Undertstanding Regulated and Non-regulated Charges to Your Phone Bills

By Karen Thatcher
Posted Sunday, December 5, 2004

Unfortunately the subject of taxes as it applies to your telecom bills is broad enough to warrant a lengthy discussion.

In Part 1 of this subject, we'll take a close look at the regulated and non-regulated charges to your bills. In Part II, I'll cover a few "rules of thumb" of just how taxes are applied to these charges, and a few tips on how to recover money due to incorrect taxation to certain business entities or non-profit groups.

The charges for local telecommunications services include both regulated and non-regulated types. Taxes are assessed on both. You can find most of these specific charges contained in the "summary" section of your bill.

Regulated Charges

Tariffs are developed and filed by the Local Exchange Carrier with the state and public utility commission. After approval, these public documents define rules under which regulated services will be provided, and the charges that will be applied.

Once approved, tariffs have the weight of law, and deviations require special approvals by the utility commissions. For detailed information on tariffs, visit CCMI. (Center for Communications Management Information) The following are services regulated by tariffs in most states:

Connections to the central office (CO) and any local usage charges (excludes wireless) Service enhancements are usually regulated. In several states, however, centrex-like services are now unregulated and such deregulation is becoming more common. White-pages directory services (except bold listings). Operator services provided by local exchange companies. Service initiation, changes, repair, and the like are usually regulated. The expression of such charges may be a "price list" of specific items, or it may be expressed as time and material "rates" for categories of work. Some standard kinds of studies are priced through regulation. Detail of local usage or message units are typical examples. Most "other" services

Non-Regulated Charges

Various price schedules and rates are applied to non-regulated offerings, in accordance with current business and competitive conditions. Keep in mind that all non-regulated charges are subject to rapid change and negotiation, although some are traditionally fixed for a year at a time.

Prices and rates for non-regulated items must be obtained from suppliers. The following services are unregulated in most states:

Terminal and switching equipment, and ancillary items, Pay telephones, Some service enhancements, such as wire maintenance and voice mail boxes, Directory advertising, bold listings, street directories, Sale of "foreign" directories.
Many kinds of studies and some technical service matters, some corridor and other services.

In Part II, we will look at the taxes - federal, state and local - that are imposed on both the regulated, and non-regulated portions of your bills. Included will be the three "rules-of-thumb" for taxes, along with the specifics on what these taxes are and the purpose for which they are paid, and, who is exempt from them.

About the Author
Karen Thatcher is President of TelCon Associates, a 30 year old telecom consulting and management firm. TelCon Associates helps companies gain control and reduce telecom/IT spending through a guaranteed cost-reduction consulting process.