A 20% Increase In Prepaid Calling Cards?

[jeffrey]

If you buy AT&T prepaid calling cards (these are sold through partners such as Wal-Mart and Costco at rates as low as about 3 cents a minute), you may soon see a 20% increase in costs due to a Federal Communications Commission (FCC) staff proposal to make AT&T pay extra fees to connect the calls. If it takes effect, other prepaid phone card companies could be hit with similar rate increases.

What is at dispute are universal service fees. The government levies universal service fees on long-distance calls to subsidize phone service in rural areas. Long-distance companies pay local phone companies access charges to connect calls. AT&T claims it should not have to pay approximately $160 million in universal service fees because its prepaid calling card provides an "information service," rather than a "telecommunications service."




To complicating the issue is a resolution passed by Congress last year which orders the FCC not to take action which would raise calling card rates for military personnel. While currently a FCC staff proposal, the FCC's five commissioners will likely vote on the proposal within the next few weeks.