MCI long distance rates increase again

The PhoneDog
Mascot from Charleston, SC
Published: September 26, 2006

Many MCI long distance subscribers could be in store for more of a trick than a treat when the calendar turns over to October. This is due to the announcement from MCI that they will be raising the per-minute rate of the MCI Nationwide plan by 1¢ to 6¢ per minute. While 1¢ may not sound like a lot, consider the larger impact of the change.

First, a typical 20 minute long distance phone call would now cost 20¢ more. Second, MCI charges a variety of percentage-based taxes, fees, and surcharges that are applied based on the amount of charges in a given month. For example, 10.5% of the total of all long distance charges and the monthly service is how MCI calculates the Federal Universal Service Fee (FUSF). The Nationwide Plan charges a $5.95 monthly service fee along with the 6¢ per minute rate. On a monthly bill with one hour of calling prior to the increase, the FUSF fee would have been 94¢. The 1¢ increase to 6¢ per minute increases the FUSF on that same bill to $1.00.

In addition, MCI also charges a property tax surcharge equal to 2.5% of long distance charges. On the same sample monthly bill with one hour of calling prior to the increase, this surcharge would have been 22¢. With the 1¢ per-minute rate increase, the property-tax surcharge now increases to 24¢ per month. Additional percentage-based state and local taxes on subscribers? bills could also increase the total bill thanks to the per-minute rate increase. While small per-minute rate or monthly service fee increases often seem fairly harmless on their face, it is the subsequent effect on other taxes, fees, and surcharges that can really take a bite out of consumers? checkbooks.

Source: Telecommunications Research and Action Center.