FCC Concerned About Pay Phone Compensation, Gillett Assures Operators
The FCC is ready to handle payphone-compensation problems as needed, Wireline Bureau Chief Sharon Gillett told a commission symposium looking at ways to streamline and improve the dial-around compensation process for payphone calls. A dial-around call is made using an access code or toll-free number instead of coins. “Payphones are very important today, as ever, particularly in times of emergency or for consumers who don’t have access to any other form of wireline or wireless telephone service,” Gillett said. Section 276 of the Communications Act requires payphone service providers (PSPs) be compensated fairly for calls, she noted: “Our challenge today is to ensure that PSPs are compensated for all completed calls, including dial-around calls.”
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Current FCC payphone rules have been in effect since 2003, Gillett said. “Some parties have raised concerns with how they actually work in practice today,” she said. “It’s a good time now to have a discussion on our payphone compensation process with those who are most familiar with its operation."
Voluntary actions may be enough to deal with the problems raised at the meeting, Deputy Wireline Bureau Chief Cathy Seidel said. “Please don’t just focus on what ultimately might be the topic in a rulemaking or some other activity later on, but think of other things that you might suggest the commission consider or that you all consider,” she said. “We know how important payphones are.” But Seidel added: “We've heard anecdotally of other scenarios where some carriers have been asked to compensate for calls that they don’t believe that they should be having to compensate for. So we know that the process is complex. We know that there are multiple sides to the issue."
Payphone operators are not being compensated for a substantial percentage of calls made using their phones, said Albert Kramer of Dickstein Shapiro, counsel to the American Public Communications Council (APCC). “We are losing an enormous number of calls,” he said. “We looked at this system and said this system isn’t working. ... There is a substantial amount of dial-around that has been left on the table, and again I want to emphasize that is just what we can see.”
A June 28 consent decree by the Enforcement Bureau with Qwest over complaints about payphone reimbursement showed that “tracking was not going on in any manner that was consistent,” Kramer said. “We know there was a lot of lost traffic there,” he said. “We know that Qwest is not unique.” The order is at http://xrl.us/bhuqpe.
"Dial-around is very important,” said Jim Kelly, APCC chairman and the president of a company that provides payphones at airports. “I'm finding that we weren’t paid for probably 25 to 35 percent of calls that flow through our high-volume phones at major airports throughout the country.” The number of payphones in the U.S. has fallen from more than 2.5 million to fewer than 500,000, Kelly said, partly because of compensation problems. “It’s very disconcerting,” he said. “I recognize that many people have cellphones and they kind of push us out of the way. But there are still 5 or 6 million ... households who don’t have cellphones or home phones. There are people who work in this building who need to use a payphone to call home.” Payphones can be a “last line of defense” in a major emergency like the 9/11 attacks, Kelly added. “Cellphones aren’t there,” he said. “Payphones always work.”
USTelecom Vice President Glenn Reynolds conceded that the landscape for payphones has changed significantly since the Telecom Act was approved in 1996. “One of the fundamental concerns of the ‘96 Act was ensuring that Bell operating companies were not unfairly discriminating in favor of their own payphones,” he said. “Now, of course, the number of Bell-owned or even ILEC-owned payphones has gone down dramatically. Two of my Bell members, at least, are completely out of the business. AT&T and Qwest, I understand, don’t have any payphones whatsoever. My other three Bell operating companies still have some, but the number of those payphones continues to decline.” Four of the top 10 local service providers aren’t even members of USTelecom -- they're cable operators, Reynolds noted. “Those competitive local providers would need to be part of any discussion of how best to approach these issues.”
USTelecom members generally are following the rules in compensating payphone companies for calls, Reynolds said. He argued against adding obligations on carriers to guarantee that payments are made. “If there is an issue about compliance with the rules, then it is incumbent on the commission, as it is in any area, to aggressively enforce those rules,” he said. “Obviously, if member companies are not following the rules then they get what they deserve.” As far as carriers can tell, the system is working, Reynolds said. “Obviously, it’s is not an easy business,” he said. “And I'm sure it’s not getting any easier. But it’s hard to understand why the major burdens of whatever system changes might be suggested should end up falling on the LEC, as a LEC, in a business where it’s neither sort of the causer or the primary beneficiary of the service that’s being offered.”