AT&T's Calling Card: Reach Out and Pitch Someone

Sprint, which has a calling-card business of its own and pays intrastate and Universal Fund fees, is particularly irked.

"AT&T's petition just won't wash. It hinges on the absurd proposition that transmission of unsolicited 'stored information' during call setup can transform a telecommunications service into an 'information service,' " Sprint told the FCC. It also threatened that if AT&T gets its way, Sprint would seek refunds from the Universal Service Fund as far back as 1998 for its prepaid calling cards.

Rep. John D. Dingell (D-Mich.), ranking minority member on the Energy and Commerce Committee, wrote to the FCC in June, asking the agency to act immediately on the AT&T petition and throw the book at the company.

"And when the Commission finds -- as it must -- that AT&T's actions have violated the Commission's rules, it should require not only that AT&T pay intrastate access charges and make USF payments . . . but also that AT&T make such payments retroactively to the date on which it implemented its self-help cost-avoidance scheme," the letter said.

AT&T, meanwhile, has used the calling cards to lobby its point. The Department of Defense, the United Service Organizations and members of Congress who want to keep calling-card rates low have gotten involved. The Defense Department has a special interest in the price of the cards since Congress authorized it to provide prepaid calling cards or other telecommunications support of up to $40 per month for service members.

"Should AT&T raise their prices for prepaid calling cards, this benefit would be eroded. We request that the impact on military personnel be considered in the Commission's proceedings," said a July 23 letter from Charles S. Abell, principal deputy in the Office of the Undersecretary of Defense, to the FCC.

AT&T said Wal-Mart asked it place a pre-recorded message on the cards, urging users to object to the extra charges. "To tell the White House you want pre-paid card rates to stay low, please call 800-696-6322," said the message that card users heard on July 19.

"If we don't do it, someone will come in behind us and take that business," AT&T's Quinn said. There are dozens of smaller companies that have sprung up to provide the calling card service, and many of them are structured not to pay the fees that AT&T feels it should not have to pay, either.

On July 2, FCC Chairman Michael K. Powell wrote back to Dingell, saying: "I expect that Order to be released in the near future. As a general matter, the burden is on carriers to offer their services in a manner that complies with the Commission's rules. A carrier that provides a service . . . that violates Commission rules may be subject to forfeitures or other enforcement measures."

AT&T's opponents said the lobbying caused the FCC to table the item after it appeared in July that at least two of the five commissioners, including Powell, would vote against AT&T.

FCC spokesman David H. Fiske said the delay wasn't an attempt to push the controversy past the November election. "During the review of the item, a number of additional legal and factual issues were raised and the staff is working on those issues. The item will be recirculated [for a vote] when those issues are resolved," Fiske said.