Dingell Letter Turns Up The Heat On FCC, AT&T

Telecom Policy Report, Jan 19, 2005

Federal Communications Commission Chairman Michael Powell and the other commissioners are being pressed again by Rep. John D. Dingell (D-Mich.) to resolve AT&T's May 2003 petition (TPR, Jan. 12) asking the FCC for a ruling that declares its advanced prepaid calling-card services are interstate communications subject to interstate, rather than intrastate, access charges; as he did once before last year (on June 16, 2004), the ranking member of the House Committee on Energy and Commerce made public a Jan. 13, 2005, letter urging the FCC to act quickly on the petition.

Dingell essentially blasts AT&T for seeking the exemption -- even in instances where the calling and called parties are located in the same state --and for unilaterally withholding universal service funds (USF) and intrastate access payments surrounding the prepaid services. Dingell added that the last time around, Powell responded by July 2, 2004, and he shared his concern that the petition be resolved expeditiously; this time, the congressman would like Powell to respond by Jan. 31.

The FCC's proceeding on the matter, Docket No. 03-133, was started in June 2003 and opened up several comments on the AT&T petition, in particular and questions regarding access charges for such services in general. The FCC has said recommendations still are pending on the subject, and no decision has been made while the work continues.

Dingell's recent letter notes that a congressional conference report that accompanied H.R. 4818 -- the Consolidated Appropriations Act of 2005, enacted in December 2004 -- obliquely refers to the AT&T petition by urging the FCC to avoid actions that might increase the cost of prepaid phone cards used by military personnel or their families who make extensive use of prepaid phone cards. The congressman, however, does not necessarily agree with this fear, and the commission has not suggested the AT&T would necessarily raise costs to soldiers and their families. That report is said to "direct the FCC not to take any action that would directly or indirectly have the effect of raising the rates charged to military personnel or their families for telephone calls placed using prepaid phone bills."

The congressman's recent letter remarks to Powell that the report's language "was not part of the statute and, therefore, is non-binding upon your agency. It was added minutes before the bill was filed in the House and was neither discussed nor debated in either chamber. Indeed, I and most of my colleagues were not made aware of its existence until after the House voted on the bill."

No Flag-Wrapping, Dingell Warns

Dingell also has accused AT&T of leveraging the fact that some of its prepaid calling cards are used by U.S. military personnel stationed in Afghanistan and Iraq as a justification for not paying USF and access charges, while the carrier "seeks to generate opposition to any effort by the FCC to require AT&T to comply with the commission's regulations based on concerns that doing so would increase costs to U.S. military personnel, an outcome that all Americans would choose to avoid."

"Of course, I do not favor increasing the cost of making telephone calls for U.S. forces stationed overseas," Dingell wrote. "That issue, however, is largely irrelevant to commission action on the AT&T petition. Whatever the outcome of that proceeding, if it truly wishes to help the troops, AT&T can offer military personnel prepaid calling cards at discounted rates or it could offer calling card services to such personnel for free..."

He maintains if the FCC determines that AT&T's actions have violated its rules, AT&T should be required to pay intrastate access charges and to make USF payments for prepaid calling card services on a going-forward and retroactive basis plus compensate, with interest, the USF and affected local exchange carriers (LECs) for the loss of funds. Dingell is said to be among the staunch supporters of efforts by the incumbent LECS to shrug off regulation (TPR, April 28, 2003).

In response to this latest Dingell development, AT&T corporate media relations provided TPR with a curious statement, saying it shares the congressman's "concerns about the availability of low-cost calling for rural America. That's why we legally provide enhanced prepaid cards with rates as low as three cents per minute. Data shows that a majority of those who use prepaid cards are low-income and rural residents. The very people the universal service fund was designed to benefit will be hurt by a negative decision by the FCC that will raise rates on prepaid cards. We look forward to working with Congress and the FCC on intercarrier compensation reform that will ensure the long-term sustainability of the universal service fund."

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