TELECOM Digest OnLine - Sorted: USTA Sends Strange Letter to Wal-Mart

USTA Sends Strange Letter to Wal-Mart

Jack Decker (Decker@address)
Fri, 24 Dec 2004 12:32:59 -0500

I don't know what they are putting in the water coolers at the United
States Telecom Association (USTA), but this is just strange. ANYONE
would half a brain would want to try to avoid the cushy little access
charge scheme that the independent phone companies have set up for
themselves, and I don't think there's a long distance company on the
planet that hasn't tried to reduce the charges they pay to local phone
companies by any legal means possible (and by some methods of
questionable legality, but still, when you have are really, really
idiotic system of compensation you have to expect things like that,
given that the independent phone companies have somehow managed to
manipulate the laws to their own benefit).

What is so, well, just plain strange about this is that the USTA would
make such an appeal to Wal-Mart and try to wrap themselves in the flag
while doing so. A long time ago, I used to think that the small phone
companies were the good guys (and a very few still are) but when I see
things like this, I am starting to think they are mostly becoming just
as bad as the old Bell System. Here's the press release the USTA
posted on their web site (a further comment follows the release):

Wednesday, December 22, 2004

CONTACT: Allison Remsen

Telecom Association CEO Urges Wal-Mart and SAM'S CLUB To Disassociate
>From AT&T's Phone Card Scheme.

Scheme Pads AT&T's Bottom Line at the Expense of Rural Communities

WASHINGTON, D.C. Today, the President and CEO of the United States
Telecom Association (USTA) sent a letter to the CEOs of Wal-Mart and
SAMS CLUB urging the two companies to disassociate themselves from
a scheme where AT&T exploits Wal-Mart and SAMS CLUB customers'
goodwill for American troops to pad AT&T's bottom line in a
controversial phone card gimmick that is currently under review by the
Federal Communications Commission.

"Knowing Wal-Mart and SAMS CLUB'S commitment to delivering value and
service in rural America, I am writing to share my concern that your
customers and your brands are being exploited by a company seeking
public relations 'cover' for its scandalous business practices,
which are currently under review by the Federal Communications
Commission," explained Walter B. McCormick, Jr., President and CEO
of USTA. If this activity continues, "the result for rural
telecommunications and for the nation's commitment to affordable,
reliable access to a dial tone is devastating. To date, AT&T has
admitted to avoiding more than $500 million in obligations owed to
help maintain rural telecom networks and universal service.

"In this latest attempt to avoid paying what it owes, AT&T has
employed a two-part scheme. In the first part, AT&T claims that
because it briefly diverts long-distance calls between two towns in
the same state to an out-of-state 800 platform, the company can avail
itself of the lower rates carriers charge for interstate calls rather
than paying the higher rates owed to local telecom providers for
intrastate calls. The second part of the scheme involves playing a
brief audio clip promoting companies like Wal-Mart and SAMS
CLUB. AT&T claims that by including this brief audio clip, calls
placed using these cards are no longer phone calls but are instead
'enhanced' services which have no obligation to support
universal service, the joint industry fund that ensures affordable,
reliable telecommunications services for rural and fixed-income
Americans as well as for connecting schools and libraries to the

The letter explains that while hiding behind the flag for its own
financial gain, AT&T has blocked rivals from donating free calls to
military families. Also, this latest scheme raises consumer phone
bills and undermines affordable, reliable telecommunications in rural

"This is a case of for-profit patriotism, and it stands squarely at
odds with what our member companies understand to be the core values
of Wal-Mart and SAMS CLUB," explained McCormick. "We urge
you to disassociate Wal-Mart and SAMS CLUB from AT&T's
unconscionable refusal to meet its obligations to rural
telecommunications and its cynical exploitation of the goodwill of all
Americans toward our troops and their families."

To view the full text of the letter, go to [Actually it
is at ]


About USTA

USTA is the premier trade association representing service providers
and suppliers for the telecom industry. USTA's 1,200 member
companies offer a wide range of services, including local exchange,
long distance, wireless, Internet and cable television service.

[The aforementioned further comment:]

So, this is a trade association trying to engage in protectionism for
its members, just the same as when trade associations of plumbers or
electricians or whatever try to get laws passed that would bar
homeowners from doing their own plumbing or wiring. Of course, many
homeowners just ignore such laws when they do get passed, and it
doesn't surprise me that long distance companies and others would try
to get around usurious and ridiculous access charges that the small
phone companies somehow feel they are entitled to, this often after
collecting ridiculously high monthly rates from their customers. I'm
certainly not saying that either AT&T or Wal-Mart is on the side of
the angels, so to speak, but to try and make this an issue of
patriotism when it is really an issue of money and greed is reaching
pretty low.

Also, whether the USTA wants to admit it or not, the fact that a call
is routed outside of a state can make it interstate. I recall when
Merit/Michnet (not sure which moniker they were using at the time) set
up their network of dialup access numbers back in the early 90's.
Most of their numbers were in Michigan but they also had an access
point in Washington, D.C. and another in Chicago (if I recall
correctly). The whole point of having those two access points was
that under the law it made the entire network an interstate network,
thereby reducing their costs. Maybe a legal loophole, but what
organization or business doesn't take advantage of any legal loophole
they come across that will save them money?

Now, this may be a case of "a pox on both your houses", because the
letter does state this:

"AT&T has used its position as a U.S. military contractor to block
rivals from donating free calls to our military families. As you
likely are aware, AT&T has an exclusive contract with the
U.S. military. In a formal filing with the FCC, Sprint recounted that
AT&T used its role to bar U.S. military personnel from using free
calling cards that Sprint had distributed to troops in Iraq and
elsewhere. While AT&T's 'free' minutes for the troops only
accrue when your customers donate their purchased minutes, the company
actively ensured our troops never received no-strings-attached
donations. The clear message: Good-faith giving should not come at the
expense of AT&T's bottom line."

Now if this is true, it is also reprehensible, and those who have read
this list for a while know that I generally don't have a high opinion
of AT&T anyway (nor of Sprint, for that matter), but note that this is
dragging in an unrelated issue. But to be fair about it, I would have
to see AT&T's response, because frankly, I don't believe much of what
the USTA is saying in this letter. Basically what it appears that the
USTA is trying to do is get Wal-Mart to act as an enforcement arm for
the companies they represent -- is it because their appeals to the FCC
and to many state commissions to do their dirty work have fallen on
deaf ears of late? Why they think Wal-Mart would want to get involved
in this is beyond me; after all, Wal-Mart is a user of telephone
service, and I'm sure that if they give this a moment's consideration
they will realize that high access charges also affect their bottom

Hopefully whoever receives this letter at Wal-Mart will either
promptly file it in the paper shredder, or else send a response
telling the USTA to take a flying leap. It is not patriotic to gouge
telephone users, and it's certainly not patriotic to tie the issue of
access charges to the issue of free phone cards. This letter reminds
me of something that a social activist group might write to a company
to try and get them to use paper instead of plastic, or to save the
spotted owls, but the USTA isn't any social action group with high
ideals - it is a trade organization trying to protect and enhance the
bottom line of its members. So in that context, this letter is just

All of the above (except for the press release and the excerpt from
the letter) is just my opinion, of course. But we really need access
charge reform and it is organizations like the USTA that are standing
in the way, and I for one would be just as happy to see them get run
over (figuratively speaking) because they represent the old way of
doing things, which basically amounts to gouging telephone users for
every cent they can get (again my opinion).

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