Local Governments Suing Phone Companies Over 911 Fee Discounts

The lawsuits allege that the companies are trying to undercut the competition by lowering 911 fees for big businesses

Local Governments Suing Phone Companies Over 911 Fee Discounts
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August 9, 2016

Officials from local governments in several states are suing numerous phone companies, including AT&T Inc. and Verizon Communications Inc., for discounting 911 fees for big businesses in order to beat competing phone companies.

Local 911 dispatch centers are funded by fees charged by phone companies. These fees, which the companies are required by law to charge, usually amount to roughly one dollar per phone line. However, officials are alleging that several companies are trying to undercut their competitors and drum up business for themselves by lowering the fees they charge large businesses, resulting in underfunding for emergency services.

Using data reported to the Federal Communications Commission (FCC), Morningstar reports that there was a $600 million funding shortfall in 2014 as local governments across the country spent more than $3.1 billion on emergency services but collected only $2.5 billion in 911 fees.

"Only a dozen states reported to the FCC that they collected enough fees to cover their 911 spending for the year, though not all states reported complete data," it says.

North Carolina is one of those dozen. The FCC report shows that the state spent slightly more than $56 million on emergency services in 2014 but raised more than $78 million with fees charging only $.60. According to the North Carolina 911 Fee Report for 2015, NC General Statutes do not allow the salaries of its telecommunicators (dispatchers) to be funded solely by 911 fees, nor can the fees be applied to facility maintenance or radio network infrastructure. Instead, they are used to pay operating costs such as the purchase and maintenance of hardware and software, training for telecommunicators, program administration, and travel expenses. Telecommunicators' salaries were paid for by a combination of the fees and allocations from the general funds of 121 Primary Public Safety Answering Points (PSAP) and six Secondary PSAPs.

Although some local governments are able to allocate funds from elsewhere in their budgets to make up the shortfalls, the Consumerist states that "most are forced to put off technology upgrades or hiring dispatchers" and also notes that the emergency services system is becoming more stressed as a result.

These suits are not the first to be filed against phone companies for discounting the 911 fee. "In the past 18 months," says Morningstar, "the FCC has reached settlements with five telecom companies totaling nearly $40 million for 911 outages that have affected millions of people." AT&T won a similar case filed in 2011 by 10 Tennessee counties because the federal judge ruled that the counties hadn't supplied enough evidence to support their allegations.

Meanwhile, cases are ongoing in Georgia and Pennsylvania, although AT&T and Verizon representatives claim that their companies are in compliance with the 911 fees laws.