Billing Q&A with Jim O'Neill

Q—Can you please explain the term LATA and how it affects billing rates?

A—The acronym means Local Access and Transport Area, or the specific geographic area within which a LEC (local exchange carrier) provides service. With a few exceptions, when you call from one number to any other number in the same LATA, the LEC delivers the call over its own facilities, and you are charged a rate that is included in the local tariff. Sometimes, especially in large LATAs, that rate may be mileage-sensitive, meaning the farther away you call, the more you will pay.

When delivering a call across a LATA boundary, the basic rule is that the call must be given to a long-distance company to complete. Once out of the local LATA, rates charged by the long-distance company may vary, depending on whether the call originates and terminates within the same state or originates in one state and terminates in another.

Calls that qualify as inter-LATA/intrastate come under the jurisdiction of a state regulatory body for determination of rates or tariffs. Some states allow the long-distance carrier rates to be mileage-sensitive. Since the passage of the Telecommunications Act of 1996 and the introduction of competition, some states have begun to deregulate rates.

Calls that qualify as inter-LATA/interstate come under the jurisdiction of the FCC. To simplify life for everyone, the FCC established “toll rate averaging” to eliminate mileage-sensitive rates. Under that ruling, for most calls it does not matter whether you are calling an adjacent state or one completely across the lower 48—the per-minute rates will be the same. The obvious exceptions, of course, include Alaska, Hawaii and U.S. territories in the Pacific and Caribbean.

Q—I understand that there are regulations for telephone billing information retention. What are the regulations for the new services such as data networks, Internet, etc.

A—Good question! Retention regulations are generally defined by the states. As most of the existing regulations were written long ago, you will probably find that they focus on voice traffic delivered through the public switched network. If you wish to learn more about state telecommunications regulations and have Internet access, go to www.naruc.org (the National Association of Regulatory Utility Commissioners). That site maintains links to all the member regulatory agencies. Many states have posted their regulations on the Internet. While others have not, all can be accessed through the state Web sites. At the very least you will find how to contact the agencies in the states where you do business. Some of the regulations define how telephone companies must provide service; some are tax regulations; and some establish customer satisfaction guidelines and rules.

Q—What taxes apply to local service, and do they vary by state?

A—Yes, they vary by state, and many different telecommunications taxes have been defined by one state or another. See the www.naruc.com Web site mentioned in the preceding answer for a way to find out how particular states regulate the industry. A recent TeleStrategies seminar on telecommunications taxation identified a list of some 40 different taxes that might apply. Hopefully, no one state will ever try to impose all of them—but we never know, do we?

Q—What are the tax implications for companies that offer discounted services to employees?

A—In my experience, none. Taxes are computed on revenue, so if you don’t charge for something, normally no tax is due. Some states may have a different view; so, as with all tax-related questions, check the state regulations and get the final decision for action from your legal counsel or tax attorney.

Q—How does the network recognize a roamer making a call?

A—Each mobile service center uses databases that list all the valid home telephone numbers and the prefixes of all the market’s roaming partners. If a call attempt is from any roamer, the prefix database is checked to see if a partnership is in effect for that prefix. If not, the roamer is generally routed to a third-party service selected by the serving carrier that will allow individual calls via credit card.