The Federal Communications Commission cracked down yesterday on Oncor Communications Inc., a Bethesda-based pay telephone operator that it cited for charging unwitting consumers three or four times market rates for long-distance calls charged to credit cards.
The FCC ordered Oncor's parent company, Operator Communications Inc., to reduce Oncor's interstate rates to no more than 15 percent more than AT&T;'s rates for a comparable interstate phone call. It also gave the company seven days to add an audible message telling callers that its rates are available by dialing a specified number.
The commission told Oncor that if it failed to cut its rates to that level within 30 days, it would have 60 days to show why it shouldn't be compelled to add a message warning consumers of the possibility of higher charges, including surcharges of up to $10 a call.
A company lawyer said Oncor would contest the FCC order.
The FCC said Oncor is one of several "operator service providers" it is investigating for such pay phone charges, which often come as a nasty surprise when customers open their telephone bills. The Oncor case is the first in which it has taken public action.
The commission said that over the past three years, the number of complaints it has received concerning Oncor's charges has quadrupled. The agency cited complaints of one customer who was charged $15.50 for a five-minute call and another who was billed $9.58 for a three-minute call.
Gregory M. Casey, Oncor's regulatory lawyer, said the company had no intention of rolling back its rates. "We plan to cost-justify our rates, and we're fully confident we can do that when the FCC understands what our costs are," he said.
Mr. Casey said Oncor's rates used to be comparable with AT&T;'s before the long-distance giant issued 40 million proprietary phone credit cards that encouraged customers to put long-distance calls onto AT&T;'s network. He said that once AT&T; did that, Oncor experienced a steep drop in traffic that drove up its unit costs and forced it to raise rates.
pTC "We didn't set out to be the high-cost provider," he said, adding that his company is suing AT&T; over the card issuance in federal court in Baltimore.
Jim McGann, an AT&T; spokesman, praised the FCC's action and dismissed Oncor's accusations.
"People are choosing AT&T; because we're offering competitive rates," he said. "That's the way the marketplace is supposed to work."
Oncor, which operates in 46 states, also has run afoul of the FCC over charges that it switched 94 pay phones in New York to its own service without the consent of the owner -- a practice known as "slamming." In that case, which is pending, the FCC told Oncor it could be liable for $1.4 million in damages.
Dana Murray, an assistant Maryland attorney general, said there have been a "tremendous" number of consumer complaints about Oncor.
"They are a problem in every state in which they operate," she said.
Ms. Murray said high-priced pay phone operators are able to take advantage of consumers who assume that if they use a phone credit card the call automatically is routed through their preferred carrier when in fact it defaults to the service provider for that phone.