more information, see http://www.fcc.gov (Internet); STATUTE(S): 47 CFR § 64.1300, 64.1310, & 64.1320. (Note: Under the 1996 Telecommunications Act, payphone operators must be compensated by long-distance operators for toll-free calls made from their payphones.)

As a part of the May 1997 Access Reform Order, the FCC has changed the way local phone companies (LEC’s) charge long distance carriers, like AT&T, for access to their local networks. AT&T and other long distance companies must pay flat monthly fees to the local phone companies based on the number of residential phone lines subscribed to the long distance company. The fee helps local phone companies cover their costs for connecting long distance calls to and from your residence. The FCC left it up to each individual long distance company to determine how it will recover this expense. The PICC, in part, replaces the carrier common line charge currently imbedded in rates. Although the fee isn't new, some long distance companies began to itemize the charge in February 1998. The purpose of the PICC is to make up somewhat for lost revenue due to the FCC imposed lowering of "access fees" which the LECs have historically charged the long distance companies on a per-minute basis. The FCC has ordered these fees lowered significantly, since they were arbitrarily high. If the customer uses a long distance carrier via "casual access" (i.e., by dialing extra digits) and is not presubscribed to that carrier, that carrier should not pass this charge to the customer. However, if the customer has no presubscribed long distance carrier, the local provider is allowed to assess the PICC. RATE: This charge has been abolished for the majority of telephone customers. On July 1, 2000, the Presubscribed Interexchange Carrier Charge was eliminated for residential lines and single-line business lines.  From July 1, 1999 through June 30, 2005, the maximum Presubscribed Interexchange Carrier Charge paid by the long distance companies to local telephone companies is $4.31 per month for each multi-line business line.  EXEMPTION(S): Texas state agencies possibly exempt--depends on contract terms; TEX-AN. STATUTE(S): 47 CFR § 69.104 & 69.153-.154; TEX. CONST, art. III, § 44, 51; FCC 99-72, 32; FCC 97-158, 55, & 90; FCC Form No. CCB-FS012.

The Subscriber Line Charge (SLC) and the Presubscribed Interstate Carrier Charge (PICC) were combined by the FCC effective July 2000 under the name SLC.

Authorized by the FCC in 1983, the SLC is part of a method used by local telephone companies to recover the cost of "local loops", a term that refers to the outside telephone wires, poles, and other facilities that link each telephone customer to the telephone network. In the past, the interstate portions of local loop costs were recovered through per-minute charges on interstate long distance calls. The highly inflated cost of interstate long distance service caused by the old method of recovering the interstate portion of local loop costs encouraged subscribers who made many long distance calls to "bypass" the public telephone network and use other facilities for meeting their needs, including building their own private systems. The FCC viewed this as a serious problem because when large users bypass the public network, they no longer contribute to the support of the network. Unlike the CCL and other interstate charges, the SLC is based on revenues and booked costs. The FCC believes it is more reasonable to recover local loop costs, which do not vary with the amount the local loop is used, partially on the basis of a fixed monthly charge. The fee is sometimes referred to as the "Customer Subscriber Line Charge", "Easy Access Dialing Charge", "FCC Approved Customer Line Charge", "FCC Subscriber Line Charge", "Federal Line Fee", "First Network Charge", or "Interstate Subscriber Line Charge". RATE: For the largest local telephone companies that provide service to over 90% of the telephone access lines in the country, the subscriber line charge cap for primary residential lines increased to $6.50 (for a single line) on July 1, 2003. The local telephone company can only assess charges for additional lines that are necessary to cover interstate costs. For more information on the fee increase, contact your local account manager. EXEMPTION(S): None. STATUTE(S): 47 CFR § 69.104,,69.152, 69.153, & 69.154; FCC 97-158 72-87 (CC Docket No. 96-262).

