WASHINGTON-Paging service providers that want the Federal Communications Commission to institute a coin-in-the-box mechanism for toll-free calls placed at pay phones may have a tough time convincing the major players involved in the pay-phone compensation debate, according to sources at the FCC, the Payphone Communications Alliance and AT&T Corp.
A federal appeals court here told the FCC May 15 to re-evaluate its decision on pay-phone compensation but left in place current rules that require pay-phone operators to be paid 28.4 cents for each toll-free call placed from a pay phone. Many paging companies offer toll-free numbers to customers. When a customer chooses this service, people are able to place calls to the subscriber’s pager without incurring long-distance or other charges.
The decision from the U.S. Court of Appeals for the District of Columbia Circuit involves FCC rules dating back to 1996 that require end users to compensate pay-phone operators 35 cents for each coinless call. The FCC instituted the rules after Congress said pay-phone owners should be compensated for “each and every” call placed from a pay phone. Prior to the Telecommunications Act of 1996, pay-phone operators were not compensated for coinless calls.
This is the second pay-phone compensation decision from the D.C. Appeals Court. The same court last year told the FCC to re-evaluate the 35 cents and base the compensation amount on market forces.
In the FCC’s response to the court’s first decision, the agency last October reset the compensation amount to 28.4 cents. Several parties, including the Personal Communications Industry Association, sued again disputing the market-rate calculation. The appeals court’s second decision keeps current rules in place, which makes pay-phone owners happy because they finally will be compensated for coinless calls. Long-distance companies have been collecting the compensation amount but have not paid the pay-phone owners while the case was in court.
The court did not rule in either decision whether the coin-in-box scheme would have been more appropriate than the compensation plan that was instituted. This muddies the waters for PCIA, which believes that by not acting, the court left open the possibility the FCC could scrap its compensation scheme and start over.
By contrast, the Payphone Communications Alliance, which represents pay-phone owners, believes that the current compensation scheme should stay in place. Under that plan, end users-including paging companies-pay the long-distance carrier, and the long-distance carrier negotiates with the pay-phone company and makes the final compensation payment.
The long-distance industry believes that pay-phone operators deserve to be fairly compensated for coinless calls but strongly disputes the 28.4 cents rate. The FCC arrived at this amount by subtracting what it believed were the costs of operating a pay phone, 6.6 cents, from the compensation amount of 35 cents. This calculation is skewed, the long-distance companies say, noting the FCC should have started from zero and worked up.
On the coin-in-the-box proposal, AT&T spokesman Mike Cuno said if the FCC institutes its plan and starts at zero, then coin-in-the-box will not work. If, on the other hand, the FCC keeps in place its market-rate scheme, then a coin-in-the-box mechanism may be more appropriate to ensure that competition between pay phones begins to develop, Cuno said.
