PICC is a charge that long distance companies pay to local telephone companies to help them recover the costs of providing the "local loop." Local loop is a term that refers to the outside telephone wires, underground conduit, telephone poles, and other facilities that link each telephone customer to the telephone network.

The monthly service fee that consumers pay for local telephone service is not enough to cover all of the costs of the local loop. Historically, the local telephone companies have recovered the shortfall through per-minute charges to long distance companies. Now, however, part of these costs are recovered through flat-rated charges to long distance companies, who use the local networks to complete their long distance calls. Because the costs of the local loop do not depend on usage, this flat-rated charge better reflects the local telephone company's costs of providing service.

A long distance company pays this charge for each residential and business telephone line pre-subscribed to that long distance company. If a consumer or business has not selected a long distance company for its telephone lines, the local telephone company may bill the consumer or business for the Pre-subscribed Inter-exchange Carrier Charge.

A long distance company pays the local phone company a Pre-subscribed Interexchange Carrier Charge for each multi-line business telephone line pre-subscribed to that long distance company. If a consumer or business has not selected a long distance company for its telephone line, the local telephone company (i.e. Bell South) will bill the consumer or business for the Pre-subscribed Inter-exchange Carrier Charge.