Sprint told the FCC it opposed AT&T’s prepaid calling card petition and was “dismayed” by reports that the agency may delay action on it. In an ex parte letter Mon., Sprint said “it strains credulity to argue, as AT&T does, that a prepaid calling card, marketed and sold for the sole purpose of making telephone calls, can be turned into an ‘information’ or ‘enhanced’ service by injecting a commercial message during call set-up.” This message is one that “consumers don’t ask to hear and that only services the purpose of delaying connections to the parties they are calling,” Sprint said. The letter signed by Sprint Vp Richard Juhnke said AT&T’s decision not to pay into the universal service fund (USF) and access charges because it deemed the prepaid calls an information service resulted in customers of other carriers having to make up the USF contributions and LECs being denied the access charges “to which they are lawfully entitled.” If other carriers followed the same logic, the USF would suffer even further, Sprint said. For example, the letter said, Sprint transmits time-of-day information for wireless customers and could program its wireline switches “to interject some irrelevant piece of information [such as] the temperature in downtown Djakarta.” Using AT&T’s argument, “Sprint could legitimately cease all future USF contributions on both wireless and [with the switching change] direct-dialed voice services” and could seek refunds of all prior wireless-related contributions as well.”
SBC said in a July 30 letter to the FCC that AT&T’s exclusive contract with the Defense Dept. (DoD) should be examined. AT&T has petitioned the FCC to have its long distance calling card be classified as an information service rather than a telecom service, which would prevent the carrier from meeting universal service fund and access charges requirements (CD July 26 p1). SBC said AT&T was engaged in “unethical and illegal acts” because it wasn’t collecting the charges on the cards, which are used by military personnel, including in Iraq and Afghanistan. “DoD should hold AT&T to the terms of its procurement contract and/or launch an investigation into whether the representations AT&T made in bidding on that contract, or AT&T’s performance under the contract, violate federal laws and regulations.” SBC said DoD would set a “dangerous precedent” if it gave the contract to suppliers that offer lower prices by violating the law. SBC said AT&T’s threat to raise rates would mask dodging of USF payments. SBC said: “Providers that play by the rules likely will seek a refund of their USF payments or copy AT&T’s charade.” AT&T has said that since the service includes a prerecorded advertisement, it’s an informational service. SBC disagreed. The letter was signed by Paul Mancini, SBC senior vp-asst. gen. counsel.
Wireline and wireless carriers alike opposed reseller TracFone Wireless’s request for universal service funding in N.Y., saying it would add pressure on the Universal Service Fund (USF) without benefits. But public interest groups said the entry of TracFone, which offers prepaid service, would help low-income consumers. TracFone had asked the FCC to give it eligible telecommunications carrier (ETC) status, needed to receive USF support, and to forbear from rules that require a carrier to have facilities of its own to receive that USF support.
States might have to begin thinking about replacing revenue from telecom services with another revenue stream, perhaps the streamlined sales tax, House Judiciary Commercial & Administrative Law Subcommittee Chmn. Cannon (R-Utah) suggested Fri. During Fri.’s hearing on VoIP regulation, Cannon asked many questions about state taxation of VoIP specifically and telecom and Internet taxation generally. In a broad discussion that also touched on the Internet tax moratorium and wireline access regulations, Cannon said VoIP will likely reduce state revenue, even if states get authority to tax it.
A spokesman for the Coalition for Equitable & Affordable Rural Service (CLEAR) said attempts would probably continue to move universal service fund (USF) reform legislation through Congress this year. CLEAR supports S-1380, legislation from Sen. Smith (R-Ore.) that would change funding for the so-called “high cost” fund, which supports larger telecom providers who provide service to rural areas. More than 40 states and territories don’t receive any of the funding, which is about $260 million yearly. There were efforts to introduce the bill Thurs. during the comprehensive committee markup, sources said. But some relevant legislation, including VoIP, passed without the amendment’s being offered by Smith. And other bills that might have taken the amendment, such as the junk fax bill, moved without amendment after Sen. Wyden (D-Ore.) forced a procedural end to the markup over objections to the nominee for FTC chmn. (CD July 23 p1). Industry sources said Sen. Lott (R-Miss.), whose state receives the largest piece of the funding, would agree to the amendment. The CLEAR coalition coordinator told us he expects an effort to move the measure in Sept., once Congress returns.
