CORRECT(10/13):Lawmakers Query Big Phone Cos On Rural Connection Rates
October 15 2009 - 9:49AM
Dow Jones News
Senior House lawmakers on Wednesday sought help from some of the
country's biggest phone companies to investigate what the companies
say are abuses of costly connection charges in rural areas.
AT&T Inc. (T), Verizon Communications Inc. (VZ), Sprint
Nextel Corp. (S), and Qwest Communications International Inc. (Q)
all have accused some small phone companies of taking advantage of
high connection rates by partnering with adult chat lines or free
conference call centers to drive more phone traffic through their
systems.
The issue has caught fire in the wake of recent disclosures that
Google Inc. (GOOG) is blocking those expensive calls through it's
Google Voice phone management service. Google has the highest
profile of Internet companies offering phone services engaged in
call blocking.
House Energy and Commerce Committee Chairman Henry Waxman,
D-Calif., sent a letter to Verizon, Sprint, AT&T, and Qwest
letters Wednesday asking for details about their disputes with
rural phone companies over inflated call volume to high-cost
areas.
Telecommunications Subcommittee Chairman Rick Boucher, D-Va.,
and Oversight Subcommittee Chairman Bart Stupak, D-Mich., also
signed the letter.
Other lawmakers representing rural areas have said blocking
calls to high-cost numbers could hurt their constituents.
The Iowa Utilities Board recently found that eight local phone
carriers had engaged in a practice designed to increase access
charge revenues by 10,000% using free adult chat lines.
Large phone companies cheered the Iowa board's decision, while
the rural carriers said the board overstepped its jurisdiction. The
Federal Communications Commission is reviewing the board's
decision.
The call blocking issue appears ripe for regulation. Two years
ago, the Federal Communications Commission has expressly forbidden
larger phone companies like AT&T and Verizon from blocking
calls to high-cost numbers.
The FCC recently asked Google how its phone service restricts
calls to certain numbers and sought input on how Google's new media
product should fit within current telecom law.
Waxman's letter said any investigation into blocked calls should
also examine "the existing access charge regime and purported
abuses of that system."
Large carriers have for years asked the FCC to address practices
they dub "traffic pumping." They have also taken their complaints
to court, saying rural companies are making a mint off the
practice.
Waxman's letter asks the company executives whether they have
withheld payment from the smaller rural companies as a part of
their legal disputes. The rural companies involved the lawsuits say
they are owed tens of millions in unpaid access charges.
Ross Buntrock, an attorney representing the rural carriers,
welcomed the letter because he said it acknowledges that his
clients aren't getting paid.
"Don't let companies like AT&T and Qwest starve rural
carriers out of existence by refusing to play by the rules that
exist," Buntrock said, noting that there's nothing illegal about
routing calls through high cost areas. Buntrock is with the
Washington, D.C. law firm Arent Fox.
Verizon and Sprint both cheered the inquiry from Waxman and his
colleagues. "We welcome any effort to address the harmful traffic
pumping schemes that have plagued the industry for the last several
years, and we look forward to responding to the questions from
members of Congress," said Verizon spokesman David Fish.
Sprint Senior Vice President Vonya B. McCann said, "Excessive
access rates are the root cause for many of the industry's
problems, including traffic pumping schemes."
AT&T spokesman Michael Balmoris said AT&T is happy to
assist the lawmakers in their investigation. "We are especially
eager to provide members of Congress with information related to
[Internet-based phone] providers who are still blocking calls with
impunity," he said.
Qwest Senior Vice President of Public Policy, Steve Davis, said
Qwest is pleased to cooperate with the inquiry. "We encourage
Congress to make similar requests for information from the
companies engaged in traffic pumping," he said.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263;
fawn.johnson@dowjones.com