State of New Jersey

31 Clinton Street, 11th Fl.
P. O. Box 46005
Newark, New Jersey 07101


Public Advocate

Rate Counsel

Press Release

For Immediate Release
September 1, 2006

For Further Information Contact
Steven T. Walker:
(Public Advocate)

Tel: 609-826-5090

Rate Counsel

N.J. Public Advocate Calls for Stricter Federal Rules to Prevent “Overcharging” Consumers for Telephone Service

Newark, N.J.—The Department of the Public Advocate and the National Association of State Utility Consumer Advocates (NASUCA) are calling for an end to the use of “outdated” cost accounting rules used by the Federal Communications Commission (FCC). The organizations contend that current rules allow telecommunications companies to unfairly inflate consumers’ telephone rates by billions of dollars. Today, New Jersey Public Advocate Ronald K. Chen and Rate Counsel Seema M. Singh announced the joint effort with NASUCA calling for an immediate change to the rules and a lifting of a freeze that results in the higher costs to consumers.

“New Jersey consumers should not be paying higher rates to subsidize companies’ investments into unregulated services,” said Chen. “Stricter rules are needed to prevent consumers from unfairly subsidizing telecom services such as bundled long distance services and broadband services."

In comments submitted jointly to the FCC by the New Jersey Rate Counsel, the NASUCA and the Maine Office of the Public Advocate, it was noted that there is a compelling need for revision of FCC rules due to “seismic changes” in the types of services provided by telecommunications companies over the past few years. The current cost accounting regulations do not clearly separate certain charges and expenses for telephone services.

Singh said NASUCA’s and New Jersey Division of Rate Counsel’s experts believe that local telephone customers have been subsidizing companies' non-local and deregulated services. It is their belief that a fair reallocation would give benefits to residential local customers throughout the nation. By reducing intrastate charges, the benefits would include a lower subscriber line charge, which is a fee that all local telephone customers pay on their monthly bills. Also, by allowing separate proceedings by state regulators based on a reallocation of costs, basic local service rates could also be lowered.

Singh said the FCC rules were not set in a competitive market and cost allocations have been frozen since 2001. While the cost allocation practices remain the same, telephone companies have invested billions of dollars in their networks to provide more modern unregulated long-distance and high-speed Internet data services.

“Services and products have changed rapidly in the telecommunications industry. There is a need for a thorough review of telecommunication rates to ensure that they are fair to ratepayers,” said Singh.

The FCC is in the process of examining the rules that govern how telephone company costs are assigned to intrastate and interstate services which directly impact the “reasonableness” of consumer rates.


The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water/sewer and telecommunications and cable TV service. Additional information on this and other utility matters can be found at the Division’s website at The Department of the Public Advocate website is