Why are there different rates depending on whom you have for dial tone?

The independent local carriers are allowed to charge much higher (300% higher) origination and termination fees to long distance carriers versus the old Bell companies. When you pick up the phone and make a long distance call, not every long distance carrier has lines on the pole. All long distance carriers must pay an origination fee to the local carrier per minute and a termination fee per minute to the local carrier where the call is ending to complete the call. (it is our job to carry it in the middle of the two points). Thus a call that starts in Boston, Mass with Verizon and ends up in LA, California with AT&T and be 10 minutes in length will incur fees of:

Verizon: 10 minutes of origination access fees
AT&T: 10 minutes of termination access fees
Pioneer: transporting the call for 10 minutes between Boston & LA

Think of it as a rental fee for the telephone poles and wires. Congress in the Telecommunication Reform Act of 1996 allowed Competitive Local Exchange providers to charge up to 300% higher access fees to long distance companies to offset their short fall in offering cheaper dial tone to consumers.

Posted in Frequently Asked Questions under Local Service.

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