Who's Behind ZPDI?

ZPDI is a unit of something called Billing Concepts Inc., whose literature proudly states:

Since our founding in 1988, Billing Concepts has grown to serve more than 400 customers as the telecommunications industry's leading provider of billing clearinghouses and information management services.

As for what the company actually does:

Billing Concepts provides a comprehensive range of services to the LEC market through USBI, with services for calls that are direct dialed using 1+, Zero Plus Dialing, Inc. (ZPDI), with services for calls that are dialed using 0+ and Enhanced Services Billing, Inc. (ESBI), with services for non-regulated and enhanced telecommunications services. Additional services include Dial Around Compensation to assist carriers who offer dial-around services in compensating Payphone Service Providers, and Return Code 50 Billing, for efficiently collecting rejected records.

To translate, a LEC is a "Local Exchange Carrier," meaning a local telephone company, either an incumbent carrier like the local Bell company or a competitive new entrant.

Far from being a fly-by-night operation housed behind a beans-and-rice joint in the bayou, ZPDI is part of a large, well-capitalized venture whose many customers include the local phone companies, especially those who specialize in the pay phone business.

In most localities, pay phones are now deregulated and most of them are operated by companies you've never heard of. Same is true of telephones in prisons (don't laugh -- most inmates call home frequently and have no choice but to call collect) hotel rooms, universities, hospitals and other establishments looking for new sources of revenue.

These companies charge sky-high prices and kick back a large part of the loot to the establishment that owns the space where the phone is located. Sometimes, this is the corner newstand, sometimes it's the state Corrections Department.

It's a lucrative business, one that is -- as so many consumers have said in their complaints to us -- close to extortion. The prison inmate's family, already on the financial brink, winds up with exorbitant phone bills, as does the parent who takes a call from a traveling offspring or the business traveler who makes a call home from the hotel phone.

ZPDI, the phone companies and the property owners are taking advantage of telecommunications deregulation to rip off consumers -- the opposite of what the Telecommunications Act of 1996 was intended to achieve.

By deregulating pay phones, Congress supposedly was trying to open the field to innovative newcomers who would provide more phones in more places, maybe even charging lower prices. Instead, it created ZPDI.

ZPDI's Web site includes a very brief Q&A; section, where one finds this enlightening exchange:

Why are these rates so high?
Rates for carriers are designed to recover unique expenses associated with the public telephone from which your call(s) was placed. Carriers are tariffed and have received approval for the rates being charged by the FCC or the individual State Public Utility Commissi

This artfully crafted statement may not tell the whole story. Besides the outrageous service charge for placing a collect call, which may or may not be tariffed, ZPDI and similar companies charge outlandish long-distance rates, which are largely unregulated.

ZPDI and Collection Systems are obviously very good at what they do, in large measure because they use what might be called legalized cramming to collect. Calls handled by ZPDI are billed through the local telephone company on the subscriber's monthly bill. If the consumer doesn't pay, the consequence is that his or her local telephone service is cut off.

Local telephone companies like to throw up their hands and plead innocence, claiming they're just passing through third-party charges. What they fail to point out is that nothing obligates them to be in the billing business. They do it only because it is profitable. If they wanted to stop propping up ventures like ZPDI, they could do so tomorrow.

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