Passage of AT&T Backed Legislation Could Adversely Affect DTC Communications

February 18, 2011
Dwayne Page

A battle is brewing between large telecommunications corporations and smaller telephone companies and cooperatives over intrastate access fees and the Tennessee Legislature is apparently where the matter will be decided.

However, if the smaller companies should lose the fight, Les Greer, CEO of DTC Communications, said the local telephone cooperative could lose as much as $700,000 per year in revenue, which could be "devastating" to the company.

At issue is legislation that would force the small telephone companies, like DTC Communications, to reduce the access fees they charge long-distance companies. An access charge is what a long distance company pays to a local telephone company to complete a call.

According to a published report in the Tennessee Journal, many small telephone companies charge about 7½ cents a minute and use the revenue to subsidize basic residential and business rates. For some, the access charges generate 20% of their revenue.

Styled the "Uniform Access, Competition, and Consumer Fairness Act of 2011," the bill would make intrastate access charges the same as the much cheaper interstate charges, phasing in the reduction over four years.

Besides AT&T and Comcast, the coalition of long-distance providers seeking a phased reduction includes Charter, Sprint, Verizon, and TW Telecom, according to the report.

In a prepared statement, which appears on the DTC Website, Greer , COO Gary Hancock and members of the DTC Board said passage of this bill could result in increased telephone and Internet rates, a loss of jobs in the community, and lost opportunities to attract new, high paying jobs. They are urging the general public, including DTC subscribers, to contact their state representatives and senators asking them to oppose this legislation.

State Senator Mae Beavers told WJLE Friday that she stands with the telephone cooperatives in her district and will oppose this bill. "I have four small telephone cooperatives in my district. We don't think that the bill which AT &T has filed is fair to our small telephone companies and it's an issue we're going to take a serious look at. I've filed some legislation on behalf of the small telephone cooperatives. It's a caption bill in case we need it. It's hard for some of these small companies to go up against AT&T sometimes especially with their (AT & T) 30 lobbyists which they've hired already. So that's going to be a huge issue especially for those of us that have the small telephone cooperatives in our districts and the customers are really going to be paying out the ying yang if the AT&T legislation passes."

The DTC statement is as follows:

"Telecommunications competitors and regulators have long acknowledged that it is more expensive to build and maintain rural networks, which also have lower revenue potential because they serve more sparsely populated areas. In fact, those are the very reasons why AT&T and its coalition partners consistently choose not to serve you. Small cooperatives like ours were created to fill the gap and provide services in rural areas that the larger companies do not serve".

"Now, AT&T and other large long distance carriers are asking the legislature to arbitrarily reduce one of our key revenue sources, the "intrastate access fee," which is the fee that long distance carriers pay when calls from their customers use our network to connect to people in our community."

"This fee provides significant revenue to communications cooperatives like ours. If AT&T and the telecom giants are successful, we estimate lost revenue to DTC will be $700,000 per year."

"This is a reduction in revenue that no small cooperative or independent phone company can absorb. That's why this legislation will cost jobs, force rate increases, and make it difficult for us to invest in continued infrastructure improvements like broadband. Deferring these investments will stifle new job creation in our community and impact essential services we provide to small businesses, hospitals, local governments, emergency services and law enforcement."

"AT&T wants you to believe that reducing this fee will benefit consumers, but there is nothing in the bill that requires the large corporations to pass their "savings" through to the customer. In fact, based on AT&T's actions over the past few years, we have no reason to believe Tennesseans will see any benefit. In all likelihood, reductions in AT&T's costs will go directly to AT&T's bottom line while communities like ours pay the price."

"It is critical that lawmakers hear from you on this subject. We are asking all of you – individuals, businesses and local officials – to let your voice be heard in Nashville.. Please take a moment today to write, call and e-mail these individuals today!"

The statement concludes "We cannot outspend AT&T and its coalition partners to ensure your interests are protected, but together, we can outwork them. If you have questions, please feel free to call our office. "

According to the Tennessee Journal, the coalition of long distance providers have scoffed at the notion that smaller telephone companies will be devastated, pointing out that eight cooperatives serving Tennessee have received a combined $315 million in federal broadband stimulus grants and that four of the small telephone exchange companies are owned by Wisconsin-based TDS, which took in $5.1 billion in 2008 and is the parent company of U.S. Cellular.

The big companies further argue that the high access charges enable the rural providers to offer basic service rates lower than those in other areas, at the expense of city and suburban customers who indirectly pay the charges.

The bill is scheduled to go before committees of the state House and Senate for the first time on Tuesday, February 22nd and Wednesday, February 23rd.

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