Docket
No. 19129
FEDERAL
COMMUNICATIONS COMMISSION
27
F.C.C.2d 914
RELEASE-NUMBER:
FCC 71-185
March 3, 1971 Released
Adopted February 24, 1971
JUDGES:
BY THE COMMISSION: COMMISSIONER JOHNSON CONCURRING IN PART AND DISSENTING
IN PART AND ISSUING A STATEMENT.
OPINION:
[*914] 1. On
November 20, 1970, American Telephone and Telegraph Company (AT&T) filed proposed
tariff changes, under Transmittal Letter No. 10989, published to become
effective January 19, 1971, that would have increased the interstate long
distance toll telephone (MTT) earnings of the Bell System companies by an
estimated $545 million a year before income taxes and would have produced an
estimated 9 1/2% overall interstate rate of return for such companies.
2. In a letter of January 12,
1971, we requested AT&T to postpone the effective date of these tariff
proposals pending the outcome of an expedited hearing on the lawfulness thereof
and simultaneously granted special permission to the company to file revised
tariffs on not less than 7 days notice, providing for increases in MTT rates
that would produce estimated net earnings for the Bell System, before income
taxes, of not more than $250 million a year. We stated in our letter,
among other things, that such new rates would be suspended and that we would
"invoke the accounting and refund provisions of Section 204 of the Act, so
that in all events the public interest will be protected during and through the
hearing process." (Page 2)
3. AT&T responded to our
letter of January 12, 1971 by letter of January 13, 1971 and agreed to postpone
the effective date of the abovementioned $585 million rate proposal. At
the same time AT&T filed revised tariffs, under T.L. No. 11027 of January
13, 1971, that proposed new MTT rates designed to produce additional Bell
System annual net earnings before income taxes of $250 million. These new
rates were published to become effective on January 21, 1971 under the
aforementioned special permission granted in our letter of January 12, 1971.
4. On January 20, 1971 we
released our order herein suspending the aforementioned $250 million rate
schedules until 12:01 a.m., January 26, 1971. (FCC 71-64) In this order
we included the following clause:
[*915] 6. IT IS
FURTHER ORDERED, That pending the determination of this proceeding, or until
further order of the Commission, the carriers collecting amounts under the
above-mentioned tariff schedules shall keep accurate account of such amounts,
specifying by whom and on whose behalf such amounts were paid except in the
case of sent-paid coin box and hotel guest-initiated toll telephone calls, and
that for the latter classes of users such accounting procedures shall be
established and records maintained as will permit respondents to account for
the revenues collected pursuant to the rates filed on January 14, 1971, for
each class as a whole. Such latter sums will be held for further
disposition as further order of the Commission may direct:
5. On January 25, 1971 there
was filed with us a pleading entitled "Application for Stay of, or
Extension of Time for Effective Date of FCC Order 71-641 (dated January 20,
1971) pending Petition for Reconsideration." This pleading was filed by
the American Telephone Consumers' Council and the United Community Corporation,
Newark, New Jersey (hereinafter ATCC/UCC). It requested the Commission to
postpone indefinitely the effective date of the aforementioned $250 million
tariff revisions in their entirety from January 26, 1971 to such time as the
Commission could rule on a petition for reconsideration to be filed by ATCC/UCC
within ten days. The Trial Staff of the Common Carrier Bureau filed a
"Partial Support of Application for Stay" on January 29, 1971 in
which it opposed the ATCC/UCC request that we postpone the effective date of
the substitute tariffs in their entirety but in which it urged us to postpone
indefinitely that part of such tariff schedules that apply to "sent-paid
coin box and hotel guest-initiated toll telephone calls" pending action on
ATCC/UCC's petition for reconsideration. To date no such petition for
reconsideration has been filed.
6. ATCC/UCC's petition was
filed one day before the original 5-day suspension period was to terminate and
the tariffs were to go into effect. Thus, the petition was not submitted
in sufficient time for consideration prior to the effectiveness of the tariffs
in question. Moreover, the petition is defective in that it was not
served on the party respondents as required by Section 1.211 of our rules, 47
C.F.R. 1.211. We shall therefore dismiss the ATCC/UCC application for
stay. However, the Trial Staff filed a follow-up "Petition for Reconsideration"
on July 29, 1971 and we shall consider its merits.