The federal universal service charge is assessed on companies with interstate operations and is based on a percentage of company end user revenue. In effect since January 1998, the fee provides a funding mechanism for the Universal Service Fund (USF) which supports telecommunication services to schools, libraries, low-income consumers (via Lifeline and Link Up), rural healthcare providers, and high-cost, rural, and insular areas. The charge pays for government-mandated subsidies to the poor and pays for affordable Internet hookups for schools, libraries, and rural health care providers in high-cost areas. All telecommunication service providers (including Internet, wireless telephone, pager, and payphone companies) are required to contribute to the USF. Providers choosing to pass this charge on to customers must list the fee as a separate line item on customer bills. Currently, local telephone companies recover the costs of their universal service contributions through "access charges" levied on long distance companies. Local telephone companies, as a result, do not place separate universal service charges on bills for local telephone service. The fee may appear on bills as a "Common Carrier Line Charge". RATE: Prior to April 2000, the flat rate was $1.38 per line for interstate and international usage. Today, the amount of the monthly surcharge varies depending upon your choice of telecommunications services and the number of telephone lines you have. Generally, the surcharge will be applied per phone line. However, customers using dedicated interstate special-access circuits (for example, DSL customers) will be assessed a percentage of their monthly interstate service amount. The exact percentage that companies contribute is adjusted every quarter based on projected universal service demands by the FCC. These charges and fees may either be a percentage of the customer's bill, typically between 4.5% and 8.6%, or a flat, monthly charge, typically less than $1. The charge now appears on bills under different names, depending on the company. For example, Southwestern Bell's "Federal Universal Service Charge" is 10.25% of Bell's Basic Local Service fee and MCI's "Federal Universal Service Fee" is 8.3%. NOTE: Effective July 1, 2003, Sprint's "Carrier Universal Service Charge" will be 11.1% of a customers' long-distance bill. Effective January 1, 2008, AT&T changed its Universal Connectivity Charge (UCC) from 11% to 10.2% as a result of a decrease in the USF quarterly contribution assessment factor. EXEMPTION(S): Schools having endowments exceeding $50 million; school & library equipment not covered: direct broadcast satellite (DBS), distance learning, asbestos removal, modems, electrical system upgrades, FAX machines, network management systems, application software, personal computer, network interface card (NIC), video conference equipment, test equipment, voice mail service, Internet training, personnel costs, and wide area network (WAN). NOTE: As of September 1, 2001, Texas state agencies & non-profit entities are no longer exempt for FUSF on local service bill. For FUSF on long-distance bill, payment depends on contract terms. STATUTE(S): 47 CFR 36, 54, &  69; TEX. CONST, art. III, § 44, 51; FCC 97-420; 284 FCC 97-157; 800, & 855 FCC 98-67, 138 (CC Docket No. 96-45); FCC 99-72 (CC Docket No. 98-170).

The Advisory Commission on State Emergency Communications (ACSEC) sets and collects the 9-1-1 surcharge, which it uses to supplement the service fee in regions that cannot collect enough service fees to maintain 9-1-1 service. The surcharge is assessed to each customer receiving intrastate long-distance service and is a percentage of each line's monthly intrastate long distance charges. "The surcharge is applied to the total amount for intrastate long distance service charged by the customer's long-distance service provider, but such amount shall not include taxes charged by local, state, and federal authorities, nor shall local, state, or federal taxes be applied to this surcharge unless otherwise required by law." (13 TexReg 2365). Surcharge funds go to the regional planning commissions to implement 9-1-1 service and the Texas Department of Health to fund poison research. The balance goes to the General Revenue Fund for allocation to regional planning commissions and poison control centers. RATE: The Equalization Surcharge is imposed upon each customer receiving intrastate long-distance service in the amount of 1.0 % of the charges for intrastate long-distance service. Amounts are rounded to the next cent ($.01) in the case of fractions. Remitted to the Texas Comptroller of Public Accounts. EXEMPTION(S): Texas state agencies (except junior & community colleges) or branch of the federal government; by commission rule (1 TAC § 255.9); STATUTE(S): TAC § 255.1 & 255.9; Health and Safety Code § 771.072 (1995 Texas legislative session).

