Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 30, 1995                   TAG: 9503310016
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: The New York Times
DATELINE: WASHINGTON                                LENGTH: Medium

LONG-DISTANCE PHONE CHARGES TO BE REDUCED

The rate cuts could translate into one of the biggest single reductions in long-distance telephone prices since the breakup of the Bell System 10 years ago. Consumers are likely to feel some of the impact in lower long-distance prices, though long-distance carriers such as AT&T, MCI and Sprint will try to keep as much of the reduction for themselves as the market will allow.

The access charges that long-distance carriers pay to connect to local telephone networks constitute about 40 percent of the cost of a long-distance call and total about $27 billion a year nationwide. Access charges also are the biggest source of profit for local telephone companies, and the rates have come down very gradually over the last decade.

A typical long-distance call from New York to Los Angeles costs from 10 to 27 cents a minute, depending on the time of day and a customer's discounts. But long-distance carriers must pay about 4 cents a minute to the local phone company on each end of the conversation - 8 cents a minute, all told.

Consumer advocacy groups and the long-distance carriers have been lobbying the government for months to push these prices down sharply, charging that the Bell companies have been able to enrich themselves unfairly.

Government officials, speaking on the condition of anonymity, said on Wednesday that the new rules would reduce these local charges about 4 percent a year for the next few years and would begin to take effect this summer. That reduction would roughly double the average decline in access charges in recent years, they said.

The FCC action is intended to be part of a grand bargain in which the local phone companies, in exchange for lowering access charges, would be free to keep more of the profits they can make from long-distance access services by cutting their own expenses. Until now, the FCC has put a cap on the profits the local companies can make from these access services.

In addition, the FCC plans to develop rules over the next few months that would give the local companies much greater flexibility in the way they allocate costs in pricing various services.

``The goal here is to reinvigorate competition among long-distance companies by reducing the cost of access,'' said Reed E. Hundt, chairman of the commission, who would not discuss details of the plan.

Executives at the Bell companies were hesitant to comment on the new rules before they were made public officially. But they were clearly unhappy, in part because they contend that the FCC was taking only modest initial steps to let them retain more of the profits they generate through cost-cutting.