The California PUC has ordered TracFone Wireless, Inc. to pay $24,425,262.48 in past due user fees and public purpose program surcharges, including interest. The decision finds that penalties are not warranted.
In order to fund important Commission programs, all telecommunications companies regulated by the Commission are required to pay user fees and public purpose program surcharges on all intrastate call revenue. Generally, user fees and public purpose program surcharges are collected from the end-user by the carrier and then remitted to the Commission. TracFone, a prepaid wireless carrier operating in California, did not collect or remit user fees (from 2004 through 2012) or purpose program surcharges (from at least 2000 through 2012).
The Commission initiated this investigation in 2009. In its defense, TracFone relied primarily on two arguments: (1) that it is not a utility and that its revenues fell under an exemption to public purpose program surcharges, and (2) that it could not collect or remit user fees and public purpose program surcharges because the Commission had not prescribed methods for prepaid carriers to collect these amounts from customers or for prepaid carriers to determine the portion of revenue related to intrastate calls. In its Phase 1 Decision (D.12-02-032), the Commission emphasized that it is TracFone’s responsibility to figure out how to collect user fees and public purpose program surcharges and to figure out how to determine intrastate revenue on prepaid sales.
The Commission concluded, however, that it is not necessary to impose penalties on TracFone for its failure to pay user fees and public purpose program surcharges prior to 2012. In making this decision, the Commission considered several mitigating factors, such as TracFone’s good faith efforts to confirm its interpretation of the law with Communications Division staff. However, because it did not collect user fees and public purpose program surcharges from customers up front, TracFone will have to bear the entire cost of past due amounts.
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