In May 1987, the Texas Legislature passed House Bill 911 (Chapter 771c, V.T.C.L.) to assure that all of Texas' 18.5 million citizens would have access to 9-1-1 emergency telephone service. The 9-1-1 service fee--collected by local telephone service providers--is the primary funding source for 911. The Advisory Commission on State Emergency Communications, commonly called the 9-1-1 Commission, sets and authorizes its collection based on each region's projection of how much it needs and can collect. Each region collects its own service fees, which can only be spent in that region. Note: The Texas Public Utility Regulatory Act, which is under the jurisdiction of the Public Utility Commission of Texas, in Title 2 of the Texas Utilities Code, provides in Section 51.002 that "access to 9-1-1 service provided by a local authority" is a part of "basic local telecommunications service" provided by all Certified Telecommunications Utilities (CTU’s) in Texas. The PUC has a specific rule, 16 Texas Administrative Code ß 23.97, which in subpart (e) contains minimum interconnection requirements for 9-1-1 emergency service (i.e., minimum requirements for how CTU’s work together appropriately to provide 9-1-1 service) for all customers in all Texas CTU’s.  RATE: Monthly charge varies by local jurisdiction (e.g., $0.25 in Harris County, $0.62 in Dallas County). By Texas law, the commission may vary the service fee by region. The 9-1-1 Service Fee is set at $.50 per month (the maximum allowed by statute) in areas served by a Regional Planning Commission (RPC) and is remitted to the Texas Comptroller of Public Accounts. A Wireless 9-1-1 Service Fee is imposed on each wireless telecommunications connection in an amount equal to $0.50 per month. EXEMPTION(S): Texas state agencies (except junior & community colleges); a line to coin-operated public telephone equipment or to public telephone equipment operated by coin or by card reader; commercial mobile radio service that provides access to a paging or other one-way signaling service; a communication channel suitable only for data transmission; a line from a telecommunications service provider to an Internet service provider for the Internet service provider's data modem lines used only to provide its Internet access service and that are not capable of transmitting voice messages; a wireless roaming service or other nonvocal commercial mobile radio service, a private telecommunications system; a wireless telecommunications connection subject to the 9-1-1 wireless emergency service fee; or any emergency communication district not participating in the applicable regional plan. The fee may also not be imposed on any line that the commission excluded from the definition of a local exchange access line or an equivalent local exchange access line pursuant to Section 771.063. STATUTE(S): Texas Health and Safety Code § 771.074 & Texas House Bill 911 (Chapter 771c)(1987 Texas legislative session).

In 1993, the 73rd Texas Legislature passed legislation establishing the state's Poison Control Program. By statute, poison program responsibilities are shared between the Advisory Commission on State Emergency Communications (ACSEC) and the Texas Department of Health. ACSEC also sets and collects a companion monthly surcharge that funds the statewide poison control system, comprising six regional poison control centers with toll-free lines staffed by nurses and pharmacologists. This surcharge is assessed to each customer receiving intrastate long distance service (barring exemptions), and each intrastate long distance provider collects and remits the charges to ACSEC. No local, state, and federal taxes can be added, unless required by law. RATE: The commission may set the surcharges at whatever rates necessary to fund the program, as long as the combined surcharges do not exceed 0.3% of intrastate long distance charges. As of January 1996, the poison control surcharge was 0.30% (amounts are rounded up to the next cent in the case of fractions). The surcharge shall not include taxes charged by local, state, and federal authorities, nor shall local, state, or federal taxes be applied to this surcharge, unless otherwise required by law; EXEMPTION(S): Texas state agencies (except junior & community colleges); any agency or branch of the federal government; by Commission rule; STATUTE(S): TexasHealth & Safety Code § 777.001-.011 (1993 Texas legislative session).

This line item on your phone bill is the item that provides dial tone to the network interface. The network interface is the box on the side of your house that serves as the connection point between the wiring that comes from the pole (or ground) and the wiring that goes into your house. The phone company is responsible for the wiring to the network interface. They will do the wiring from the network interface into your home at additional cost. The residence line charge is regulated by the Public Utility Commission of Texas (PUC). RATE: Set by the PUC; EXEMPTION(S): None; STATUTE(S): P.U.C. Subst. R. § 23.104 & § 23.25.

