Telecom Carriers Oppose AT&T Request for Stay of Prepaid Order
Bell companies and competitive carriers urged the FCC to deny an AT&T request for stay of the prepaid calling card order pending an appeal filed in U.S. Appeals Court, D.C. The stay would delay AT&T payment of past-due contributions to the universal service fund (USF)and bar phone companies from suing AT&T for unpaid access charges. AT&T has offered to post a letter of credit to secure more than $150 million in USF payments due this month if the stay is granted; opponents said that won’t stop immediate harm to the USF from AT&T’s nonpayment. The FCC’s order (CD Feb 24 p1) told AT&T to pay universal service contributions and access charges retroactively, though carriers would have to sue to get the access payments. AT&T withheld regulatory payments based on revenue from its prepaid calling card service, arguing that it is an exempt interstate information service.
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Verizon told the FCC AT&T nonpayment of universal service contributions worsened stress on the USF while boosting other carriers’ contributions: “Every day that AT&T continues to evade its requirement of paying over $150 million that it owes to the fund constitutes irreparable harm to, and puts further unnecessary strain on, the fund,” Verizon said. “It also harms other carriers, whose contributions are increased to compensate for AT&T’s unlawful withholding. The posting of security, which will delay payment for additional months or even years, does nothing to mitigate this immediate harm.”
USTA said carriers should be able to file claims against AT&T in state courts for intrastate access charges “particularly since AT&T has made no offer to secure a letter of credit, or to make some similar assurance, that would cover the amount of any intrastate access liabilities.” Qwest found “frivolous” an AT&T argument that if it wins its appeal it might not get its USF contributions back: “If the Universal Service Fund owes money to AT&T, it is difficult to imagine how the Administrator would resist a lawsuit requiring that that money be paid -- even if the Commission itself chose to resist such payment.” Qwest said AT&T made “an odd argument” that other carriers also have avoided USF payments: “While AT&T’s pointing out other potential scofflaws in the universal service payment area is useful as a public service, it is legally irrelevant.”
To get a stay, a petition must pass several tests, including showing that other parties won’t be harmed, BellSouth said. That test can’t be met because other carriers will be harmed, BellSouth said: “AT&T fails to acknowledge the carriers have lost millions of dollars by AT&T illegally withholding intrastate access charges… and offers no basis to ensure they will be paid or will recover the interest on past withholdings.” BellSouth said nonpayment of USF contributions harms other carriers: “Simply pledging a letter of credit to act as collateral to ensure that the USF fees will be paid once AT&T’s appeal is denied will not protect the interest of carriers that have properly paid contributions to the USF.” Under USF structure, “if one carrier does not pay its fair share to the fund, that carrier’s obligations must be picked up by the remaining carriers.” BellSouth said the public will be harmed because “the USF is an important part of ensuring that the national phone network continues to provide affordable communications for all.”
Alaskan competitive carrier General Communication Inc. (GCI) said AT&T can’t prove it would suffer “irreparable harm” without a stay because other parties will be the ones harmed: “AT&T’s claim of irreparable harm is based entirely on its claim that it does not owe monies for USF on calling cards, and its desire to be shielded from carrier claims of intrastate access charges due… Other parties, however, are threatened with significant irreparable harm as AT&T continues to withhold payment for services… AT&T’s self-help approach, which would be perpetuated by grant of a stay contrary to the legal status quo, leaves rural carriers holding the bag… There is great difficulty -- if any chance at all -- for the LECs to be able to recoup lost… revenues for the past several years that AT&T has misreported in-state calling card calls.” WilTel said the stay would let AT&T “continue to subvert the USF and maintain an artificial competitive advantage.” It also would “send precisely the wrong message about carriers’ ability to violate the Commission’s rules with impunity,” WilTel said.
In its March 28 petition, AT&T told the FCC that without a stay it could lose money by winning its court appeal: “The Commission’s rules do not provide for a full refund of those monies to AT&T… To the contrary, AT&T would be entitled to recover only a portion of its payments to the USAC [Universal Service Administrative Co.] and the Commission’s rules also do not provide for the payment of interest on refunds.” Also, if the FCC order is reversed, a stay would avoid “wholly unnecessary” litigation in state courts across the country to gain access charge payments.”