Fees charged by wireless providers often draw the ire of their customers, but now some of those fees will be considered by the Sixth Circuit. A notice of appeal was recently filed in Commonwealth of Kentucky Commercial Mobile Radio Service Emergency Telecommunications Board v. TracFone Wireless, Inc., Case No. 11-6215, from a Kentucky decision (pdf) holding that a state statute requiring mobile phone providers to collect monthly emergency 911 service fees from their customers on behalf of the Commonwealth of Kentucky applied to prepaid wireless service providers.
In 1998, the Kentucky legislature passed House Bill 673 (the “1998 Act”) in response to a mandate from the FCC requiring all emergency 911 systems to service wireless callers. The 1998 Act established the Commonwealth of Kentucky Commercial Mobile Radio Service Emergency Telecommunications Board (the “CMRS Board”) to develop an emergency 911 system for wireless customers. In order to pay for this system, the 1998 Act created the CMRS Fund, which was to be funded through a seventy cent per month service fee assessed to all wireless customers. Kentucky Revised Statutes § 65.7635 required wireless providers to collect this fee from their customers and to remit the funds to the CMRS Board.
From 1999, when TracFone began providing wireless services in Kentucky, until November of 2003, it remitted at least $764,000 in service fees to the CMRS Board. However, in late 2003, TracFone stopped remitting these fees when it learned that another state and much of the wireless industry had interpreted similar statutes as not applying to prepaid wireless providers. Ultimately, TracFone was sued by the CMRS Board, and according to the trial court, the case presented two primary questions of statutory interpretation. The first, “whether TracFone was required to collect and remit service fees under the 1998 Act.” The second issue was “whether TracFone was required to collect and remit service fees under the 2006 Amendments to the 1998 Act.”
The 1998 Act provided that “[e]ach CMRS provider shall act as a collection agent for the CMRS fund and shall, as part of the provider’s normal monthly billing process, collect the CMRS service charges levied upon CMRS connections . . . .” In interpreting the statute, the trial court found that TracFone clearly was a CMRS provider and, as such, was required to collect the CMRS service charge from its customers and remit them to the CMRS Board. While the trial court recognized that TracFone’s business model made collection of these service charges problematic, because as a prepaid wireless provider, it did not issue monthly bills to its customers, the court this fact did not alter the clear intent and language of the statute. The trial court also rejected TracFone’s arguments that the 1998 Act did not apply to prepaid providers because the statutes were amended in 2006 to specifically add language regarding prepaid providers. The court found that “a closer examination of the amendments reveals that they only changed the method of collection, not the general collection obligation of cell phone providers.”
These issues of statutory interpretation, along with other issues raised by TracFone before the trial court, are now before the Sixth Circuit for its evaluation. Stay tuned in the coming months for more updates on this case.