The Texas Infrastructure Fund was created by the Texas Legislature to ensure that all Texans have access to advanced telecommunications services. The TIF distributes grants and information to public schools, public hospitals, and public libraries in an effort to improve Texas telecommunications technology across the state. All telephone service providers are required to contribute to the TIF. Commercial mobile service providers and telecommunications utilities (including resellers), pay the assessment on charges for any of the following: basic local exchange service; enhanced services; auxiliary services (i.e., call waiting, call forwarding, etc.); long distance telecommunications services originated from and billed to a telephone number or billing/service address within Texas; paging, mobile telephone, and other commercial mobile service, including roaming charges; a taxable service paid for by the insertion of coins or tokens into a coin-operated telephone, other than a private pay telephone; equipment provided to a customer as part of a telecommunications service, including separately stated charges for installation, maintenance, and repair; installation of telecommunications services (i.e., service connection fee); and private line services, including charges for related equipment. RATE: The current assessment is 1.25% of the taxable telecommunications receipts of each telecommunications utility and commercial mobile service provider. The fee may or may not be billed separately depending on company policy. For telecom utilities, the $75 million annual assessment for each fiscal year is divided by the taxable telecommunications receipts reported by all utilities for the period July 1 through June 30. Each report period will result in an assessment rate applicable to all utilities for the following four quarters. Because the rate is based on historical data, the comptroller may adjust the rate to reflect actual taxable telecommunications receipts. The assessment rate times the taxable telecommunications receipts reported by each utility will result in the amount owed by that utility; (Note: Since October 1995, virtually every Texas resident who receives a phone bill has been paying a 1.25% surcharge to fund the program administered by the Telecommunications Infrastructure Fund (TIFB). However, the TIFB was dismantled by the Texas Legislature in 2003 as a cost-cutting move to trim state government costs, and the TIF fee continues to be collected by the State of Texas. In 2007, House Bill 735 (relating to the discontinuation of the Telecommunications Infrastructure Fund) passed the 80th Legislature Regular Session. The bill repealed Chapter 57, Subchapter C of the Utilities Code and abolished the Telecommunications Infrastructure Fund (TIF) assessment upon the calendar quarter ending September 30, 2008.  The bill also abolished the statutory requirements of funding TIF programs and made conforming changes.  EXEMPTION(S): (1) sales for resale where resale certificate was validly issued; (2) long-distance telecommunications services which are not both originated from and billed to a telephone number or billing or service address within Texas; (3) telephone prepaid calling cards sold on or after September 1, 1997. (Sec. 151.01032, Tax Code); (4) broadcasts by commercial radio or television stations licensed or regulated by the FCC; (5) telegraph service that originates outside Texas; (6) storage of data or information for subsequent retrieval or the processing, or reception and processing of data or information intended to change its form or content; (7) internet access service that enables users to access the internet or email. The first $25 of the monthly charge is exempt from sales tax regardless of the billing period used by the service provider or whether the internet access service is bundled with another service. Effective 10-1-99. (9809821L); (8) separately stated finance charges and late fees collected from customers. (9902257L); (9) revenue from equipment and accessories sold to customers and invoiced separately from telecommunications services. (9902257L); (10) separately stated and invoiced charges for maintenance or repair of customer-owned equipment; (11) deposits for telecommunications equipment or service (8911L0962D07); (12) separately stated charges for directory listings; (13) telecommunications services sold to exempt organizations (e.g., Texas state agencies, political subs., & non-profit schools, etc.) and persons exempted from paying sales tax under the Tax Code (Chapter 151), if used for the exempt purpose (9107L1122B11, 9110L1151C11); (14) receipts from calls at coin-operated pay telephones (even though the owners pay sales tax on those receipts); & (15) charges for assessments and fees imposed upon the telecommunications customer rather than the telecommunications service provider (e.g., 911 Emergency Service fees and surcharges, Federal Excise Tax) are excluded from the assessment base. STATUTE(S): PURA § 57.041-050; 34 Tex. Admin. Code § 3.110; Tex. Util Code Ann. § 57.043; Tex. Tax Code § 151.309; Tex. Att'y Gen. Op. H-1265 (1977).

