Aug. 4, 2006

CTIA is asking the FCC to clarify recent universal-service rules that have sparked a puzzling situation.

Specifically, the FCC has accused the wireless industry of not fully reporting its toll revenues, and by implication not paying its full share of universal-service contributions.

“Commercial mobile radio services carriers recognize their obligation to contribute to universal service, and have complied in good faith with prior FCC rules regarding the reporting and allocating of toll revenues and the performance of traffic studies.

CTIA respectfully asks the commission to clarify the standards that it intends to apply to these issues on a going-forward basis and recognize that new standards for these issues should not be applied retroactively,” said Paul Garnett, CTIA assistant vice president of regulatory affairs.

In its universal-service contribution rules, the FCC uses the term “toll.”

The distinction doesn’t apply to wireless revenue since much of it is charged on bucket plans. However, the FCC apparently expects wireless carriers to report toll revenue.

“This has become a puzzle and has been difficult to figure how carriers report their revenues and how that fits the way wireless customers pay for wireless services,” said Michael Altschul, CTIA senior vice president and general counsel.

Rather than asking the FCC to clarify or reconsider its most recent rules, which it adopted in June, CTIA filed a petition for declaratory ruling because the confusion stems from a series of orders.

The FCC released a rather harsh order establishing the new rules in June, charging that wireless carriers reported only $1.3 billion in toll revenues in 2004, compared to Census Bureau estimates that wireless carriers earned $7.1 billion in long-distance revenues that year.

The wireless industry is also concerned that the FCC plans to probe how wireless carriers have reported toll revenues in past years, and assess additional charges based on this re-examination. The FCC has not made an announcement on retroactive charges.

“Overall, it would be grossly inequitable and unjust to apply any new direction on toll revenue reporting retroactively.

Wireless carriers’ practice of applying the safe harbor or traffic studies to all of their revenues is supported by FCC rules.

Any change thus would represent an abrupt departure from well-established practice, and upset substantial reliance interest.

Perhaps more importantly, retroactive application of different toll-revenue allocation requirements would impose a substantial burden on carriers that reported their revenues in reliance on the commission rules.

This could potentially subject them to contribution obligations for prior periods which they may be unable to recover from their customers, given the agency’s restrictions on universal-service fund line items,” said Garnett.

Source: RCR News