Groans are the noise I am most familiar with when I have to talk to people about regulatory compliance. Lately it is has felt like the subject is surrounded by so much negativity and fear that I wanted to have a little fun with this issue and invite a new voice into our newsletter!
Many of you are familiar with Jonathan Marashlian of The CommLaw Group, head of the firm's Regulatory Practice. I thought he was the perfect person to speak to about the current state of the Prepaid Industry as it relates to regulatory compliance (and just like last year, he will be at the tppExpo in August). I hope you enjoy our informative Q & A:
How have you seen the prepaid industry change over the last several years?
Calling cards literally burst onto the scene in the late 1990s, and by 2005, calling card sales were burgeoning. The low-entry cost and vibrant marketplace for international calling card services invited hundreds of new entrants, which fueled aggressive competition. Aggressive competition, in turn, led to some aggressive practices, both in terms of marketing and the approach to regulatory compliance. Some practices clearly went too far, thus attracting the unwanted attention of government agencies and regulators.
By early 2007, I began noticing a sea of change in the way the prepaid industry, as a whole, approached its regulatory compliance responsibilities. During the course of the ensuing years, the industry started paying the same attention to marketing and consumer protection issues. Today, regulatory and legal compliance isn't the last thing on the minds of prepaid industry executives. It very well may be the first.
Unfortunately, what many are now finding out is that the industry's silence and lack of representation during the formative years of post-1996 Telecom Act competitive telecommunications industry has resultedin a lot of bad regulations and bad decisions. The industry is now finding out that the past 10 plus years of decision making by government agencies, without the slightest input from the prepaid industry, are making it harder and harder for providers to fully comply and remain profitable.
The industry is beginning to recognize that it not only can't hide, it must stand up and have its voice heard. This, too, is a natural part of the evolution and maturation of many new industries throughout the history of American capitalism.
You have put together an Ad Hoc Coalition this year. Can you tell us a little about it and what prompted you to do it?
I spoke earlier about my perception that the prepaid calling services industry awakened to its regulatory obligations after a long slumber. What the industry awakened to, however, was a system created without any of its input. Therefore, the rules, policies, and precedent that exist are not terribly kind to the industry. And when presented with bad law, there are really only three options - grin and bear it, avoid it, or change it. During the last few years, I witnessed too many in this industry doing the first two, and heard too many others giving lip service to "making change."
Given this set of circumstances, our firm decided to do the one thing we believed might work - we pursued the "Field of Dreams" approach. At our own expense, we drafted a Petition seeking Declaratory Rulings to clarify or change certain USAC rules which were deemed particularly harmful to international telecommunications companies. Once the Petition was drafted, we circulated it to clients and non-clients alike, seeking interest and support.
We invited industry participants to offer their support with or without making a financial contribution. By allowing interested parties to stand behind the objective of the Petition without demanding money and without "naming names," we were able to garner enough voluntary contributions and supporting members to establish the Ad Hoc Coalition of International Telecommunications Companies.
Ideally, what outcome would you like to see come from the Coalition?
The immediate objectives of the Coalition are to continue with efforts to pressure the Federal Communications Commission to clarify or amend current rules, so as to level the playing field and eliminate rules that unfairly discriminate against providers of prepaid and other international telecommunications services. Another objective is to begin the process of educating regulatory and governmental agencies about the prepaid calling card industry, starting with the FCC. Overall, it is my sincere hope that we can offer the industry an opportunity to have a voice - either through direct support of the Coalition or by participating in the current FCC proceeding and in future proceedings we are currently working on initiating.
There are many prepaid calling card providers who are frustrated with the uneven playing field today. What advice would you give them when competing with other providers using deceptive marketing practices or "flying under the radar" of the FCC related taxes/fees?
The advice I would give is simple - it's much safer, less stressful, and far more productive to try leveling the field than it is to take unnecessary risks. You level the playing field by gathering your team together,presenting a united front, and pleading your case to the groundskeeper to make alterations!