Consumers with more extensive telecommunications demands than a single household include commercial establishments, government offices, and other organizations housing several employees. They are conventionally referred to as the “business” customers of a telephone company. In this chapter we examine the rate structures for the major business telephone services.

Local rates

Network access and local calling is provided by local exchange companies (LECs) to business customers under tariffs separate from residential rates. Typically, the monthly business access rate is more than twice the charge to a residential consumer (see Section 7.2.1). And, in most localities, the business tariff includes a measured-service rate for each local call or minute of use, whereas most residential subscribers have either flat-rate service or measured service as an optional rate. Local service rates are the clearest example of customer-class pricing.

Businesses with sufficient calling to require more than a few access lines usually have a significant volume of intrabusiness communication. These calls may be supplied by the local exchange carrier (LEC) through a Centrex service, which uses the local central office switch to connect individual access lines. Centrex provides abbreviated dialing to reach users within a business, redirection of calls to an attendant, and a wide variety of other features.

Alternatively, the business customer may lease or purchase a private branch exchange (PBX) switch that is located on its premises to provide intrabusiness telephone services. The PBX is then connected to the public network by trunk access lines terminating at the local exchange.

The volume of long-distance calling generated by business customers varies widely. Interexchange carriers offer switched service at bulk rates under a variety of WATS (wide area telecommunications service) tariffs for directly dialed calls.