7. The Petition for
Reconsideration filed by the Trial Staff of the Common Carrier Bureau requests
the Commission to suspend for three months the revised rates only with respect
to sent-paid coin box and hotel guest-initiated calls and to request American
Telephone & Telegraph Company, the filing carrier, to voluntarily agree to
a further suspension of such rates until a final order with regard thereto is
issued in this proceeding. In support of the request, the petition
alleges that our order requires that the carriers collecting amounts under the
revised tariff schedules keep accurate account of such amounts, specifying by
whom and on whose behalf such amounts were paid, except in the case of
sent-paid coin box and hotel guest-initiated calls, and that, accordingly,
these are the only classes of telephone users who cannot receive possible
refunds at the termination of this case. The petition further alleges
that these two classes of users will provide only a small portion of the
increase subject to refund, probably about 2 percent; and that it is only the
least affluent class of users, those who cannot afford [*916] a
telephone, who will find it necessary to depend exclusively on sent-paid coin
box calls. The petition argues that since the effects on the company will
be minimal and since these classes of users cannot be otherwise protected by
possible later individual refunds, the requested relief is "an equitable
solution to what would otherwise be an unfair situation which would provide the
least protection to a class of users (persons without home telephones), upon
whom the potential impact would be relatively most severe." The petition
further suggests that the protective measures requested "would be
consistent with the policy of Section 202(a) of the Act * * * in that these two
unprotected classes of users would be discriminated against and could suffer
'unreasonable prejudice and disadvantage' because of the failure of the accounting
order to provide them with the protection afforded other classes of telephone
users."
8. On February 5, 1971, the
Bell System respondents filed an opposition to both petitions. In their
opposition, respondents contend that the Commission's orders adequately protect
coin box and hotel guest users as classes. They dispute on a factual
basis the assertion that these users represent the least affluent class.
Moreover, they assert that the relief requested would operate as a
discrimination against those users not using coin or hotel phones.
Finally, they contend that the Commission has no authority to suspend a rate
after it has become effective.
9. We do not believe that the
actions requested by ATCC/UCC and the Trial Staff are warranted. Our
reasons for permitting the refiled rates to become effective January 26, 1971,
after a 5-day suspension period, are set forth in our Memorandum Opinion and
Order FCC 71-74, released January 21, 1971. The ATCC/UCC petition
provides no basis for a revision of our earlier determination in this
regard. Further, we do not believe that the partial suspension requested
by the Trial Staff would be appropriate. If we were to suspend
indefinitely the increased rates only as to prepaid coin box and hotel
guest-initiated calls, this would result in such calls being handled for an
indefinite period at substantially lower rates than apply to similar calls made
from residential or business phones. As pointed out in the opposition to
the petitions, as an example.
... the initial period charge at the
rates that are now in effect for a station call in the daytime period from
Washington, D.C. to Pittsburgh, Pa. for sentpaid coin box telephone (and
hotel-guest initiated) calls is $0.85. If the rates for such calls were
rolled back to the level prior to January 26, 1971, the charge would be $0.70,
while the charge for the same call dialed directly would be $0.75. This
would create a distortion in the rate structure whereby the telephone user
could save money by placing an operator-handled coin box call rather than by
dialing directly. * * * Similarly, the initial period charge for a
person-to-person call from Washington to Pittsburgh is $1.35, whether made from
a coin telephone or from a home telephone. If, as the Trial Staff
requests, the sent-paid coin box rates were rolled back to the former level,
the charge for such a person-to-person call would be $1.10 if made from a coin
telephone but would still be $1.35 from a home telephone. Again, a
telephone user could get a more advantageous rate by using a coin box rather
than his home telephone.
Moreover,
if we should later find, after hearing, that the prepaid charges to the
coin-box users and hotel guests were too low, the telephone companies would
have no recourse to recover such underpayments.
