Prepaid Press features interview with Pete Pattullo, CEO of NetworkIP and ACITC organizer

The following article was published in The Prepaid Press on February 1, 2011.  The full interview can be found here: http://www.prepaid-press.com/wordpress/?page_id=4238.

We have talked before with Pete Pattullo, whose day job is the CEO of   NetworkIP. But, this time, Pete is talking to us as the working leader   of the Ad Hoc Coalition of International Telecommunications Companies.   This group of industry leaders has been meeting to address a very   serious problem, the advocacy of the prepaid calling card industry at   the FCC. The last industry association, the IPCA, folded in 2005. Since   then, the only advocacy on the part of prepaid calling card providers at   the FCC has been by big companies who are more intent on the interests   of their company than the industry at large. So, Pete and Jonathan   Marashlian started enlisting other independent companies to come   together. What Pete has accomplished at the FCC is preliminary, but very   important. Listen to how he sees this unfolding.

GR: Tell us what you have been doing at the FCC regarding USF.

PP:  We've been working with the FCC about the direction of the USF   (Universal Service Fund). They originally committed to have something in   December. We are looking now at, maybe February or March for an NPRM   (Notice of Proposed Rule Making).  When that does come out, that's going   to be an opportunity for not only us, but hopefully other parts of the   industry to chime in and give them feedback on their position before it   becomes final.

GR: What are you expecting them to do in the NPRM?

PP: They are tasked with making USF more equal across the board, not   just our industry, but all industries; how you assess it, how you   administer it, how it applies to all the different situations within the   telecom industry as a whole. Make sure that no specific part of the   industry gets penalized or is unfairly treated. That's a big task. That   isn't just changing a couple of things.

What we have seen in our discussions is that they are really stepping   back, and relooking at the whole picture. What's worked, what hasn't   worked, and what do we do next? They are trying to redo all that and   make it the best they can for this moment in time.

GR: Let's break that down. What has not worked?

PP: If you look at how USAC has applied the rules, they will be the   first to tell you that it is very fuzzy, trying to apply the rules to   the prepaid long distance industry. Who are the players, and who does it   really apply to? Who is supposed to be paid? Those are all unclear.   They are trying to get that better defined, to make USAC's life easier.   Hopefully then everybody will know who is supposed to pay and who is   not.

GR: Wasn't there an issue involving the USAC forms?

PP: Oh yes, there certainly is not, from our perspective, continuity   between the FCC rules and the USAC forms. They are not really together   at this point, and that's one of the things they have to solve. It's   still broke and we, NetworkIP, have been an example of that, but they   continue to have those problems.

GR: So you expect that to be fixed in the upcoming NPRM?

PP: I don't think it will solve it by one magic bullet, but   hopefully they will make the rules clearer, especially as those rules   apply to our industry. Making it clearer for everybody, including USAC.

GR: Have you talked to USAC about this?

PP: Yes, last year we talked to USAC directly about our specific   audit and, during that meeting, their reply was, 'well, someone has to   pay.'

GR: And, they don't care who.

PP: They don't care who, they really don't, just someone has to pay.   I repeated that to the FCC and they all shook their heads. They have   assured me that is not the real case. They are not all on the same page,   they don't have clear enough instructions to apply the rules, and so   they are doing the best they think they can, but at the end of the day,   they are making all of our lives miserable.

GR: Wow, that sounds like a pretty broken process. How do you think the industry should approach that?

PP: I think, even if you take NetworkIP's experience over the last   14 years, there are times when we have done nothing. We've put our head   in the sand and let somebody else worry about it. We've attempted to   hire an attorney and let them handle it, and tell us when we need to do   something. We found that did not work for us either. It's come down to   being proactive and engaged with the FCC.

GR: How has that worked for you?

PP: Some of the previous attorneys we have had in years past were   telling us we could not meet with the FCC, that is not something that is   done. We found that to be very bad advice. So, the attorneys we use now   have been more proactive in helping us talk directly to the FCC. In the   last year, I have met with the FCC six times, every couple of months.   Only about an hour each time, but I feel that time spent has advanced my   understanding of their problems and them understanding ours. It has   resolved not only our specific problems, but how this affects the entire   industry.

