APPPA concerned about pending FCC decision

The American PrePaid Phonecall Association voiced concern that a potential decision by the Federal Communications Commission would have an adverse impact on the end users of prepaid long-distance phone cards.

The APPPA said the FCC is weighing whether to uphold a ruling made by its Wireline Competition Bureau to allow pay phone providers to bill prepaid card providers for calls made by prepaid card users from pay phones, even if the calls were not completed. The end result would be prepaid companies would have to offset the costs of the pay phone charges by raising the price of phone cards for consumers, according to the APPPA.

"If this ruling is affirmed by the full commission, the impact will be the greatest on those who can afford it the least," said Gene Retske, Executive Director of the APPPA. "Prepaid providers will have to pay for calls long after their ability to appropriately charge the customer who made the call."

One calling card company executive told the APPPA that the average pay phone charge is about 99 cents per call when a consumer uses a prepaid phone card. But if the FCC approves the bureau's ruling, prepaid phone card providers would have to increase the costs on calling cards to offset the costs of the pay phone charges, which could raise the price of calling cards by as much as 40 percent.

The APPPA is especially concerned about the retroactive billing of prepaid card providers by pay phone operators. Retske told Selling Prepaid that, prior to 1996, pay phone operators were not compensated by prepaid card providers for the use of their pay phone equipment and networks, since toll-free 800 calls are not charged at pay phones. But the landscape has changed.

"In essence, today the prepaid providers have to pay the pay phone folks for calls that are completed using their phones," Retske said. "Of course, only the prepaid provider knows if the calls were successful or not. So, we have a very imperfect system that only satisfies lawyers and, presumably, regulators."

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