DINGELL ASKS FCC TO OPEN AT&T BOOKS ON UNIVERSAL SERVICE FEES
House Commerce Committee ranking Democrat John Dingell (Mich.) called on FCC to investigate AT&T’s recent increase in Universal Service Fund (USF) line-item fee for residential customers, but Chmn. Tauzin (R-La.) is considering congressional action rather than waiting for Commission response. Dingell urged FCC Chmn. Powell in letter dated Jan. 7 specifically to “open the books and records” of AT&T while raising questions whether long distance companies in general were using fee to “gouge” customers. Committee spokesman Ken Johnson said Tauzin “is giving serious consideration to holding congressional hearings” on AT&T decision to raise fees: “He will make a final decision after consulting with [Telecom Subcommittee] Chairman Upton [R- Mich.], but clearly we are very concerned about the impact the fee hike would have on consumers nationwide.”
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AT&T recently raised its USF fee to 11.5% from 9.9%, saying FCC methodology to determine how much company should contribute to fund was flawed. Commission makes determination based on company revenue from 6 months ago. AT&T said “lag” problem, combined with diminished interstate and international telecom revenue, necessitated increase.
Dingell “fails to note the ample evidence” on record at FCC that collection mechanism is “inequitable and discriminatory, and likewise neglected to mention that FCC currently is reforming that method,” AT&T Gen. Counsel James Cicconi said: “This method hurts customers of companies like AT&T with declining revenues, and helps companies like Verizon with growing long distance revenue. The lag also means that new entrants to the long distance market can collect USF [fees] on their bills for 6 months before they need remit anything to the [USF] since their long distance revenues prior to entry were zero. That is why AT&T has asked the FCC to consider a fairer collection method based on projected revenues.”
Cicconi emphasized that “AT&T collects no more from consumers than it owes for its contribution to the [USF].” He also said additional factors existed that forced companies to recover USF costs at higher rate than FCC-mandated level: “These include delinquent accounts where USF goes unpaid, but for which USF must be remitted by AT&T, and the difficulty of assessing USF on certain customers such as those receiving Lifeline service, 10-10 dial-around service users and prepaid card users.”
Time lag for USF contributions is only part of problem, Consumer Federation of America (CFA) Research Dir. Mark Cooper said: “We think there are more shenanigans than this.” He said FCC had been “unwilling or unable” to take action on USF fees and impact of carrier fee collections on consumers. In addition to making final determination on lag, Cooper said, it’s equally imperative that Commission determine whether, as CFA suspects, AT&T is applying USF fee unevenly. He said it must be determined whether company was giving break to large customers in collecting USF contributions while imposing burden on most vulnerable consumers: “They kill the bottom order of the American public. There are 25 to 30 million households subject to tremendous rate increases.” Cooper lauded Dingell for being “great on this issue.”
FCC wouldn’t comment on Dingell’s request, spokesman saying agency approved notice of proposed rulemaking (NPRM) last year on how to better assess carrier cost contributions to fund and how carriers could recover costs from customers. NPRM raised concerns (CD May 9 p1) similar to those expressed by Cooper, acknowledging possibility that “certain customer classes are bearing a disproportionate share” of carriers’ cost contributions. Issues in item included: (1) Requirement that carriers contribute to USF based on percentage of collected revenue, rather than billed revenue. (2) Whether to assess USF contributions based on current or projected revenue. (3) Whether to use per-unit assessment, such as fixed per-line assessment. (4) Limits on how carriers recover contribution costs from customers, such as uniform line description and requiring line item amounts not to be larger than contributions assessment.
Dingell said AT&T’s claim was “puzzling at best.” Although he said FCC’s current USF factor amounted to 6.9% of company revenue, AT&T already was charging customers 9.9%: “Such behavior potentially jeopardizes the E-rate program for public schools and libraries, as well as the affordability of basic telephone services for rural and low-income customers.”
If FCC determines AT&T collected more from customers than it actually paid into USF, Dingell said Commission should adopt order requiring AT&T to refund money to its customers: “Irrespective of the rate charged, no carrier should be permitted by law to charge its customers more for the [USF] line-item fee than it actually contributes to the government for this purpose. It appears that AT&T may be padding its pockets by doing just that.”