In 1987, the Texas Legislature established TUSF, the Texas component of the national Universal Service Fund (USF). The current rules concerning universal service in place at the Public Utility Commission of Texas complement the federal universal service rules. Currently, the TUSF supports the (1) Relay Texas and Specialized Telecommunications Device Assistance programs; (2) Tel-Assistance, Lifeline, and Link Up America programs; and (3) the Small Local Exchange Carriers Universal Service Fund. The USF is administered by the Schools and Libraries Corporation (SLC). In Texas, the charge is listed on telephone bills as "TX USF CHARGE." Prior to 1999, TUSF charges were hidden in long distance costs. Today, it is assessed on all Texas local, long distance, pager, wireless, and other telecommunications services. Consumers in Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas, and Virginia already pay more in federal USF taxes than their state gets back for rural health care, schools, hospitals and rural connectivity. RATE: Based on taxable communications receipts, the charge in the past has ranged from 0.79% to 1.52%. In March, 2000, the TUSF rate was 3.96% but later reduced to 3.6% on January 1, 2001. Effective October 1, 2006, Texas’ TUSF Surcharge was reduced to 4.4% (from 5%) of intrastate telecommunication services receipts and applies to every retail customers' bill, except Lifeline and Link-Up services. Telecommunications providers are allowed to pass the costs of the TUSF through to residential and business customers on their monthly bills. The charge is calculated by multiplying the percentage rate by the amount of your total bill minus the 9-1-1 service fee. [NOTE: In accordance with the PUC of Texas’ order in Docket No. 21208, SBC Texas calculates and applies its TUSF Surcharge on intrastate telecommunications services receipts utilizing “safe-harbor” percentages, which for SBC Texas is 85% of total taxable telecommunications receipts as reported under Chapter 151 of the Texas Tax Code excluding revenues identified in P.U.C Substantive Rule 26.420(F)(2)(B). SBC Texas’ TUSF Surcharge percentage will change periodically due to changes in SBC Texas’ TUSF assessment or as necessary to ensure revenue neutrality.]  EXEMPTION(S): Texas state agencies, political subs., & non-profit schools (tax-exempt entities); long-distance telecom services that are not both originated from and billed to a telephone number or billing or service address within Texas; access to a local exchange telephone company's network by a regulated provider of telecommunications services; broadcasts (other than cable television service) by commercial radio or television stations licensed or regulated by the Federal Communications Commission; and Lifeline, Link-Up America, and Tel-Assistance customers. NOTE: The TUSF is assessed against telecommunications providers based on "taxable telecommunications receipts." PUC ruled in Docket 20616 that LECs cannot recover any portion of the TUSF assessment from tax-exempt entities. STATUTE(S): PURA Chapter 56 (1987 & 1999 Texas legislative sessions); PUC Subst. R. 26.401; PUC Docket No. 20616, Declaratory Order (April 6, 1999).

Revenues generated from this assessment go to the State of Texas and are used to fund the Public Utility Commission of Texas (PUC) and the Office of Public Utility Counsel (OPUC). Amounts generated, but not appropriated to those agencies, remain in the state's General Revenue Fund. The fee may appear on bills as a "State Regulatory Tax", "Regulatory Fee", "Texas Gross Receipts Assessment" (Grande Communications), "Utility Gross Receipts Assessment" (MCI), or “Gross Receipts Tax Surcharge (Sprint). RATE: All public utilities, including long-distance companies, pay one-sixth of 1% of their gross receipts. EXEMPTION(S): None. STATUTE(S): TEX. UTIL. CODE § 16.001 Tex Att'y Gen Op. H-1265 (1977)

All certificated telecommunications providers (CTPs) providing telecommunications service within a municipality must compensate the municipality for the use of public rights-of-way. House Bill 1777 establishes a uniform competitively neutral and non-discriminatory method for CTPs to compensate municipalities for the use of public rights-of-way. The bill authorizes the PUC to establish the amount of compensation and allows CTPs to recover (on a pro rata basis) the amount paid to a municipality from its customers who are within the boundaries of the municipality. This charge may be separately stated on the customer’s bill. Beginning March 1, 2000, all telecommunications franchise fees in Texas will be based on a fee-per-access line method. Each category of access line will have a rate. The rate for each category will be multiplied by the number of lines in that category in the municipality to determine fees. Other names for this fee: "Municipal Telecommunications Service Fee", "Regulatory Fee", or "State Regulatory Tax"; RATE: The amount of the fee varies by municipality and type of customer. All proceeds go to the local governing body; EXEMPTION(S): Electric utilities, water, sewer, natural gas providers, and cable TV; STATUTE(S): PURA § 54.206; Section 283.051(a) of House Bill 1777 (1999 Texas Legislature); Tex. Att'y. Gen. Op. H-1265.

