FCC Denies AT&T Prepaid Calling Card Petition
AT&T acted “unlawfully” when it failed to pay millions of dollars in universal service contributions and other fees on revenue from its enhanced prepaid calling cards, the FCC ruled in an order issued Wed. AT&T had asked the FCC for a ruling that withholding the fees was proper because the calling cards provided an “information service,” rather than telecom service, because they contained advertising. However, the FCC disagreed and said the insertion of advertisements in the calling card service didn’t change the regulatory status of the cards.
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The Commission ordered AT&T to file revised universal service contribution forms for the entire period that AT&T has provided the calling card service. The Commission also rejected AT&T’s claim that card calls made within a state shouldn’t be subject to intrastate access charges because they are routed via AT&T’s out-of-state switching platform. “Sending a call out of state to a switch that embeds incidental [an] advertising message is no more relevant to the jurisdictional question than the typical phrase, ‘Thank you for using AT&T,'” the FCC said in a news release.
The FCC also initiated a rulemaking to more broadly address the regulatory regime for all calling cards. The action targets new variations of calling cards that AT&T introduced in Nov. AT&T said then the card services more obviously met the definition of information service. The Commission said it would be better to address the entire calling card issue than act in a “piecemeal manner” by addressing only the new AT&T cards.
Comr. Copps said the decision “sets straight a messy situation” but he still concurred out of concern that the decision and the accompanying rulemaking will cause confusion. He said that by starting a rulemaking, the FCC is suggesting that the boundary between calling cards subject to universal service and those that are not “is whether they feature an automated voice.” Copps added: “There may be a bright line out there between services subject to regulatory authority and those that are not. But I doubt this is it.”
Comr. Adelstein said the decision was “the most logical reading of our rules” but he’s concerned that the FCC deferred ruling on the new cards, thus delaying a decision on whether universal service contributions should be paid on their revenue and how the services should be classified “for purposes of our intercarrier compensation rules.”
Chmn. Powell criticized AT&T’s lobbying on the issue, saying AT&T has “gone as far as to take the extraordinary step of conscripting consumers into a lobbying effort directed at this Commission and members of Congress. Shamelessly, they trumpet the impact of this decision on our soldiers serving in Iraq. What is remarkable about this allegation is that other carriers are offering comparable rates to people serving in the military -- some have even offered to donate free service -- without taking funds from our rural universal service program or programs designed to help low-income individuals. The FCC… is concerned about the impact of our rulings on servicemen and their families. However, some companies’ advocacy on this issue is better seen as an attempt to distract the public from companies’ underlying effort to evade their regulatory responsibilities to the Universal Service Fund.”
AT&T issued a statement saying the FCC decision “re- regulates enhanced prepaid cards,” reversing “years of precedent,” and the company is “deeply disappointed.” AT&T said it will appeal the decision “because it is unfair, legally flawed, and harmful to servicemen and women, rural residents, low-income consumers, senior citizens and others who rely on low-cost prepaid calling cards.” USTA called the decision “a critical victory for universal service” and rural telecom companies.
Senate Commerce Committee Chmn. Stevens (R-Alaska) and ranking Democrat Inouye (Hawaii) praised the ruling. Stevens urged the FCC, as it undertakes a rulemaking on how to treat calling cards, to keep prices low for the Armed Forces. Inouye said he was concerned by the prospect that the FCC’s rulemaking “may unwittingly invite the creation of a ‘loophole’ that will allow future communications service providers to avoid their Universal Service obligations.” Inouye: “The obligation to contribute to Universal Service should not hinge on whether the customer presses or does not press certain buttons to hear an advertisement.” Two weeks ago, Stevens held a news conference urging the FCC to rule against AT&T’s calling card petition. Among his complaints, Stevens criticized AT&T for directing phone calls to Congress, asking them to urge the FCC to rule in AT&T’s favor. (CD Jan 14 p1).