October 6, 2003

The FCC has released a new decision on the “tollgate” issue – the question of who has the obligation to compensate payphone service providers (“PSPs”) for dial-around calls routed to switch-based resellers (“SBRs”) such as prepaid card service providers.   This question was remanded by the court of appeals earlier this year.

While the FCC decided to revert to a “SBR-pays” rule, rejecting APCC’s efforts to maintain the “first interexchange carrier (“IXC”) pays” rule adopted in 2001, the FCC imposed significant new data disclosure, certification, and audit requirements on SBRs as well as other carriers.  The FCC adopted virtually all of the safeguards strongly advocated by APCC during a month of heavy last minute lobbying by all parties.  By imposing these requirements, the decision should not only improve PSPs’ ability to police and collect SBRs’ payments, but also may enable PSPs to negotiate alternative “first IXC pays” arrangements with most SBRs. 

            The new SBR-pays rule and the data, certification and audit requirements are expected to become effective April 1, 2004, although the exact effective date will depend on how soon the Office of Management and Budget gives final approval to the data collection requirements.  In the interim, the FCC has readopted its current first-IXC-pays rule – which was vacated by the court of appeals effective September 30 -- to allow for a transition period to the new rule.

Tollgate Order

Gary L. Pace
Managing Director

Michigan Pay Telephone Association