Depending on where you live, federal, state, and local governments may assess a percentage-based sales tax against both the local and long distance charges on your phone bill. Taxable & Non-TaxableItems: (1) Fees/Charges Not Taxed: 911 Service Fee, 911 Equalization Surcharge, & Poison Control Surcharge;(2) Fees/Charges Subject to Federal Excise Tax (3% of the following fees/charges): Itemized Calls, Monthly Service (i.e., includes basic local service and optional services), Expanded Local Calling Service Surcharge, FCC Approved Customer Line Charge, Number Portability Service Charge, and Texas USF Charge; and (3) Fees/Charges Subject to Texas Sales Tax (6.25%, minimum-to-8.25% maximum of the following fees/charges): Monthly Service, Expanded Local Calling Service Surcharge, Number Portability Service Charge, & FCC Approved Customer Line Charge.

The Texas franchise tax is a privilege tax assessed against corporations, including banking corporations and limited liability companies, that are chartered in Texas, and against non-Texas corporations that have a Certificate of Authority to do business in Texas or that do business in Texas without a Certificate of Authority. For local phone companies, the tax can be levied only by those who have not opted for incentive regulation AND have not had a rate case since 1991. RATE: 0.25% per year of privilege period of net taxable capital and 4.5% of net taxable earned surplus. The amount is calculated by applying the 0.25% tax rate to the corporation's net taxable capital AND the difference between the 4.5% of net taxable earned surplus and the amount determined by applying the 0.25% tax rate to the corporation's net taxable capital. The annual charge is "trued-up" at the end of the year to match what was billed and what was paid to the state. Corporations that owe less than $100 do not have to pay any tax, but they must file a report. The charge is collected by the State Comptroller’s Office and may appear on bills as a "Cost of Service Surcharge" or "House Bill 11 Surcharge". The amount recovered from customers each year varies, depending on the level of franchise taxes incurred; EXEMPTION(S): Nonprofit corporations providing municipal water or sewer services or natural gas facilities. Telephone cooperative corporations. Any non-profit corporation may request an exemption from the franchise tax. The fee can be assessed only for local telephone companies that have not elected incentive regulation (provided the PUC has not set rates for the company in a general rate proceeding since 1991).  STATUTE(S): PURA § 53.202; Texas Tax Code § 171.001-.002, 171.065, & 171.080; 34 TAC § 3.541; House Bill 11 (1991 Texas Legislature); PURA § 53.202, Tex. Util. Code Ann. (Vernon 1997) SWB v. PUC, 863 S.W.2d 754 GTE v. PUC, 978 S.W.2d 161 Tex. Att'y Gen. Op. H-1265 (1977).

Sales taxes are imposed on the retail sales of all taxable items within a municipality. Use taxes are imposed on the municipal use, storage, or other consumption of taxable items purchased, leased, or rented during the period that the municipal tax is effective. A municipality may adopt or repeal a sales or use tax, other than the additional municipal sales and use tax, at an election in which a majority of the qualified voters of the municipality approve the adoption or repeal of the tax. In municipalities, use taxes are paid by phone companies to reimburse the city of for use of rights-of-way and construction. For example, most cities in Texas impose a fee to cover the cost of installing telephone poles and lines, manholes, and other telephone network items on public property such as city streets. Some companies may imbed this charge in their rates. These municipal fees may appear on bills as a "Municipal Charge" (e.g., for San Antonio customers, it is $1 per month). No customer is exempt from paying municipal fees. RATE: For municipal sales tax, 1% on the retail sales receipts of all taxable items within the municipality (i.e., includes gas and electricity for residential use. Use tax is imposed at the same rate as municipal sales tax. For municipalities adopting an "additional" municipal sales and use tax, the tax is; (1) imposed at the rate approved by the voters; and (2) limited to one-eighth, one-fourth, three-eighths, or one-half of 1%. The rate may be reduced in one or more increments of one-eighth of 1% to a minimum of one-eighth of 1%, or increased in one or more increments of one-eighth of 1% to a maximum of one-half of 1%, or the tax may be abolished; EXEMPTION(S): Any imposed by the municipality and/or qualified voters; residential use of gas and electricity; and telecommunications sales; STATUTE(S): Texas Tax Code § 321.101, 321.103-.105, & 321.210.