GR: Who have you been meeting with?

PP: The Wireline Competition Bureau, everybody from the Chief of the   Wireline Competition Bureau to the Deputy Chief and other staff. A lot   of this has been educating and dialoging directly with the Bureau.

GR: The Bureau will then issue an NPRM to the Commission itself, right?

PP: Yes, the Commission does not have the facts yet, and they are   not the ones that are going to determine the facts, so getting with the   Bureau and getting them to understand the industry helps them to write   the NPRM so the Commission makes the right decisions.

GR: On a scale of 1 to 10, 1 being the lowest, how knowledgeable were the people at the FCC about the calling card industry?

PP: I believe they are all intelligent people. But, there is no way   they can understand our industry as well as we do. I would give them a   score of about 2 when we started, and I believe that they are now at   about a 7 or 8.

GR: That's a pretty significant improvement.

PP: It has improved significantly, and they better understand our   industry now. You do that through dialog. When you are in discussions   with them, and you bring up something that you have discussed before,   and they answer that intelligently back with the right responses, then   you know they are getting it. You can only do that through dialog, not   emails back and forth.

GR: When you first started the dialogs, how did it go?

PP:  The first couple of meetings we were just educating them about   the industry. One of the things we noted, as well, is that other large   prepaid companies had met with the same people at the FCC, but we took   it more from a neutral point of view. They even commented that the other   people were more self-serving. They are coming in, touting their own   compliance, which does not further the education of the Commission. When   you come in as self-serving, they tend to write you off. People think   you can trick them that way, but I don't believe that. I believe these   are intelligent people and the issue is to educate them about the   industry as a whole, and then get down to your specific case and deal   with the facts. It's surprising how many companies come in with their   attorneys and do the opposite.

GR: Tell me a little about the Coalition.

PP: One of the things we realized in the meetings was, that although   we were sitting there having a good dialog, their response was, 'well,   what does the rest of the industry think?' You can try to portray that   as best you can, but at the end of the day, you need to have other   people in the room. About halfway through last year, I realized that as   much as we are trying to educate, which will ultimately help us and   everybody else, we really needed more people in the room. Jonathan   (Marashlian) had the Ad Hoc Coalition going, so we invited him into   those meetings, but also tried to expand that to other industry   executives.

We have a group now that has met a couple of times. We are really   waiting for the FCC NPRM. After we get that, we will sit down as a group   and see what we agree and disagree on. What the FCC, down to the   Wireline Chief, has accepted is that we are willing to bring a group of   executives from the industry and sit down with them and give them our   feedback. They [the FCC] have closed off meetings and they are doing   their writing and then they will release that. That will be another   opportunity for us to sit down with them, review it and give our   feedback.

GR: How important is it that you are representing more than one company? Is that a positive to the FCC?

PP: I believe so. They have given us very positive feedback about   that. They have expressed their appreciation more than once, personally   and in writing. I truly believe they appreciate our help. Everybody I   have met there wants to do the right thing, but without information,   what can they do? Without information, they don't even understand the   key elements to this industry, how the ecosystem works. It's hard to put   into place a policy or rules that don't break the system.

I'm shocked that no one else has done this, all this time. Most of the   industry is afraid to lift their head, that the FCC will come after   them. Or, their lawyers are dancing, billing costly hours, hoping that   they find some loophole. We had an expensive lesson in the past, with   the payphone issue. But, when we got everybody in the room after the   fact, we realized that if we had only met earlier, we probably could   have had a different outcome. Proactive engagement is critical if you   trying to run a real company.

GR: What should the industry do next, once this is over?

PP: Have a voice. If there are other companies that are out there   that want to have a voice, take my advice and get active. They either   get in touch with me and join our meetings and join the Coalition and be   part of that, out front, or anonymously.

Pete Pattullo is a Member of Ad Hoc Coalition of International   Telecommunications Companies, and CEO of NetworkIP.  Visit NetworkIP   online at www.networkip.net.    If you need more information on the Coalition or want to become   involved, go to the TPP website for information, or send an email to editor@prepaid-press.com.

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