State regulators moved closer to letting AT&T end service for thousands of low-income customers if their phone company, LifeConnex Telecom, doesn't pay AT&T nearly $1.4 million in bills.
The N.C. Utilities Commission said LifeConnex, based in Wisconsin, has five days to pay AT&T. If LifeConnex doesn't meet the deadline, "AT&T is authorized to resume the process of suspending and/or terminating its service to LifeConnex."
LifeConnex is one of seven phone companies that AT&T is trying to collect money from. But two others, EveryCall Communications and Freedom Communications, have filed for bankruptcy. In July, LifeConnex had 8,800 customers in North Carolina.
These service providers buy wholesale phone service from AT&T and resell it as a prepaid service to low-income customers, often charging more than the $19.95-a-month AT&T charges for its basic residential service.
LifeConnex lawyer Henry Walker said his client doesn't plan to pay the disputed debt. If AT&T cuts off service for LifeConnex, the prepaid company may try to buy wholesale service from another phone company and continue doing business in North Carolina, as it has done in other states.
If that plan doesn't work, then LifeConnex customers will have to find another prepaid service, Walker said.
Poor people and those with financial problems qualify for prepaid phone service because it requires no credit checks, no deposits and no commitment. Customers pay ahead for the month they want phone service, and in months they can't afford to pay, they go without a working phone.
The financial dispute goes back to 2007, when the prepaid phone companies filed for AT&T rebates for every phone account they opened for their prepaid customers.
The prepaids kept $50 rebates, but AT&T said the rebates should have been $40, the wholesale value. Over time, the difference added up to a multimillion-dollar disagreement.
Staff writer John Murawski
