The Federal Communications Commission, in a move that will lower long-distance rates again, ordered local phone companies Thursday to reduce what they charge long-distance companies to connect with local networks.
The FCC ordered a $1.1 billion cut nationwide in these access charges, effective July 1. Long-distance carriers typically pass along to their customers savings from such cuts.
The nation's largest long-distance company, American Telephone & Telegraph, announced last month that it would cut its rates by $160 million annually, effective July 1, in anticipation of the FCC decision. This would mean a cut of 2.5 percent in typical evening rates.
Other phone companies such as MCI and US Sprint usually follow suit to remain competitive.
AT&T has decided on deeper rate reductions, however, since it had based its cuts on local phone company proposals to the FCC. The local companies in April had asked to reduce their access charges by just $405 million on July 1.
But the FCC ordered an additional $696 million cut Thursday, saying the local phone companies had underestimated likely calling demand by 2.4 percent, or 7 billion minutes.
The FCC also based its rate reductions, in part, on corrections of the local phone companies' cost estimates.