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The Changing Landscape of Telecom

During the summer months, and in particular during the Congressional Summer Recess;  the pace of change in governmental interaction with the telecommunications industry usually slows down.  However, this summer there were several developments relating to telecommunications charges and regulation that came during August.

Excise Taxes

As was talked about earlier this summer, the Treasury Department and the Internal Revenue Service (IRS) have put an end to the 1898 federal excise tax on long distance calls.  After that announcement, the IRS then turned its attention to figuring out how to return over three years of “over collected” excise taxes to individuals and businesses in the United States.

Recently, the IRS announced their estimation plans for individual 2006 tax returns.  The next step is to announce the estimation method for companies and charities to claim their over collect taxes.  The formal announcement should be forthcoming in the next a couple of months.

Of course, organizations, which have those 41 months of phone charges ready and available in either hard copy or incorporated as a single database of electronic information, can use the actual excise tax numbers to claim an “exact” refund on their 2006 returns.

California Regulatory Changes

In August, the California Public Utilities Commission (PUC) announced a couple of interesting developments in relation to its telecommunication oversight.  First, the California PUC eased pricing regulatory requirements on some of its largest phone companies.  This has the effect allowing companies, like Verizon and AT&T, to change pricing with only a 30 day notice to customers.  The past requirement of California PUC approval on pricing changes has been removed. 

Also, the California PUC has decided to align its reporting requirements with those of the Federal Communication Commission (FCC).  Again, this decision has the result of making regulatory life, for telecommunications companies doing business in California, a little simpler.

Those changes will still have to be submitted to the California PUC before they are enacted.  However, the key area here is that billing statements and notices will be the primary instrument of billing change notification and not the PUC. 

New Rules?

This month there are two significant due dates for commentary on FCC telecommunication rules and regulation.  The goal of this every two year process is to spur economic competition among telecommunication providers and provide business and individual consumers with additional benefits from either increased competition (ie lower prices) or increased selection (ie better products).  The results of these comments to the FCC should be seen in 2007 in the form of recommendations to alter current telecommunication regulations.

And as a non-election year, this could provide some real changes to way that the telecommunications industry is regulated without election year politics getting in the way of the prospective/possible changes to the following:

 

Watch Dogs

With the end of Universal Service Fund (USF) surcharges on DSL services, many of the largest telecommunication providers decided to enact a similar internal surcharge to keep telecommunication bills near the same amount.  However, the FCC recently “encouraged” both Verizon and BellSouth to reconsider those internal surcharges.   This “encouragement” came in the form of FCC questions relating to the internal surcharges and wondering if they complied with “truthful billing practices”.

While the recent trend is for regulatory pressures to easing on the telecommunications industry, the FCC’s actions with Verizon and BellSouth show that their role as a watchdog organization has not changed.   FCC still has the power, and apparently the will, to keep track of the actions of telecommunication service providers closely.  This will probably continue to be the case in other areas where the FCC has decided to ease regulation or remove government mandated charges.

Conclusion

While none of these actions in and of themselves are major events, they show that the government regulation of the telecommunications industry is taking an interesting course.  First, the Treasury Department and the FCC for various reasons are taking a look at the taxes and surcharges placed on telecommunications services to lower the overall costs of those services.

Next, if California continues its leadership role, other state PUCs should start to ease some of the regulatory processes on telecommunication service providers.  This provides for additional flexibility in terms of pricing changes (up and down) as well the way in which services are offered.

Finally, it appears that if telecommunication service providers stray from the intent of governmental actions, like the removal of surcharges; the agencies involved still take their watchdog responsibilities seriously and will protect the interests of the consumers of those services whether they be individuals or businesses.