Last Summer, a handful of Congressional Democrats launched an inquiry into the “below the line” surcharge and tax billing practices of U.S. telecommunications providers. See https://eshoo.house.gov/press-releases/members-seek-answers-from-leading-us-communications-companies-on-billing-practices/. In a recent letter to FCC Chairman Tom Wheeler, a bipartisan group of Congressmen urged the FCC to investigate carrier billing practices further. See https://thehill.com/blogs/hillicon-valley/technology/199484-members-to-fcc-investigate-sneaky-phone-fees. In their letter to Chairman Wheeler, the Congressmen said that, based on their own experience from the Web sites of companies including AT&T, Century Link, Sprint, T-Mobile, Verizon, and Verizon Wireless, that “consumers cannot easily obtain a total estimate of their first month’s bill, including all taxes, fees and surcharges, prior to entering personal information, such as name, social security number and credit card information. Given that the combination of such charges can add as much as 42 percent to a consumer’s monthly bill, we believe that further examination by the FCC is warranted.”
Consistent with FCC rules and policies, many service providers have adopted Regulatory Cost Recovery fees (or their equivalents) as legitimate means of recouping their regulatory administration expenses; in particular with respect to the costs associated with Universal Service Fund compliance. These legitimate business practices now appear to be under attack by an ill-informed and misguided Congress. Major industry groups, including CTIA-The Wireless Association, have publicly responded to Congress’ letter with rebuttals of the false assumptions evidenced therein.
At this time, we do not believe action is necessary for any provider whose Regulatory Cost Recovery fee practices are reasonable, cost-justified and otherwise defensible as a legitimate cost recovery percentage or fee. However, we caution vigilance in this area due to the increased regulatory and Congressional attention that is being paid to “below the line” billing practices of the telecom industry.
If you are concerned about your company’s ability to justify and defend its Regulatory Cost Recovery fee or other “below the line” surcharge policies, please contact Jonathan S. Marashlian at jsm@commlawgroup.com or 703-714-1313.
