Tuesday, February 22, 2005

FCC Rules Against AT&T on Prepaid Calling Card USF Fees

The FCC ruled that AT&T unlawfully avoided paying millions of dollars of universal service contributions and other fees related to pre-paid long-distance calling card services. The FCC ordered AT&T to file revised universal service contributions forms for the entire period that AT&T has provided its calling card service. In its November 2004 filings with the Securities and Exchange Commission, AT&T reported that it had avoided $160 million in universal service contributions on the card since 1999.

The Commission rejected an assertion by AT&T that its practice of inserting verbal advertisements in the calling card service transformed it into an unregulated "information service" not subject to universal service assessments. The FCC found the advertisements to be incidental to the underlying telecommunications service offered to the cardholder, and therefore did not change the regulatory status of the service.

The Commission also rejected AT&T's assertion that calls made within a state shouldn't be subject to intrastate access charges. AT&T said the calls are exempt because they are routed through AT&T's out-of-state switching platform. The Commission generally determines the jurisdiction of a call by its endpoints; calls that originate and terminate in the same state are considered jurisdictionally intrastate.

AT&T plans to appeal the decision. In a statement, AT&T said the FCC decision was legally flawed and that it reversed years of precedent to re-regulate enhanced prepaid calling card services.

AT&T asserts that there are dozens of other companies offering prepaid
cards that do not appear to be contributing to universal service or paying access charges . Rather than settling the issue years ago, AT&T complained that "the Commission has instead dodged the difficult issues and opened another in its long line of rulemakings. By doing so, this Commission continues its legacy of asking many questions but answering very few."http://www.fcc.govhttp://www.att.com

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