FCC Says AT&T Illegally Avoided Calling-Card Fees
Posted on: Thursday, 24 February 2005, 15:00 CST
Feb. 24--AT&T Corp. may owe as much as $500 million in fees related to its prepaid calling-card business.
The Federal Communications Commission said Wednesday that the Bedminster-based phone company illegally avoided paying into a federal fund designed to help defray the cost of rural phone service. In addition, AT&T avoided call-connection fees paid to local phone companies, the FCC said.
The FCC rejected AT&T's argument that inserting recorded advertisements heard by the person using the calling card made it an unregulated "information service" not subject to payments into a federal fund that subsidizes rural phone service.
"Customers buy the card to make telephone calls; they must hear the recorded message -- whether or not they listen to it -- because it would be impossible to make calls without doing so," the commission said
The commission ordered AT&T to resubmit information for the entire period that the company 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 contributions to the federal fund that pays for rural phone service since 1999. AT&T also avoided $340 million in intrastate connection charges that are typically paid to local phone companies since November 2002, according to its recent SEC filing.
AT&T spokeswoman Claudia Jones said the company had not yet read the FCC's order.
The company issued a statement saying it was "deeply disappointed" in the decision, and plans to appeal the ruling.
"In order to reach its desired outcome, the FCC has reversed years of precedent and re-regulated enhanced prepaid calling-card services," the company said.
The FCC cannot collect the $340 million in connection charges; those would have to be recovered by the local phone companies in court, Jones said.
AT&T is merging with a local phone company, SBC Communications, based in San Antonio, Texas.
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T, SBC,
Source: The Record - Hackensack, New Jersey
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