Posted: 02/1999

Dial-Around Compensation Services Arrive for Both Sides of the Coin
By Jennifer Knapp

Dial-around compensation (DAC)–the reimbursement of payphone service providers (PSPs)
for dial-around and toll-free calls placed at a payphone–has been a reality for more than
two years.

While the Federal Communica-tions Commission (FCC) has determined how much–28.4
cents–carriers and calling card providers must pay PSPs for the use of their phones, no
system was instituted for the tracking and disbursement of these funds.

With the number of obligated carriers estimated at about 700, and the number of PSPs
estimated at about 2,500, the creation of tracking software systems as well as billing and
collections services has become a necessary evil.

While the 28.4-cent compensation plan remains the solution du jour (see info below),
there are advocates for the transition from the carrier-pays system to a caller-pays
system. A caller-pays model, however, is not likely to fly in our lifetime, says Bruce
Renard, executive vice president of regulatory affairs and general counsel for Miami-based
People’s Telephone Co. The key reason for this, he explains, is that the "800 concept
was developed with the idea that businesses could pay for calls from their customers as a
form of value-added customer service."

And congressional leaders have made it clear that the "political backlash from
changing such a system would be immense," he says.

Some enterprising firms already have reached this conclusion and have launched DAC
services to assist companies on both sides of the compensation equation.

For Payphone Providers

The American Public Communi-cations Council (APCC) has developed a DAC program
dedicated to PSPs who must file for their DAC with long distance carriers, local carriers,
switch-based resellers and prepaid phone card companies. APCC Services will file for
compensation each quarter on a payphone provider’s behalf. PSPs must use a software system
provided by APCC to submit the necessary filing information. The cost to the PSP is
between 35 cents and 85 cents per payphone per month, depending on the PSP’s status as an
APCC member or state payphone association member. For companies with more than 25
payphones, there is a $250 setup fee.

Also available for PSPs is a DAC auditing system from Lake Success, N.Y.-based AMNEX
Inc. This web-based system tracks 800, 101 and 950 dial-around call counts by
interexchange carrier (IXC) and month. Based on this information, the system calculates
expected IXC quarterly compensation and compares these amounts with actual carrier
payments.

Main features of the system include online reporting of expected amount and payment
comparison by IXC, expected amount and payment comparison by automatic number
identification (ANI) and analysis of call counts by call type and duration.

As of press time, the AMNEX system was still in the marketing development stage, so
cost for the system had not been disclosed. Rollout is expected early this year.

For IXCs

Billing Concepts Inc., a San Antonio-based billing service provider, has added
dial-around tracking for IXCs to its billing services’ roster.

IXCs can provide Billing Concepts with their complete call records from which Billing
Concepts will identify payphone owners and validate the payphone ownership with local
exchange carrier (LEC) information. Based on this data, Billing Concepts reports back to
IXCs how much they owe and to whom they owe it.

"Then [our carrier customers] provide the funds back to us on the accounts they
actually want us to pay, and we make the payments on their behalf with all the supporting
documentation–not only to the people receiving the payments, but also back to the
carriers so they can comply with FCC reporting regulations," says Joy Lindsey,
director of sales for Billing Concepts.

This service includes database management, calculation of DAC obligations, PSP invoice
processing, customer service, dispute resolution and management reports.

Billing Concepts charges a $5,000 implementation fee for its DAC services, plus a
per-record fee ranging from 2 cents to 4 cents depending on the number of records
processed per month.

IXCs also have support at their fingertips from a new centralized database service,
created by Ramsey, N.J.-based TelcoSolutions Inc. in conjunction with the unofficially
named per-call compensation forum, which includes APCC, Ameritech Payphone Services, Bell
Atlantic Corp., BellSouth Public Communications, Data Net Systems, GTE Public
Communications and US WEST Public Access Solutions and Smart Card Division. The service,
which is provided at no cost to payers of DAC, offers PSP billing addresses and ANIs of
payphone lines in LEC territories on CD-ROM.

"Today [carriers] get a variety of diskettes in a variety of formats from the
payphone providers around the country," explains Rodger McDowall, general manager of
Ameritech Payphone Services. "This [CD] provides the telephone numbers of the
payphones in one format. It also provides a separate CD of all the payphone lines that the
LECs are provisioning for the payphone providers … so those can be verified."

For Prepaid Calling Card Providers

The International Telecard Association (ITA), representing the worldwide telecard
industry, announced last October it would bring Atlanta-based Atlantax Systems Inc.’s DAC
clearinghouse services–called A/DACC–to the ITA membership.

A/DACC processes call detail records (CDRs) provided by prepaid calling card companies
and matches these against telephone numbers owned by PSPs. The system then calculates the
total obligation of a participating telecard company monthly and reports this back to the
company via the Internet.

At the same time, A/DACC reckons the dial-around compensation due each PSP. Once funds
have been received in a clearing account from all telecard companies, the system
automatically transfers each PSP’s total compensation into its respective bank accounts.
The system also sends each PSP an accounting of its receipts via the Internet.

Cost for the A/DACC service is 1 cent per CDR per month, plus a one-time setup fee of
$1,000 for ITA members and $1,500 for non-ITA members.

Jennifer Knapp is news editor for PHONE+ Magazine.

Payphone Compensation Rate Under Review Again
By Kim Sunderland

At press time in late December, the Federal Communications Commission (FCC) was
preparing its response to a May 15, 1998, order by the District of Columbia Circuit Court
of Appeals to explain how the FCC derived the 28.4-cent rate that interexchange carriers
(IXCs) must compensate payphone service providers (PSPs) for dial-around calls made from
their payphones.

FCC Attorney Glenn Reynolds would not discuss the FCC’s response, which was due to the
court Jan. 8.

While the court order left in place the commission’s compensation requirements, it also
said those requirements are subject to adjustment at a later date. The court order said
that the commission "never explained why a market-based rate for coinless calls could
be derived by subtracting costs from a rate charged for coin calls."

This isn’t the first time the court and the FCC have tangled on this issue. Reynolds
explained that Common Carrier Docket No. 98-126 implemented Sec. 276 of the
Telecommunications Act of 1996, with most of the provisions intended to deregulate
payphones owned by local exchange carriers (LECs), putting them on the same competitive
footing as independent payphones. The final order was released in November 1996.

In July 1997, the D.C. Circuit granted in part and denied in part petitions for review
of the Payphone Orders. "The court overturned our determination in the Payphone
Orders regarding several issues," Reynolds said of the decisions, including the
following:

In August 1997, the commission sought comment on the remanded and vacated issues, and
in October 1997, the FCC released a Second Report and Order addressing the issue of the
amount of the per-call default compensation rate. The commission established that
"IXCs would be required to pay PSPs a rate of 28.4 cents per compensable call in the
absence of a negotiated agreement between the parties for a different rate." On Dec.
1, 1997, 11 parties filed petitions for reconsideration of that order.

In March 1998, the Common Carrier Bureau then released an order clarifying the
requirement that LECs provide coding digits to IXCs that enable IXCs to identify calls
originating from payphones so that IXCs can pay per-call compensation.

In April 1998, the FCC released orders that clarify how IXCs that are unable to pay
per-call compensation to PSPs without coding digits may pay per-phone compensation until
coding digits are available.

But the industry wasn’t happy with that either, and several entities have submitted to
the FCC what they believe are more fair rates, such as 11 cents from AT&T Corp.,
between 6 cents and 11 cents from Galaxy Long Distance and 10 cents from the
Telecommunications Resellers Association (TRA).