THE LOCAL EXCHANGE: ACCESS AND COMPETITION
As we observed at the outset, there has been a movement to greater cost- based pricing of local and long-distance phone calls. In general, local rates have been subsidized by long-distance users. Prices that are lower than justified by the costs have helped keep the local exchange a monopoly; prices that are higher have helped create the competitive long-distance market.
The subsidy from long-distance to local was and continues to be accomplished by manipulation of the access charges the local-exchange carrier can impose for access to its local loop. This access charge is called the carrier's carrier charge or the carrier common line (CCL) charge. In the 1980s the FCC enabled phone companies to move to greater cost-based pricing of long-distance service by the introduction of the subscriber line charge (SLC), added to every phone bill regardless of the number of long-distance calls made. The charge was accompanied by reductions in the per-minute CCL charge, which was reflected in lower per-minute charges to customers. The changes were made to discourage long-distance companies from bypassing the local exchange to avoid the unrealistically high access charge imposed on calls handled by the local exchange carrier.
Large customers had already been given special treatment through "special access" tariffs for private lines (see Figure 9.1). These access tariffs are lower than those charged public switched network customers. Indeed, private lines are a form of bypass, but one offered by the long-distance company itself.
Because local exchanges offer basically two services--transport and access--lost revenues from the latter can strain the former. The subscriber line charge was an attempt to compensate for the inequities between large and small users of long-distance, thereby stemming the bypass flow.
Some do not view the revenue flow from long-distance customers and carriers to local users as a subsidy because the supposed subsidizing parties derive substantial benefits from a universally available local distribution network. Furthermore, it is hard to determine what the precise cost of access