Payphone Operators Push Back Against ‘Unseemly’ USF Arguments

TracFone’s argument against an emergency Universal Service Fund subsidy for payphones as undermining competition for poor customers is “particularly unseemly,” the American Public Communications Council said in replies in FCC docket 03-109. Payphones are “and will remain” a “critical backup to wireless services in times of crisis when wireless networks fail or are overwhelmed,” the council said. Industry has roundly condemned the council’s request for the USF help (CD Jan 20 p9).

"The major competitor of payphones for the patronage of people in transit is wireless services,” the council said. “It is only because of the availability of USF support that wireless providers like TracFone, who have no facilities of their own, are able to compete at all for the business of low income consumers.”

But payphone operators are missing the point of the Universal Service Fund, said the National Association of State Utility Consumer Advocates. “In the first place, the purpose of the Lifeline program is to assist low-income consumers,” the association said. “The payphone providers are not low-income, except perhaps incidentally as a result of the market decline for payphones. And the consumers who use those payphones, although many are likely low-income are not necessarily low-income, as required by the commission’s current rules.”

Although it’s true the Lifeline program shouldn’t support “obsolete” technologies, payphones are still vital to millions of poor Americans, the council said. Helping payphones won’t “in any way … hinder the commission from moving ahead with universal service reform or the transition to the ubiquity of broadband capability,” the council said.