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New friends are foes on GI phone calls
New friends are foes on GI phone calls

By Jonathan Kaplan
The Federal Communications Commission (FCC) is likely this week to review a dispute between AT&T and SBC Communications Inc. that has produced a war of letters between lawmakers on Capitol Hill and is further complicated by the pending $16 billion merger of the two telecom giants.
At issue is whether AT&T must pay taxes on prepaid-calling-card phone calls made by U.S. soldiers deployed in Iraq and Afghanistan.
SBC, the buyer in yesterday’s megatakeover, has long insisted that AT&T should not be exempt from paying fees into the Universal Service Fund, a $6.4 billion subsidy for phone service in rural areas and Internet service to schools and libraries.
AT&T counters that if it is forced to do so, it will raise its prices, making GIs’ calls home more expensive. SBC says AT&T owes $160 million.
The fact that SBC yesterday agreed to buy AT&T is not expected to change its stance, at least in the short term.
A well-placed industry source said both companies are expected to continue pressing their agendas at the FCC because they cannot stop and wait for the merger process. It could take the Justice Department and Federal Trade Commission up to 18 months to approve or reject the merger.
If it goes through, the combined company would become the largest telecommunications company in the United States, surpassing Verizon Communications Inc.
AT&T has claimed an exemption because it has said soldiers’ phone calls are “enhanced” because they include information or advertising. “Enhanced” long-distance calls are not subject to the 10 percent intrastate connection fee, which phone companies typically pass along to consumers.
SBC, which provides phone service to 13 states and 50 million people, told the FCC in a July letter of its complaint, calling “AT&T’s blatant attempt to use the welfare of our armed forces and their families to achieve its illegal and improper regulatory objectives … outrageous and despicable.”
Caught up in this are Reps. Curt Weldon (R-Pa.) and Mike Rogers (R-Ala.), siding with AT&T and SBC, respectively.
In a letter being circulated on the Hill but that still has not been sent to the FCC commissioners, Weldon argues that ruling against AT&T would “increase the cost of prepaid calling cards for all those who use these popular cards, including the troops and their families.”
The lawmaker told The Hill: “I’m really taking the troops’ side. We’re going to go to the wall for the troops. As far as I’m concerned, AT&T ought to donate the services, but I’m not out there making AT&T’s case. I don’t want AT&T hiding behind the soldiers. It’s outrageous that we even have this discussion. If the FCC has to take on AT&T, I’ll be behind the FCC all the way.”
Rogers’s letter, which is also still being circulated, states: “We strongly support keeping the costs low for our overseas military personnel [but] we also believe that companies should not be able to dismiss federal rules to gain unfair advantage over potential competitors. … [R]elief should be carried out through legitimate rulemaking or a waiver by the Commission that is available to all carriers.”
In petitions to the FCC commissioners, AT&T has argued that prepaid phone cards that provide information to the caller should not be subject to government fees. AT&T says that because the calls contain information
Last month, Sidley, Austin, Brown & Wood, AT&T’s attorneys, wrote the FCC that because the caller hears a computer-generated commercial before his call is connected, under the current regulatory framework the call should not be subject to access charges and universal-service fees.
In a letter sent last summer to FCC Commissioner Michael Powell, SBC said, “The Commission should deny the AT&T petition because it is legally indefensible and it would perpetuate a scam.”
Sprint’s attorneys argued that “AT&T’s petition just won’t wash” and referred to AT&T’s argument as “an absurd proposition.”
So far, Weldon has persuaded 14 lawmakers to sign his letter, including GOP Reps. Joe Wilson (S.C.), Roscoe Bartlett (Md.), Frank LoBiondo (N.J.), Thelma Drake (Va.), John Kline (Minn.), Jo Ann Davis (Va.), Joe Schwartz (Pa.) and Mike Turner (Ohio) and Democratic Reps. Solmon Ortiz (Texas), Rob Andrews (N.J.), Kendrick Meek (Fla.), Sylvestre Reyes (Texas) and Steve Israel (N.Y.). Madeleine Bordallo, of Guam, has also signed.
Just seven lawmakers have sided with Rogers, who was unavailable for comment.
Some lawmakers have signed both letters, including Wilson and Meek. GOP Reps. Jeff Miller (Fla.), Terry Everett (Ala.) and Walter Jones (N.C.) signed Rogers’s letter.