Correction: T-Mobile USA didn’t receive money from the federal USF fund 2nd quarter (CD Aug 13 p9). The carrier collected $38 million from its customers to satisfy its USF contribution obligations. T-Mobile USA doesn’t have ETC status and can’t receive funds through the USF program.
T-Mobile USA said it added 1.092 million customers 2nd quarter, topping analyst expectations and increasing customer additions the past year to 4 million. The subsidiary of Germany’s Deutsche Telekom now has a customer base of 15.4 million, vs. 11.4 million a year ago. In an interesting footnote, T-Mobile said it received $38 million through the USF program, up from $36 million in the first quarter. A Deutsche Telecom official said the company passed the 15 million customer milestone a year ahead of schedule. T- Mobile earned $717 million on revenue of $2.46 billion. Average revenue per user per month was $55. Pres. Robert Dotson said: “T-Mobile USA captured almost 25% of the net customer additions posted by the 6 national carriers this quarter, and a 7.6% increase in our customer base.”
Rural carriers urged the FCC to deny AT&T’s prepaid calling card petition,(CD Aug. 4 p4) saying their customers would be affected because the petition would decrease access charge revenue and the Universal Service Fund (USF). The letter to FCC Chmn. Powell was sent Mon. by the Independent Telephone & Telecom Alliance, NTCA, OPASTCO and Western Telecom Alliance. AT&T is seeking a ruling that its card is an information service, so its revenue shouldn’t be subject to access charges or USF. Noting AT&T hasn’t been paying the fees for several years, the letter said: “AT&T’s unauthorized self-deregulation disproportionately harms rural carriers and their consumers. Rural carriers rely on access revenues and universal service support to provide consumers in their regions with high quality, affordable telecommunications services… Additionally, AT&T’s claim that adding a recorded message transforms a traditional voice call into an enhanced service is illogical.” The group asked the FCC to act quickly and require AT&T to make retroactive payments: “Based on AT&T’s May 2004 10-Q filing, we calculate every month that goes by, AT&T is avoiding as much as $10 million in access charges and $2.3 million in universal service contributions. The FCC should not allow AT&T to chart its own course while it continues to deliberate these important issues.” The FCC reportedly has put the item on hold until after the election.
Rural ILEC, CLEC and wireless industry groups filed an interim universal service plan with the FCC, marking the first time they've agreed on the subject. The filing -- by OPASTCO, Rural Independent Competitive Alliance (RICA) and the Rural Telecom Group (ROUTING) -- came in response to the Commission’s proceeding on the Universal Service Joint Board’s Recommended Decision on high-cost support portability. The groups proposed minimum standardized criteria for competitive eligible telecom carrier (CETC) applicants in rural service areas. They said the plan would “provide sufficient support to both wireless and wireline ETCs and would enable the FCC to better control the future growth of the Universal Service Fund (USF), while it considers more long-term reform for all ETCs serving rural service areas.”
On the eve of a critical filing deadline on USF distribution issues, Western Wireless Chmn. John Stanton said that if the fund is expanded to pay for rural broadband rollout, wireless carriers will be in line for funds. The remarks came as NTCA and OPASTCO released a report heavily critical of the carrier’s pursuit of USF funding.
One of the few surprises at Wed.’s FCC mostly well scripted meeting was a strong statement from Comr. Copps warning that the FCC is still falling short on homeland security. Shortly after the session’s start, Copps -- responding to an FCC report on post-Sept. 11 communications changes that led off a meeting largely focused on homeland security -- addressed at length Commission shortcomings. Sources involved with emergency communications said Thurs. that issues remain, echoing in part Copps’ statements. Copps, sources said, delivered what he viewed as a moderate speech.
Sprint told the FCC it opposed AT&T’s prepaid calling card petition and was “dismayed” by reports that the agency may delay action on it. In an ex parte letter Mon., Sprint said “it strains credulity to argue, as AT&T does, that a prepaid calling card, marketed and sold for the sole purpose of making telephone calls, can be turned into an ‘information’ or ‘enhanced’ service by injecting a commercial message during call set-up.” This message is one that “consumers don’t ask to hear and that only services the purpose of delaying connections to the parties they are calling,” Sprint said. The letter signed by Sprint Vp Richard Juhnke said AT&T’s decision not to pay into the universal service fund (USF) and access charges because it deemed the prepaid calls an information service resulted in customers of other carriers having to make up the USF contributions and LECs being denied the access charges “to which they are lawfully entitled.” If other carriers followed the same logic, the USF would suffer even further, Sprint said. For example, the letter said, Sprint transmits time-of-day information for wireless customers and could program its wireline switches “to interject some irrelevant piece of information [such as] the temperature in downtown Djakarta.” Using AT&T’s argument, “Sprint could legitimately cease all future USF contributions on both wireless and [with the switching change] direct-dialed voice services” and could seek refunds of all prior wireless-related contributions as well.”
SBC said in a July 30 letter to the FCC that AT&T’s exclusive contract with the Defense Dept. (DoD) should be examined. AT&T has petitioned the FCC to have its long distance calling card be classified as an information service rather than a telecom service, which would prevent the carrier from meeting universal service fund and access charges requirements (CD July 26 p1). SBC said AT&T was engaged in “unethical and illegal acts” because it wasn’t collecting the charges on the cards, which are used by military personnel, including in Iraq and Afghanistan. “DoD should hold AT&T to the terms of its procurement contract and/or launch an investigation into whether the representations AT&T made in bidding on that contract, or AT&T’s performance under the contract, violate federal laws and regulations.” SBC said DoD would set a “dangerous precedent” if it gave the contract to suppliers that offer lower prices by violating the law. SBC said AT&T’s threat to raise rates would mask dodging of USF payments. SBC said: “Providers that play by the rules likely will seek a refund of their USF payments or copy AT&T’s charade.” AT&T has said that since the service includes a prerecorded advertisement, it’s an informational service. SBC disagreed. The letter was signed by Paul Mancini, SBC senior vp-asst. gen. counsel.
Wireline and wireless carriers alike opposed reseller TracFone Wireless’s request for universal service funding in N.Y., saying it would add pressure on the Universal Service Fund (USF) without benefits. But public interest groups said the entry of TracFone, which offers prepaid service, would help low-income consumers. TracFone had asked the FCC to give it eligible telecommunications carrier (ETC) status, needed to receive USF support, and to forbear from rules that require a carrier to have facilities of its own to receive that USF support.
States might have to begin thinking about replacing revenue from telecom services with another revenue stream, perhaps the streamlined sales tax, House Judiciary Commercial & Administrative Law Subcommittee Chmn. Cannon (R-Utah) suggested Fri. During Fri.’s hearing on VoIP regulation, Cannon asked many questions about state taxation of VoIP specifically and telecom and Internet taxation generally. In a broad discussion that also touched on the Internet tax moratorium and wireline access regulations, Cannon said VoIP will likely reduce state revenue, even if states get authority to tax it.