[*917] 10. In our
Memorandum Opinion and Order released January 21, 1971 (FCC 71-74) we dealt
more fully with the matters contained in our prior January 20, 1971 order (FCC
71-64). We stated, in paragraph 15 thereof, as follows:
... In response to an inquiry from
the Chief of the Common Carrier Bureau, AT&T indicated, in a letter of
December 1, 1970, that it could institute a procedure for maintenance of
collection record, at minimal cost and complexity, which would assure equitable
treatment to all but coin-box patrons or hotel guests paying for toll
calls. We have been assured that other carriers will also be able to
establish such procedures. According to AT&T the cost of maintaining
individual records for sent paid coin-box calls and for hotel guest calls would
be approximately five times the additional revenue from such users sought by
AT&T in its November 20, 1970 filing. Accordingly, with respect to
those classes of service we provided that accounting procedures be established
sufficient to provide revenue data for the classes as a whole rather than on an
individual user basis. Should the rates ultimately be reduced or modified
as a consequence of this proceeding in such a way as to require further
consideration of the total revenue collected from these user classes, the
carrier shall dispose of such funds as directed by the Commission.
According to AT&T the estimated cost of maintaining the
individual records referred to is approximately $57,000,000, whereas the
associated revenue under the modified rate schedules now in effect is
approximately $7,000,000, or a ratio of approximately 8 to 1. Under such
circumstances, the infeasibility of providing for the potential refunds to
individual users of sent paid coin-box calls and hotel guest-initiated calls in
a manner which would require accounting for each individual call is
apparent. The situation in this respect is analogous to that noted by the
U.S. Court of Appeals for the D.C. Circuit in the Bebchick case when faced with
the prospect of refunds to D.C. Transit riders where it stated:
It is not feasible to require
refunds to be made to individuals who paid the increase. Nevertheless,
the amount realized by Transit from the increase must be utilized for the
benefit of the class who paid it, that is, those who use Transit...
Bebchick v. P.U.C., 318 F. 2d 187, 203 (1963)
Thus, we
have provided for an accounting by the company for the amounts paid by these
classes of users by virtue of the increased charges looking toward a possible refund
to them as a class in a manner best calculated to benefit them as a class.
11. Accordingly, IT IS
ORDERED, That the aforementioned "Application for Stay of, or Extension of
Time for Effective Date of FCC Order 71-64 (dated January 20, 1971) pending Petition
for Reconsideration" IS DISMISSED, and the "Petition for
Reconsideration" by the Trial Staff IS DENIED.
FEDERAL
COMMUNICATIONS COMMISSION, BEN F. WAPLE, Secretary.
DISSENTBY:
JOHNSON (IN PART)
DISSENT:
OPINION OF COMMISSIONER NICHOLAS
JOHNSON, CONCURRING IN PART AND DISSENTING IN PART
I concur in the denial of further
suspension of the entire $250 million ATT rate increase. For the reasons
stated in my concurring opinion at the time the Commission designated this case
for hearing, -- F.C.C. 2d -- (1971), I believe that in the totality of
circumstances of this case, [*918] consumers are adequately
protected by the Commission's accounting order and hearing.
However, I disagree with the
Commission's treatment of our trial staff's proposal that rate increases for
coin-box (pay telephone) calls and hotel guest-initiated telephone calls be
suspended altogether. Our trial staff's concern is that there is no
economic way to protect these consumers if in fact the Commission determines
that the proposed rate increases are unreasonable. It is simply not
practical to keep account of who has made those calls.
Our staff also points out that there
are two considerations which support a complete suspension pending the outcome
of the case. One, the sum is nominal, something around 2% of the total
rate increase. The impact on Bell's revenues if a suspension were made
would be infinitesimal. In addition the equities are strongly on the side
of suspension. Those consumers most likely to have to pay increased rates
-- particularly for coin-box telephones -- are those who often cannot afford
telephones and resort to coin telephones only when calls are absolutely
necessary. As a practical matter there is no way the Commission can
provide relief to the particular consumers if we find the new rates
unreasonable.
In these circumstances I would have
supported the initial efforts of our trial staff as they act to improve the
public interest advocacy in Commission common carrier cases.