The prospect of calling party pays looks like a dying one in the United States, as the Federal Communications Commission appears to be backing away from the issue, and many wonder if the service is needed in light of nationwide rate plans.
The wireless industry in Europe grew up with CPP, the ability to bill the party who calls a wireless phone, as a way to provide interconnection. CPP is credited with strong growth in Europe because it encourages customers to leave their phones turned on, driving more minutes of use. For years, many in the U.S. wireless industry believed CPP would drive penetration in the United States as well.
A year ago, CPP had gained some momentum when the FCC said the service should be a national and optional service, meaning states could not regulate the service’s rates.
But more needs to be done. The wireless industry believes the FCC needs to step in on the issue with definitive rules on such things as notification and billing so that state regulators-which generally don’t control wireless-don’t set up 50 sets of rules.
Today, an item sits on the 8th floor, waiting for three more votes. The Cellular Telecommunications Industry Association is asking the commission to adopt a uniform way to inform people of the charges they’ll incur if they call a mobile phone.
The situation seems no different than it was in February, when it was clear there were not enough votes within the FCC to pass the item. Earlier this year, the item was edited and revised and then recirculated about three weeks ago. Some commissioners remain concerned about consumer outrage because they will have to pay for calls.
“We’re never going to have a truly competitive market when we’re competing with carriers that don’t have to pay for incoming calls,” said Brian Fontes, senior vice president for policy and administration with CTIA, which has aggressively pushed for CPP standards. “The failure to move this thing forward does consumers an injustice and isn’t helping companies that want to roll out this service.”
A number of carriers have tested the service over the years, and many have eliminated it altogether because of issues like notification and billing. AirTouch Cellular, now Verizon Wireless, has offered the service in selected markets for many years to a highly targeted segment of the market. Verizon is offering CPP to all its customers in Delaware in order to better understand the demand for it. The carrier reports several thousand customers.
“We certainly can offer calling party pays today, but it has to be piecemeal to regulations in different states and regulations with billing,” said Jonathan Chambers, vice president of regulatory affairs with Sprint PCS. “In Europe, it’s done as a way of interconnection. Carriers here will have to provide their own billing for small charges and would have to include a message.”
Verizon is charging Delaware customers 25 cents plus long-distance charges if customers are calling from a Bell Atlantic landline phone. If people call from another area of the country, Verizon is charging 35 cents per minute plus long-distance charges to a credit card. Delaware customers traveling outside of the state don’t have access to CPP service.
Many landline companies like SBC Communications Inc., which controls about one-third of the local exchange carrier market, aren’t zealous about helping wireless operators like Sprint PCS, which don’t have a local landline presence, charge for CPP calls. The FCC won’t intervene on the billing issue, said CTIA’s Fontes, but carriers can contract with third-party billing agents, he said.
But paying for billing agents costs money, and carriers don’t want to send out bills to one customer for 25 cents. Some LECs also refuse casual billing relationships, such as dial-around services charged to a credit card, said Chambers.
“To get the service to work, you have to have universal acceptance,” said Tole Hart, senior analyst with Dataquest. “People want a system that works across the whole area.”
Has CPP’s time passed?
AT&T Wireless Services Inc. supports CTIA’s proposal with the FCC, but pricing plans like the company’s wildly popular Digital One Rate plan has made it a nonissue for customers, said Ken Woo, AT&T Wireless’ director of corporate communications.
“Two years ago, it made sense,” said Herschel Shosteck, chief executive officer and president of Herschel Shosteck Associates Ltd. “With Digital One Rate coming in, it’s just not worth it. You have the bucket plans perceived at 7 to 12 cents, but carriers are offering so many minutes in the buckets, that everyone is getting more than they need … With the complexity of billing and that shift to the bucket paradigm, carriers don’t want to mess with [CPP].”
Verizon stresses that CPP service is another pricing option it wants to offer the customer. Today, its tests in Delaware indicate the service is equally popular among all customer pricing segments, including prepaid customers, said Verizon spokeswoman Nancy Stark.
“We think CPP is the way that wireless is truly going to mirror the behavior of how landline has always worked,” said Stark. “We really wanted to get some experience under our belt to evaluate the service-how customers react and how many are taking it. We’re still going through that evaluation process … It’s largely going to be determined by regulatory and national standards and customer marketplace reaction.”
U.S. wireless service penetration is about 35 percent today. What happens when it moves to 50 percent and beyond? Carriers will have to find new ways to attract different customers. CPP may become an attractive service to tap into the lower end of the market, said Dataquest’s Hart.
“Some people may say that it is an idea whose time has come and gone,” said Chambers. “We can’t know because we’ve never tried it in a way it would be a viable service option,”
While CTIA says it continues to push the CPP issue with the FCC, most carriers appear less enamored these days. It simply isn’t worth spending the money on lobbying.
“We’re not pushing and pushing for calling party pays because I see the handwriting on the wall,” said Chambers. “I think part of the hang up at the FCC is that they are not hearing from a lot of companies saying they need to get this item out. You either have companies that aren’t interested or you have companies who don’t think the FCC’s order as is would be sufficient.”
