Courts, technology, and markets may help carriers stop wringing hands over ringing up large pay phone bills
Ask not for whom the bell tolls; it tolls for thee." Poet John Donne wrote those words long before the invention of the pay phone, but carrier executives may be forgiven for believing the line was an early marketing slogan of Alexander Graham Bell.
Ever since last October, when the Federal Communications Commission (FCC) slapped a 28.4 cents fee on each call from a pay phone to a toll-free number, motor carriers have been hit with a variety of unexpected, sometimes large, jolts to their phone bills. The impishly nicknamed "pixie charge" or Primary Interexchange Carrier Connection Charge and the universally scorned Universal Service Fee (USF) are now being tacked onto -- or buried inside -- phone bills already laden with a welter of federal, state, and local taxes, as well as fees and charges. Adding to the pain and confusion, some trucking companies that for decades claimed an exemption for common carriers' toll-free service from the federal (and sometimes state) telephone tax are being told that today's "800" services don't fit the 1964-era definition of toll-free. Result: no more tax break.
Still, relief may be, if not a phone call away, reasonably close. As always in trucking, the answer has different beats for different fleets.
First, the FCC may trim the 28.4 cents pay phone fee. On May 15, the U.S. Court of Appeals for the District of Columbia Circuit blasted the FCC, calling its explanation for the rate "plainly inadequate," saying it used an "unreasoned" procedure that resembled "subtracting apples from oranges" and displayed reasoning that is "utterly unhelpful." The Court followed this tongue-lashing by giving the FCC six months to justify or recompute the rate and order refunds if it finds the rate has been too high.
Second, the FCC is rethinking the USF, which has been jacking up long-distance bills by nearly 5% in some cases. The fee is meant to fund school and library connections to the Internet and subsidize some rural phone service. Phone companies are threatening to identify it as a tax on customer's bills, members of Congress are threatening to repeal the FCC's authority to impose it, and the Commission seems to be running for cover.
Third, the market is beginning to offer ways around the pay phone fee that can help some fleets or individual drivers. Park 'N View Inc. has installed specially equipped jacks or "bollards" at some truckstop parking places that provide subscribers with in-cab video, phone, and Internet service.
A consortium organized by SmartStop Inc. and others is signing up truckstops and carriers to use a combination of phones, switches, and "smart cards" to deliver lower long-distance rates without incurring the 28.4 cents fee. Other vendors are working on kiosks or other types of facilities with dedicated phones that avoid the fee.
Fourth, there are more types of phones and phone-like services than ever. At least two new constellations of "LEOs," or low-earth-orbit satellites, will soon offer an alternative, albeit a pricey one, to the current ground-based and geostationary satellite alternatives. Cellular providers are spreading to cover the few remaining gaps in the road network with analog, digital, and personal communications services (PCS). The Hatfield-McCoy-like feud between long-distance and local phone companies may yet produce more choices in both types of service before year-end.
Finally, even if direct phone costs don't go down, the new services might generate revenue or savings elsewhere in the company. In their new book, "Prosperity: The Coming 20-Year Boom and What It Means to You," reporters Bob Davis and David Wessel of The Wall Street Journal devote three pages to how Schneider National uses satellite communications and computers to cut costs and improve productivity.
The bottom line: Phone costs seem to have soared in the past year. Yet the increases have been only a few tenths of a percentage point of operating revenue -- less than most fleets have saved over that time in fuel costs --and the worst may soon be over. Also, many carriers can wring some productivity gains out of better communications services, either directly or by using them to help lower driver turnover.
