Calling Your Neighbor May Cost You
Reader Ruth Skiles of Falls Church recently noticed that the minutes on her prepaid AT&T calling card began rapidly disappearing even though she hadn't made any out-of-state calls. That had never happened before in the four years since she bought the card at Sam's Club. She was used to reloading it with minutes via telehone and paying the same low rate whether she called inside Virginia or out.
So Ruth called AT&T wanting to know why a call to her neighbor was suddenly depleting many more minutes than a call to a friend in Florida. AT&T's answer is a little convoluted, but we'll do our best to lay it out for you.
The in-state rates on prepaid cards shot up because of a recent Federal Communications Commission ruling that is only starting to affect consumers.
In 2005, the FCC ruled that AT&T had illegally avoided $500 million in government and other fees on prepaid long-distance phone cards. As a result, the agency ordered the company and anyone else that offered similar cards, to pay up, prospectively, that is.
Some portion of the fees in question go toward various purposes, including the Universal Service Fund, which supports phone service in sparely populated areas. AT&T had tried to argue that because prepaid card customers--made up in large measure by service members, seniors and low-income families--had to listen to ads before their calls, they weren't subject to those fees.
Among the fees are access costs on in-state calls. AT&T pays access costs to other carriers that carry the beginning and ending leg of a phone call. For whatever reason, those costs are cheaper for interstate calls than they are for intrastate calls.
Still with me?
After some legal wrangling, the FCC's order was adopted in June 2006. AT&T has just begun notifying customers of the new in-state rates. As of Feb. 1, if you buy a AT&T prepaid card at a store or online, the packaging and the AT&T Web site should lay out the rates, said spokeswoman Amanda Ray.
If you have had the same card for years, you're in a slightly different boat. The thing about prepaid cards is that unlike with cellphones or landlines, they don't generate a monthly statement--or any of stream of mail that might include a printed summary of terms and conditions.
AT&T said it plans to tell existing cardholders about the new rates when they buy new minutes. Somehow, though, no one passed this info onto Ruth, who reloaded her card recently. She had to call and nag a customer service rep to disclose that her new rate amounted to 18 cents per minute. (The new rates will vary by card, depending on where it was purchased and the value of the card, Ray said.)
You can, of course, go online and check out one of the "service guides," for terms and conditions and rate info.
The challenge there is understanding what those guides say.
The prepaid phone card service guide says that as of Jan. 10, a card owner in Virginia would lose "five units" per minute talked when making an in-state call, but only one unit per minute talked during a state-to-state call. You lose three units per minute in Maryland and one unit per minute in D.C.
Ray kindly translated this for us as follows: If I call Ruth from Arlington, Va., and we chat for five minutes on my prepaid AT&T calling card, I will have 25 minutes deducted from the card. But if I call her from Florida and we chat for five minutes, I will lose only five minutes.
Sprint and Verizon (which owns MCI) couldn't tell me if their prepaid cards were similarly affected.
The bottom line is if you have a prepaid calling card, check with your carrier by phone or online to see if the FCC ruling has bumped up your in-state rates. You may want to shop for a better deal.
Ruth says the state-to-state rates still make the card worthwhile for her, but she's probably going to lay off using the card for those local gabfests.
Calling all avid prepaid calling card users: Anyone else noticed a sharp uptick in in-state rates?
AT&T spokeswoman Amanda Ray called in with a clarification. Cards in stores now do NOT have the new rate information yet.
"We do honor the details printed on the back of the cards that are currently in stores now. It's when customers recharge those cards they that they would be notified of the new in-state charges (via an automated/interactive message). If they opt to recharge, they would be charged the new in-state rates after that point."
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