State, Rural Groups Say All AT&T Calling Cards Should Be Regulated

The Feb. ruling was in response to an AT&T petition seeking a ruling that the company didn’t have to pay universal service and intrastate access charges on revenue from its calling card service. The FCC ruled the company had to make those payments because its card wasn’t an information service. AT&T’s original calling card included advertising messages geared to the card’s sponsor. One new version lets customers listen to additional information or perform additional functions before listening to the advertising message. Another transports calls over AT&T’s IP backbone.

AT&T’s new cards may have enhancements but they're still used for “one predominant purpose -- to make telephone calls,” said the Independent Telephone & Telecom Alliance, National Telecom Co-op Assn., OPASTCO and Western Telecom Alliance. “Classifying either of these prepaid calling card service variations as information services would significantly exacerbate the opportunities for regulatory arbitrage under the existing intercarrier compensation regimes,” the groups said. Making such a classification “would be opening the floodgates for all prepaid calling card service providers to avoid universal service assessments and access charge obligations,” the filing said.

The National Assn. of State Utility Consumer Advocates (NASUCA) said “there are no differences between the 2 new AT&T variants and the original calling card service significant enough to disturb and Commission’s finding that the service is a telecommunications service.” NASUCA said AT&T’s 2nd “variant” may use the Internet “as an incidental part of their transport” but that doesn’t make it an information service. NASUCA also recommended that both AT&T variants should be “segregated into interstate and intrastate calls and should be [regulated] under both jurisdictions.”

The N.Y. State Dept. of Public Service (DPS) said the FCC should classify the prepaid cards as a telecom service and “the only circumstances under which the [FCC] may assert exclusive jurisdiction over such services would be where it is impossible to separate the intrastate and interstate components of regulation.” In fact, the state regulators said, even if the FCC decides the cards offer an information service, “we disagree with the Commission’s presumption that [the cards] would be automatically subject to exclusive federal jurisdiction.” The DPS said the FCC regulates information services under its “ancillary authority” but the U.S. Supreme Court has said ancillary jurisdiction can’t be used “to override [the Telecom Act’s] reservation of explicit state authority over intrastate communications. Therefore the Commission may not assert exclusive jurisdictional authority over a communications service solely on the basis of that service having been classified as an information service.”

The FCC also asked if the recent Vonage order (CD Nov 10 p1) had any relevance to determining jurisdiction over intrastate prepaid calling cards. The N.Y. State DPS said ‘no': “That order expressly applied to services exhibiting certain basic characteristics including… a requirement for a broadband connection from the user’s location and a need for Internet protocol-enabled customer premises equipment. Existing prepaid calling card services require neither.” NASUCA agreed: “The fact that AT&T’s second variant and similar services uses the Internet as an incidental part of their transport does not bring them into the ambit of Vonage-like services, which depend entirely on the Internet.” The FCC in that order found Vonage to be an interstate service not subject to state regulation.