Is AT&T relying on casuistry and wordplay to keep money from America’s poor schoolchildren? Totally. (You expected any less from a telco?) But that misses the scheme’s sheer genius. AT&T is engaging in a classic political maneuver called “share the pain.”
You might have missed the recent kerfuffle over AT&T’s calling cards and the Universal Service Fund.
Briefly: AT&T sells calling cards that include pre-recorded commercial messages. AT&T argues that phone calls from these cards comprise “information services” – which are exempt from USF fees. That makes the calls less expensive for consumers and also reduces the amount AT&T owes to the USF by as much as $160 million. (The USF, you’ll recall, is the pool of cash used to subsidize telephone and Internet access to schools and libraries.)
It gets better. When the FCC objected, AT&T responded by adding an um, informational message urging users to call the FCC and lobby Congress. Consumers obliged, flooding the commission and Congress with demands to “keep phone costs low.” Because many of these cards were used by members of the armed forces and their families, the complaints got attention. Most recently, Sen. Ted Stevens (R-Alaska) publicly admonished AT&T, saying the carrier had engaged in a “disinformation campaign” and vowing to force it to pay back the money.
So what’s up? Is AT&T relying on casuistry and wordplay to keep money from America’s poor schoolchildren?
Totally. (You expected any less from a telco?) But that misses the scheme’s sheer genius. AT&T is engaging in a classic political maneuver called “share the pain.”
See, the real issue is that the USF is one of the worst-designed systems in history. It’s essentially an invisible tax administered by a jaw-droppingly incompetent quasi-governmental agency called the Universal Service Administrative Co (USAC). As I’ve written, last summer the FCC hauled the USAC up short for shoddy accounting practices – resulting in a nationwide funding crisis for the very schools and libraries it was supposed to be helping.
Moreover, USF’s taxes are based not on which services you provide, but who you are. Interestingly, VoIP upstart Vonage is not asked to contribute – even though Vonage offers long-distance calls, the same as AT&T. That’s because VoIP is considered an “information service.” Bottom line: The FCC wants “telcos” (AT&T, MCI, Sprint) to pay to the USF while “information service providers” like Vonage remain exempt.
My best guess: This is a little trap laid by AT&T to get this issue in front of the courts. It’s a bit too late now (with the SBC merger and all ), but I think the way AT&T wanted to play this out was to have the courts pursue the question of what, precisely, an information service is and move from that into a discussion of who ought and ought not to pay into the USF funds.
Both are highly relevant because the USF funds are being paid by the putatively “rich telcos,” which are, you might have noticed, all in the process of getting acquired and/or going bankrupt.
And you’ve probably already guessed the punchline: When all the telcos have gone away, who is the USAC going to go after next? Hope Vonage is layering up the lawyers.