A sales tax is imposed on each sale of a taxable item in this state. Additionally, there are local sales and use taxes imposed by local jurisdictions, including cities, counties, special purpose districts, and transit authorities. There is an order rule to follow: first, collect any local sales taxes, then, collect local use taxes. Local taxes, however, cannot exceed a total of 2%. Local use taxes are collected in this order: (1) city; (2) county; (3) special purpose districts; and (4) transit tax. The following telecommunications services are subject to only the state sales tax: (1) interstate long-distance telephone calls; and (2) interstate telegraph service. Sales tax must be collected from the final consumer on the total charge for the service, including the charge for access. RATE: 6.25% of the sales price of the taxable item sold. Generally, the combined local rate cannot exceed 2%, making 8.25% the highest possible rate; EXEMPTION(S): Texas state agencies, political subs., & non-profit schools; natural gas, only to the extent that the gas is taxed as a motor fuel under Chapter 153. Sale of natural gas or electricity for residential use, or for use directly in manufacturing, processing, or for other noncommercial use; long-distance telecommunications services which are not both originated from, and billed to, a telephone number or billing or service address within Texas (i.e., the records must clearly distinguish between taxable and exempt long-distance services); telecom services purchased for resale; telegraph services which are not both originated from and billed to a person within Texas; separately stated charges; and charges by one telephone company to another for providing access to a local exchange network; STATUTE(S): 34 TAC § 3.285 & 3.295; Texas Tax Code § 151.051, 151.308-310, 151.317, & 151.323; Maverick County WCI Dist. No. 1 v. State, 456 S.W. 2d 204; and Tex. Atty. Gen. Op. MW-551 (1982).

AT&T, MCI, Qwest, and Sprint bill for this fee. Although Sprint lists it on its bills (in the tax section) as the "Carrier Property Tax", it is usually embedded within the "State & Local Taxes" line item of your bill. RATE: Varies by company. Sprint charges 1.08% and the percentage is applied only on state-to-state and international usage. The Sprint percentage is the same for all states. STATUTE(S): Legal citation is pending (e.g., see TX const. Art III, Sec. 44, 51).

A monthly fee assessed to customers to recover fees a long-distance provider pays to local providers to complate in-state long-distance calls over local providers lines. Not all companies bill this fee. Companies assessing the fee: AT&T ($1.95); Sprint ($1.99); & MCI (e.g., MCI's "Instate Access Recovery Fee" for Texas customers will be $1.95 beginning 9/1/02). In ten other states, the fee ranges from 50¢ to $1.95. Customers who subscribe to MCI's new $50 to $60 per month local and long-distance Neighborhood bundle will not be billed the fee.). The access charges (what long-distance companies pay to SBC Southwestern Bell to connect in-state long-distance calls) – about 5.7¢ a minute – are higher in Texas than in other states, but down from the 12¢ per minute rate charged in 1999. NOTE: Access charges for out-of-state calls set by the Federal Communications Commission are, on average, less than 1¢ a minute. In exchange, local-phone companies charge customers an FCC-approved $6-a-month fee. 

Independent pay-phone companies charge a Customer Owned Coin Operated Telephone (COCOT) surcharge when you dial an 800 number from their pay phones. If you use a Travel Card, Home Direct, or 800 Service which is accessed by dialing an 800 number, the COCOT surcharge will be included in the cost of your call to cover the FCC mandated payments to the payphone providers.

