FCC Issues Warning on Call Rates : Complaints About Alternative Operator Services Surge

The Federal Communications Commission on Tuesday warned consumers about new companies that are charging telephone callers up to 10 times the rates of the major carriers for operator-assisted long-distance calls.

The FCC’s warning was prompted by a recent surge in complaints about these new alternative operator services, known as AOS companies, said Greg Vogt, chief of the FCC’s telephone enforcement division.

The agency is trying to determine whether the companies are acting legally, he said, but “it is premature to conclude whether there should be any action at the federal level.”

The FCC has begun an inquiry to find out about the companies’ operations and the rates they charge, he said.

“We don’t want to have a knee-jerk reaction that could kill an industry,” he said.

The businesses are competing in a $7-billion-a-year market that until recently was dominated by American Telephone & Telegraph Co. They emerged within the past two years to fill the void left when AT&T; stopped paying commissions to hotels and motels on the long-distance calls made by their guests.

AOS companies serve mainly the transient public in hotels, motels and at pay phones as well as hospitals and universities, handling credit card, collect and third-party billed calls.

Since January, the FCC has received about 260 complaints from people who said they were given no indication that an AOS company was handling their call or that they would be billed at rates other than those of the company whose long-distance credit card they were using. In most cases, the AOS company has refunded the disputed amount, the FCC said.

Billing Contracts

At an establishment served by an AOS company, callers who dial “0” for an operator are routed to the AOS. An operator gets billing information and then sends the call over a line the AOS leases from one of the long-distance carriers, such as AT&T; or MCI Communications.

Many of the callers who get connected to an AOS company are those using a credit card issued by a local Bell phone company or AT&T; since use of those cards require callers to start by dialing “0.” Other companies’ cards require callers to dial a local or 800 number to place their call.

Most of the AOS companies have billing contracts with the Bell companies, which means callers receive the AOS charges along with their monthly local Bell phone bill. Some AOS companies also accept payment by other major credit cards, such as MasterCard and Visa.

The FCC advises that callers ask an operator what company they work for, what rates they will be charged and how they will be billed before placing the call. If they are dissatisfied, they should find another phone, the FCC says.

Several states have begun considering regulation of AOS companies because of complaints and some have issued consumer alerts.

AOS companies say theirs is a new and growing industry to which consumers haven’t yet become accustomed. The major AOS companies say their operators are trained to identify themselves to callers before placing their calls.

Vogt said, however, that some AOS companies can place automated calls, which substitute tones for a live operator to instruct callers on how to proceed with a credit card. There is no federal requirement for AOS companies to identify themselves, he said.

The problems AOS companies present are complex, Vogt said, adding, “we’ve never seen a situation quite like this addressed by the commission.”