POWELL TEMPORARILY BACKS AWAY FROM CONTROVERSIAL AT&T VOTE
After being barraged by calls and letters from consumers, FCC Chmn. Powell on Fri. temporarily pulled back from a controversial proposal involving AT&T’s “enhanced” prepaid calling card service. An FCC source said Powell wanted to gain more information about the impact of his initial plan to deny AT&T’s request for a ruling that the card service was exempt from universal service contributions or access charges. The source emphasized that the action didn’t mean Powell planned to change his vote. The item is still being circulated among commissioners, but Powell has removed his vote to deny the AT&T petition. That means only one vote remains registered, reportedly that of Comr. Abernathy.
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AT&T last year asked the agency to rule that its enhanced calling card service should be classified as an information service, which would mean AT&T wouldn’t be required to pay access charges or universal service contributions on its revenue. Denying AT&T’s petition would require such payments, which the company maintains would raise rates to consumers since AT&T hasn’t been paying universal service and access charges on card revenue for several years. AT&T considers the cards “enhanced” because they permit retailers to include advertisements.
The White House and FCC received hundreds of thousands of calls and letters from consumers last week urging the Commission not to raise rates on AT&T’s prepaid calling cards. Asked if AT&T had a role in the deluge of communication, a spokeswoman said the company talked to consumer groups “most harmed by the situation” to explain the impact of a negative vote by the FCC and they chose to write letters. She said the “consumer outrage” reflects the fact that so many low income people use prepaid calling cards. The petition was abruptly taken out of circulation Wed. night and placed back into the Commission’s electronic voting system Fri., reportedly because of an unrelated operational problem.
Sources said the White House received more than 800,000 calls and one commissioner’s aide said his office received thousands of faxes. The activity was heightened by messages recently added to AT&T prepaid calling cards offered by Wal- Mart and Sam’s Club. When users of the retailers’ calling cards dialed their access codes they received messages urging users to contact the White House and FCC and register opposition to rates going up.
In one of the many letters supporting AT&T’s petition, Dollar Tree Stores said it sells the enhanced calling cards in 2,200 stores throughout the country and “any increase in cost of the product would cause us to discontinue offering this item.” The retailer said if the FCC denies AT&T’s petition, “your action will have negative consequences for consumers and, frankly, for our business.”
In a blitz of ex parte meetings with FCC commissioners, Bell companies and other ILECs argued that exempting prepaid calling cards from universal service payments will deny the Universal Service Fund millions of dollars. USTA in an ex parte filed Fri. called AT&T’s request “cynical manipulation of the access charge and universal service system.” USTA said if AT&T is given this exemption, others will seek it as well, “quickly bringing down the universal service and access charge regimes upon which small and rural companies rely to continue to provide quality service at reasonable rates to rural Americans.”
USTA noted AT&T in a May 10 SEC filing (CD May 11 p6) revealed that it hasn’t paid some $215 million in access charges on its enhanced calling card service since the 3rd quarter of 2002 and since 1999 has withheld $140 million in universal service contributions. “AT&T improper avoidance” of access charges “negatively impacts the financials of all LECs and could threaten the financial viability of small rural LECs,” USTA said. USTA also urged that the FCC’s ruling be applied retroactively to unpaid access charges and universal service obligations.