The 1993 Texas Legislature enacted this required monthly fee to pay for toll-free calling between towns that share a common entity (e.g., business center, hospital, local government, business center, or school). ELCS expands rural customer's local calling territory by allowing customers to call additional exchanges without incuring per-minute long-distance charges. If the cost of providing ELCS exceeds the revenues received from the service, each local telephone company can surcharge its Texas customers to make up the difference. RATE: Although the ELCS surcharge varies among companies, the maximum monthly rate is $3.50 per line for residential customers and $7 per line for business customers (for the first five exchanges). An additional $1.50 per month can be charged for each exchange over five. Although the customer surcharge must be approved by the PUC, the surcharge can be collected in advance of approval and refunded if approval is not granted; EXEMPTION(S): Incumbent local exchange companies with less than 10,000 access lines; the petitioning or requested exchange is served by a telephone cooperative corporation; extended area service or extended metropolitan service is available between the exchanges; or the petitioning or requested exchange is a metropolitan exchange; STATUTE(S): PURA § 55.048 (1983 Legislative Session).

Since 1983, this fee has been assessed for measured, one-way, or two-way toll-free calling between customers in one exchange or zone and customers in neighboring exchanges. The ability to call an extended area for a flat monthly rate instead of paying a toll charge for each call is especially important in rural areas. (Note: Although EAS between specific exchanges and wide-area service within calling zones eliminate toll charges, telephone companies are allowed to recover lost toll revenue through higher rates for all customers served by the toll-free exchanges.). RATE: Except for EAS between a metropolitan exchange or to optional EAS, the maximum EAS fee is $3.50 a line for residential customers and $7 a line for business customers. EAS fees and surcharges require PUC approval; EXEMPTION(S): Companies serving less than 1,000,000 access lines in Texas; STATUTE(S): PURA § 55.021- 55.024 (1983 Legislative Session).

A monthly fee allowing subscribers in one exchange to call customers in metropolitan exchanges without incurring long-distance charges. The charge varies by area and service type (i.e., measured, one-way, or two-way).

A fee charged for late payment. EXEMPTION(S): State of Texas agencies. STATUTE(S): PURA §55.010; Tex. Util. Code Ann. (Vernon 1998); TEX. GOV’T CODE § 2251.001 et. seq.; PUC Subst. R. 26.27; Tex. Rev. Civ. Stat. Ann.art.

The cost your long distance provider charges for your long distance calls and any related charges, which may include itemized charges for your calls as well as monthly charges for certain calling plans. This would also include other long distance calls from your number (e.g., 1+ calls that are not included in your calling plan, such as directory assistance or operator-assisted long distance calls).

Many long distance companies are now adding a "single bill fee" (one not mandated by the FCC) to the phone bills of customers who are billed for long distance service through their local telephone companies. For these consumers, the charge can be avoided by telling their long distance company that they wish to be billed separately for long distance service.

A flat fee imposed on low usage customers. Some long distance providers impose the fee even if no long distance calls are made. The fee varies by company (e.g., AT&T, MCI WorldCom, and Sprint impose a monthly minimum-use fee ranging from $3 to $5 per customer account. Generally, customers pay this fee only for those months when their long distance charges do not meet the minimum. (NOTE: If you make no long distance calls during a billing period and are thus assessed the full minimum usage charge, the telecom companies will still assess surcharges, fees, and taxes on the minimum usage fee.) EXEMPTION(S): State of Texas agencies are exempt if on TEX-AN long-distnce network.

These are often exorbitant fees for optional services on your telephone line such as repeat dialing, name and number delivery, automatic callback (*69), and three-way or conference calling. Charges vary as much as 75¢ per use. Customers can call their local telephone company to block these features, at no charge.

A fee charged for using a carrier's telecom relay system or network to complete a wireless call. Some carriers offer protection against roaming charges. For example, a Sprint PCS phone has a “Call Guard” setting, which alerts whenever roaming charges apply. The function reminds you when you are about to make or receive an off-network roaming call. It also requires you to take additional steps before placing or answering a roaming call.  RATE: Variable, and often excessive; EXEMPTION(S): State of Texas agencies are liable for their billed roaming charges (as prescribed by contract) and the State is liable for its charges for service.  STATUTE(S)/LEGAL CITATION: Texas Attorney General Opinion H-1265 (1977).