House Commerce Leaders Question Rural Telcos on Access Disputes
Small rural telcos must answer questions about practices that large carriers call traffic pumping to increase access revenue, Democratic leaders of the House Commerce Committee told the companies in 24 letters sent late Tuesday. The inquiries follow up on October letters (CD Oct 15 p13) to AT&T, Verizon, Qwest and Sprint Nextel. An attorney for addressees of the new letter said he expects the rural carriers to be eager to cooperate.
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“At least two of the carriers’ responses to the Committee’s request reported rate disputes with your company,” wrote Chairman Henry Waxman, D-Calif., Communications Subcommittee Chairman Rick Boucher, D-Va., and Oversight Subcommittee Chairman Bart Stupak, D-Mich. “There are allegations that several of the [rural] companies engaged in practices designed to increase call volumes and access charge revenue do so by providing free calling services for indecent or pornographic content.”
The committee hasn’t concluded that the rural companies “engaged in unlawful or improper conduct,” the chairmen said. “To assist the Committee in its ongoing review of this matter, however, we request your cooperation.” The 24 rural LECs must provide written responses to questions by March 8 and tell committee aides by March 1 whether they'll “provide the information voluntarily.” The chairmen asked a large number of questions about the companies’ businesses, including how much they contribute to the Universal Service Fund and receive from it. The chairmen asked how many customers each carrier has revenue-sharing agreements with and sought details about the deals. They also asked “how much and what percentage” of total revenue comes from access charges related to free chat-line and conference-calling services.
A November draft of a USF revamp bill that Boucher plans included a ban on “access stimulation charges.” That’s defined as “any switched access charge assessed by a local exchange carrier upon a connecting carrier for delivery of telecommunications during which a free or below cost service or product is provided by an entity with which the local exchange carrier has a business, financial, or contractual arrangement relating directly or indirectly to switched access revenues from the offering of such service or product.”
Rural carriers probably will be “anxious to educate Chairman Boucher about the true nature of the disputes,” said Ross Buntrock, an Arent Fox lawyer who represents Great Lakes Communications and some others that received the letter. Big carriers have refused to pay the rural carriers for terminating their calls, and they expect to receive free service, he said. He’s still reviewing the letter and figuring out what information is sought. The National Telecommunications Cooperative Association and the Organization for the Promotion and Advancement of Small Telecommunications Companies, groups that some of the rural telcos which got letters belong to, declined to comment.
Large carriers supported the Commerce Committee inquiry. USTelecom said the rural carriers’ practices violate rules and have imposed hundreds of millions of dollars in costs on long-distance consumers. Qwest praised the committee “for taking steps to gather the information necessary to investigate these unreasonable practices,” said Senior Vice President Steve Davis. “Hopefully, their action will help bring traffic pumping to an end.” The committee is “giving needed attention to this ongoing abuse of access charges in rural areas,” a Sprint spokeswoman said. “We hope that this review of traffic pumping schemes produces needed reform in a manner that is competitive, fair and serves consumers.” AT&T and Verizon declined to comment.