Pay Phone Companies Ask FCC for Emergency USF Cash
The American Public Communications Council will ask the FCC for an emergency subsidy from Universal Service Fund cash to help keep its pay phone company members from collapsing, the group told us. The emergency petition will be accompanied by a petition for rulemaking asking the commission to consider using its Lifeline program to subsidize pay phones. The petitions could come as early as Monday afternoon, APCC President Willard Nichols said.
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The number of pay phones in the U.S. has declined precipitously since the mid-1990s. The pay phone companies will claim in their petitions that the collapse has been accelerated by the commission’s 2008 decision to subsidize wireless phones for the poor. “The commission did so without considering the devastating and unforeseen impact on payphone deployment nationwide that its actions could have,” the APCC said in a draft petition. There were about 700,000 pay phones in the U.S. in 2008 and about 475,000 now, the APCC said. In recent years, major telecom companies have exited the pay phone business.
With big companies out of the market, independent pay phone operators have to rely on LECs to collect on calls not made using coins, said APCC lawyer Bert Carp of Williams & Jensen. “They're not going after this the way they would have if they owned the pay phones,” he said of the LECs. “And you can’t blame them for that. They don’t go after marginal users.” Despite the decline of the industry, pay phones are still the only link to modern telecommunications for millions of poor Americans, the APCC said. Pay phone operators need about $60 million to “stop the bleeding,” said Bert Carp of Williams & Jensen, representing the APCC before the commission. In the long run, the FCC should take “a thoughtful look here,” Carp said.
Currently, two wireless companies are subsidized with Lifeline -- Virgin Mobile and TracFone, APCC said. The Lifeline subsidy is worth about $385 million per year, Nichols said. Several other companies have cleared regulatory hurdles to obtain the subsidy, APCC claimed in its draft review. “APCC does not take issue with the commission’s decision to subsidize mobile phone service,” the group said in its draft petition. “Having done so, however, the commission must act immediately to ameliorate the unintended impact that decision has had on payphones and payphone users.”
APCC misunderstands the purpose of USF, said TracFone attorney Mitchell Brecher of Greenberg Traurig. “The purpose of the Universal Service Fund is to provide support for people who need telecom support,” he said. “It’s not to subsidize manufacturers or service providers.” A lawyer for a Lifeline-subsidized wireless company said APCC’s petitions were “like the buggy-whip guys suing General Motors.”