The Senate Commerce Committee approved several pieces of legislation Thurs. -- including VoIP, satellite home viewer improvement act (SHVIA), low power FM radio, junk fax and reauthorization of the Corp. for Public Bcstg. (CPB) -- but fighting over an FTC nominee brought an abrupt end to the markup, which could have prevented some amendments from being introduced. Sen. Wyden (D-Ore.) infuriated Committee Chmn. McCain (R-Ariz.) by invoking the “2-hour rule” which prevents committee meetings from lasting more than 2 hours when the Senate is in session. Wyden was battling McCain on procedures concerning Deborah Majoras, the nominee for FTC Chmn. Wyden opposed the nomination over disagreements with FTC action on gasoline prices. Sources said potential amendments to junk fax and CPB legislation couldn’t be offered after Wyden’s procedural move. The Committee had approved the 2 bills under unanimous consent with the understanding they could be amended later in the markup.
SALT LAKE CITY -- Closing speakers at the NARUC summer meeting here said VoIP, broadband over power lines (BPL) and other promising new telecom technologies and applications will face major development hurdles until federal and state regulators sort out their oversight roles. All major telecom resolutions were unanimously approved by the NARUC board during the convention.
Congress faces a choice between acting quickly to preempt states from regulating VoIP or taking more time to tackle the Internet service in a broader rewrite of the Telecom Act, House Telecom Subcommittee members said Wed. At a hearing on VoIP, industry witnesses disagreed. The preference seemed to be what some committee members considered impossible: A more comprehensive Telecom Act rewrite done quickly. House Commerce Subcommittee on Commerce Chmn. Stearns (R-Fla.) told us after the hearing, however, that the debate is more complicated than that. “Some of them [Commerce Committee members] don’t want to do anything at all,” he said. Full Committee Chmn. Barton (R- Tex.) didn’t take a position on the best approach, but he did predict “VoIP is going to be huge. I think it’s going to make cell phone expansion look like wagon trains.” Barton told the witnesses Congress will preempt states on VoIP regulation: “There should be only one, federal set of rules that apply to VoIP.”
A federal appeals court ruled the Tex. PUC can’t include proceeds from interstate and international calling in the revenue base on which a telecom carrier’s state universal service fund assessment is figured. The U.S. Appeals Court, Dallas, was ruling on an Oct. 2002 AT&T suit against the PUC, in which AT&T argued it shouldn’t have to pay the 3.6% state universal service assessment on interstate and international calling revenues because that money already is subject to FCC assessment for the federal universal service fund. AT&T won in lower court March 2003, but the PUC appealed. AT&T continued to recover its universal service assessments from its customers but put the disputed portion into escrow while the PUC’s appeal was being considered. If the appeals court’s decision stands, AT&T said it will refund the money to customers. The decision will cost the state fund about 18.5% of its annual revenues, or about $100 million yearly -- and possibly more because the state may have to reimburse other telecom carriers for unlawful assessments. The state has until July 15 to seek reconsideration by the 5th Circuit or until the end of Sept. to appeal to the U.S. Supreme Court. The PUC said it will meet to discuss funding options, including raising the state telecom excise tax on local and intrastate calling.
The U.S. Appeals Court, D.C., affirmed the FCC’s June 2002 decision to allow increases in the cap on ILEC subscriber line charges (SLCs) to take effect as scheduled in the Commission’s CALLS order. Acting on the National Assn. of State Utility Consumer Advocates (NASUCA) v. FCC case (02- 1261) Tues., the D.C. Circuit denied NASUCA’s petition for review and held “the Commission acted reasonably and in conformity with the 1996 Act.”