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One Call rings up regulatory ire: Carmel telecommmunications firm faces fines, legal action-and increased scrutiny from FCC

October 31, 2005

The Federal Communications Commission is threatening to revoke the operating authority of Carmel telecommunications firm One Call Communications for allegedly failing to remit millions of dollars in federal fees.

In its second action against the firm since 2002, the agency also proposes a $1.1 million fine against One Call and parent OCMC Inc.

The FCC complaint quietly launched in August comes after allegations made last spring by state regulators. The state allegations involved so-called "modem hijacking" of dial-up computer users, whose phone bills were charged for calls they say they never made. A settlement in that case could be announced by Dec. 1, according to the Indiana Office of Utility Consumer Counselor.

The 23-year-old company also is the target of lawsuits in federal court alleging it deceived customers who used operator assistance, socking them with steep charges by the minute.

At issue in the recent FCC case is the "universal service fund," which interstate carriers are required to pay to fund telecommunications improvements in rural and highcost service areas. Some of the money also goes to rural health care and school and library programs.

"For years, OCMC has made irregular and unsatisfactory payments to the USF," states an FCC document. "As a result of this misconduct, OCMC has consistently maintained large overdue balances ... with the result that it now owes more than $2 million."

The commission said the company's refusal to pay is "an egregious offense" that gives it an unfair competitive advantage over competitors who do comply.

"We caution that additional violations of ... the commission's rules could subject OCMC to further enforcement action" that "could take the form of higher monetary forfeitures and/or possible revocation of OCMC's operating authority, including disqualification of OCMC's principals from the provision of any interstate common carrier services."

Company officials were not available to discuss the case. In a written statement, OCMC said it recently responded to the FCC "regarding calculation and payment of USF fees and [we] expect the matter to be resolved favorably. We believe the amount paid to be accurate and that the FCC will also come to that conclusion after review of our response."

Not first brush with regulators

OCMC has avoided major proposed FCC fines in the past.

In 2002, the FCC proposed a $5.1 million fine against the company-at the time the highest proposed fine for operator-service violations. One Call provides operator services that can be accessed through a number of phones in the United States, ranging from airports to hotel rooms to pay phones.

Operator-service firms are supposed to identify themselves when a person dials in to make a collect call. But the FCC alleged that One Call's Opticom unit deliberately didn't do so, in a so-called "fat finger" scheme to take advantage of callers who misdialed while trying to reach other operator services, such as AT&T. A person misdialing 1-800-COLLECT-calling instead 1-800-COOLECT-is connected to Opticom.

One customer complained to the FCC that she was billed $62 for 24 minutes.

The agency conducted its own test, saying Opticom failed to identify itself in 25 of 26 calls investigators placed in Washington, D.C., such as at Reagan National Airport and the L'Enfant Plaza Shopping Mall.

But the Carmel company got off relatively easy, negotiating a consent decree with the FCC in 2003 in which it paid $500,000 instead of $5.1 million. It also agreed to change its practices involving operator services, including an immediate identification when a person places a call.

"Our intensive factual preparation and comprehensive legal presentation resulted in the greatest penalty reduction in any FCC enforcement proceeding up to that time," Frank W. Krogh, an attorney for One Call at Morrison & Foerster in Washington, D.C., states on his Web site.

Even a full fine would have been relatively small for a telecommunications company that had 2003 sales estimated to be more than $270 million.

Back then, according to an industry database, One Call had about 400 employees. However, in a recent statement, the firm said it employs 70 people at its Carmel office.

Product offerings also include discount long-distance and Internet service and phone cards. Recent information about the private company was not available.

Larry Dunigan of Evansville formed One Call in 1982. He sold the company to management in 2002 for an undisclosed price. The reconstituted firm reportedly brought on board former Indiana Bell and IPALCO Enterprises executive Ramon Humke.

Closer to home

Management has been spending time lately fending off local complaints.

Since early this year, it has been in talks with the Indiana Office of Utility Consumer Counselor to resolve complaints by a half-dozen Indiana phone consumers who said they received bills for calls they never authorized, including some to the United Kingdom.

That includes an Avon couple shocked to find an $811 bill from One Call on their SBC phone bill in November 2004.

The Indiana Utility Regulatory Commission has given One Call and the OUCC a Dec. 1 deadline to report progress on a settlement agreement. The state may charge fines of up to $2,500 per violation.

The OUCC said "modem hijacking" most commonly occurs when a person opens an e-mail containing a virus that disconnects his or her computer's modem and reconnects it to a long-distance or international number.

Just how consumers wound up being billed by One Call is unclear; the IURC has not conducted an evidentiary hearing, pending possible resolution by settlement.

"We would prefer [settlement] as opposed to the time and expense of litigation," said Anthony Swinger, spokesman for Indiana Utility Consumer Counselor Susan Macey.

One Call said it has had long-standing security provisions in place to identify and prevent hijackers from accessing its networks.

"We believe the IURC will agree that our protocols are appropriate to identify and curtail the risks of modem hijacking while still allowing consumers to have modemdialed network access to the Internet," the company said in its written statement.

Some of those consumers already have resolved their beef with One Call. Christine Lawrence of Greenfield said she discovered more than $100 in suspicious calls on her bill in 2004, including a 16-minute call to the United Kingdom.

"It took me about six to eight months before I got word back that they dropped the charges," Lawrence said.

Busy in court

Even if the OUCC strikes a settlement with One Call, the company still faces a handful of suits by consumers who misdialed an operator service and reached Opticom.

Norma Kesman of Pocahontas, Ill., filed suit against the company in U.S. District Court in Indianapolis over a collect call she received from her sister in 2002. The sisters say they were unaware the call was being placed through Opticom and that the service did not identify itself as required. Kesman said she was charged $46.41 for an eight-minute call.

"It's really one of those cases that's outrageous," said Robert Dassow, an Indianapolis attorney who represents Kesman in the case alleging fraud and other violations.

"You really don't want to pay $43 for three minutes of service," he said, citing other cases. He is seeking to have the complaint certified as a class-action case. "We're not going away."

One Call also has been racking up complaints elsewhere. The Better Business Bureau in Indianapolis said it has received 485 complaints about the company over the last three years. Over the last 12 months, there have been 290 complaints, with 85 still pending.

Many of the complaints involve modem hijacking and "extremely high rates" on calls made from public telephones. The BBB said One Call responded that calls are billed at rates allowed by tariffs on file with the FCC.

Linda Carmody, who heads the local BBB office, said she's shared the complaint results with state and federal agencies. A company official has met with the BBB, and the company has responded to complaints, she said-most of the time offering a partial refund.

Still, the company has the bureau's lowest rating.
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