Blog Post

FCC Chairman Martin to Telcos: No Blocking Iowa Calls

BREAKING: FCC Chairman Kevin Martin said Thursday that the commission told large telcos to stop blocking calls into numbers for the Iowa-based free calling operations, threatening punitive actions if the carriers didn’t comply.

While the immediate FCC pressure was a victory for the Iowa telcos and Internet calling concerns whose services had been blocked by AT&T and Qwest, left unsolved is the separate question of whether or not the large carriers have to pay up the millions in disputed connection fees into the Iowa-based operations. But Martin, after a scheduled public appearance in Silicon Valley, made it clear that the commission took immediate action against the moves to block or restrict calls, saying they were in violation of FCC rules.

“We actually contacted the companies that were listed in the press [reports] and said our rules prohibit you from blocking consumers’ access to any of the service providers,” Martin said. Martin said the informal communication to the big telcos who were blocking calls was that if they didn’t stop immediately, the commission would start a formal process for legal recourse within days, and “would end up taking action as we saw necessary.”

According to Martin, all the offending telcos responded and said they would stop blocking — sort of. “One had stopped blocking, but we heard complaints the next week that they were restricting access, sort of narrowing the pipe,” said Martin. “We called them back and said, no, no, you can’t artificially degrade [service] either.”

On whether or not the FCC would force AT&T and Qwest to pay disputed access-charge bills, Martin said that was a separate issue, and covered by petitioning processes that might take further time to resolve. “If you have a dispute about the intercarrier compensation rules, you can file petitions, and come to the commission to get redress,” Martin said. “But you can’t just stop letting consumers make those calls.”

More from Martin’s talk with Silicon Valley digerati coming in a later post.

10 Responses to “FCC Chairman Martin to Telcos: No Blocking Iowa Calls”

  1. I find his retirement package, of over $140-Million to be way out of line. The leader of Toyota, the largest and best auto maker in the world, only gets 14 x the annual salary of someone who works on the line, actually making cars.

    Lets face it, the real reason ATT (et al) have their nickers in a snit is because they don’t want to pay, anyone, any recip comp.
    Their Big. Their ATT. Why should they pay?

    The Iowa telcos did NOT break any rules, laws, or regulations. They played by the rules ATT applauded when the telecom act was re-written in 1996.

    Apparently ATT (et al) just assumed no one in Iowa would be smart enough to figure the rules out.

    Too bad for ATT. Make ’em pay.

  2. John Thacker

    Kevin Martin’s predecessors had foresight when they set up the petitioning process for changing exchange rates. If the lecs want higher rates they can’t discontinue IXC access until they get it and it is illegal for the IXC to withhold payment until the exchange rates are changed.

    So the trick, as I’ve heard it, is that small carriers are allowed to either join the NECA (National Exchange Carrier Association) and get its standard exchanges rates for small carriers (based on the overall group statistics), or leave and offer data for its own separate exchange rates. AT&T and the rest allege that the small telcos are leaving the NECA pool to file proposals for higher rates, and then jumping back in the NECA pool when it comes time to calculate new rates. By doing the latter, the telco doesn’t have to file individual statistics; the NECA does so.

    So the small telco can follow a cycle: Two years of being in the NECA pool with no special conferencing or other plan, building up statistics that point towards the need for high exchange rates. Then, leave the pool, use those statistics to justify a high rate and start in with the conference services. Then rejoin the pool before rates get recalculated and begin the process again.

    But when the chairman of ATT gets about 10x the annual revenues of a local Iowa telco, (in his retirement package)

    Odd thing to compare, retirement package (a lifetime thing) and annual revenues. Personally, I’d compare Ed Whitacre’s $17.4 million/year in salary to the $12 million that AT&T owned the suing Iowa companies.

  3. Christian: I totally agree with you. From what I understand the local telcos HAVE already petitioned the FCC about this.
    But the process takes time and ATT (et al) know this. The more time it takes, the more pain inflicted on the local telcos.
    When the local telcos met with the FCC two weeks ago, the FCC should have ordered both payments and traffic to resume.
    Martin has publicly stated he wants to “examine” the recip comp issue. (examine = abolish?)
    The local telcos have said they are willing to negotiate. But when the chairman of ATT gets about 10x the annual revenues of a local Iowa telco, (in his retirement package)
    it appears ATT (and for that matter the FCC) don’t seem inclined to $ettle the matter anytime $oon.

  4. christian

    I agree Jim it is a good thing, however I disagree with the Iowa lecs having settling for future reduced rates. The rates are federally filed tarrifs. If AT&T were allowed to withhold payments, block calls, and file lawsuits to force a reduced rates then they really should be broken up again. That is why the FCC should have (still) stepped in and order them to pay the federally filed termination tarrifs.

    Kevin Martin’s predecessors had foresight when they set up the petitioning process for changing exchange rates. If the lecs want higher rates they can’t discontinue IXC access until they get it and it is illegal for the IXC to withhold payment until the exchange rates are changed.

    What do they think the FCC is going to do? Set some arbitrary date in the past when the exchange rates should have been changed? Are they then going to only apply it to those named in the lawsuit? If the termantion rate is set lower and set in the past are the IXC’s going to beable to demand refunds from every lec nationwide?

    Bottomline withholding this money is illegal. I hope with fines, court fees, and damages that the price tag grows from the 20 million dollars to 220 million dollars (Ed Whitacre’s 2006 salary + 2007 retirement pakage)

  5. While the FCC’s intervention on behalf of new technologies seems to have the consumer’s (that would be me) best interest in mind, I remain confused as to why such intervention is required. Does not common carrier law govern and prevent this behavior?

    The challenge posed by the FCC specifically and by any similar organization in general is that it provides a well-defined target for the lobbyists to focus on and corrupt.

    Nice to see the FCC doing the right thing anyway.

  6. The big news here is tht Martin now says payment issues will be resolved by the FCC and not the Courts.
    ATT et al, could have dodged payment for years, while the case meanders thru the court system.
    Martin, who wants to “revist” the entire recip comp issue, apparently is telling both sides to negotiate a settlement.
    My guess: The Iowa Telcos will be paid all the money they are owed, but will agree to a substantial reduction in future rates.
    All sides, Martin, ATT and the local telcos can then claim “victory”

  7. christian

    Weak Mr. Martin,

    Timeline – call blocking started March 9th, complaints started pouring in to your office March 13th, complaints from the lecs started March 15th, March 31st antitrust lawsuit filed against AT&T as a result of blocking calls, April 9th more lecs added to list of blocked by multiple carriers and we were forced to endure countless arguements by the IXC’s that what the were doing was perfectly legal. So legal that infact they needed to change their use agreements to accomadate. – finally April 29th blocking stopped. Now May 3rd you admit that you had something to do with it and we are suppose to jump up and down about your ability to influence the large carriers. After 7 weeks of blocking you hand down a series of “No, No’s” and a your grounded from TV for an hour.

    Ridiculous, I think you just proved who’s pocket you are in Chairman Kevin Martin.

  8. …provides a fresh new angle on the widely reported and anticipated cost of phone calls marching to zero…an(nother) attack on their sacred turf…the legacy boys never saw coming…