Telematics Provider ATX Opposes USF Proposal As Unequitable

Fee would derail emerging, broad deployment of automatic collision response in all vehicles

WASHINGTON, D.C., April 28, 2006 — ATX Group, the world's second largest telematics service provider to the automotive industry, filed today with the Federal Communications Commission its reasons as to why it opposes the proposal to base future Universal Service Fee (USF) assessments on wireless communications solely on a per-phone-number basis. As applied to telematics, ATX maintains the per-number assessment would violate the USF statute's requirement that the fee be "fair and equitable."

Telematics providers such as ATX rely upon phone numbers to be assigned to every telematics-equipped vehicle, but because the numbers are primarily used only in an emergency, most of ATX's subscribers never place a call through the number. So, under the proposed assessment, the USF fee amount is well over half the cost of the wireless service, and depending on the extent of the final assessment, perhaps even equals or exceeds the cost of service. Currently, telematics subscribers are assessed a USF, passed through by wireless carriers, based on a percentage of the wireless carriers' long-distance revenues — an assessment that ATX acknowledges as fair. But, under an often cited $1 per month per phone number proposal, the assessment would increase 3000 percent.

ATX points out to the Commission that a hypothetical 350,000 telematics-equipped vehicle fleet, which currently pays $10,000 per month, would see its assessment jump to at least $350,000 per month using the $1 per month per number formula.

"The per-number assessment probably makes sense when applied to devices that are extensively used, but it does not make sense to penalize drivers who primarily want a life-line to a telematics center should they ever become involved in a collision or face an emergency in their vehicle, which is the primary reason for purchasing a telematics subscription," explained ATX President and CEO Steve Millstein. "We don't oppose the USF assessment and can understand the rationale and benefits of a numbers-based system, but telematics represents a unique bloc of wireless consumers who use extremely low volumes of airtime, if any, for whom this fee would be unfair. We are confident we can provide the FCC with an alternative solution."

Telematics services provided by ATX include location-based emergency assistance (activated when vehicle occupants press a designated emergency button in the vehicle) and automatic collision notification, which immediately notifies and sends the location to ATX whenever a vehicle becomes involved in a collision. ATX receives over 10,000 of these emergency signals annually, working with emergency responders to help guide them to the location and providing them information about the emergency and occupants.

Ironically, the proposed USF fee assessment — designed in part to help broaden the deployment of telecommunications technology into rural areas where the cost to extend service is high — would have the contradictory effect of retarding enhanced emergency communications and highway safety in rural areas if applied to telematics. A majority of highway deaths and permanently disabling injuries occur on rural highways, where notification and response to an accident is often delayed due to greater distances and fewer passersby. Telematics-based automatic collision notification systems help overcome these rural "deficiencies," potentially accelerating emergency response by immediate notification of a crash and providing its exact location and a description of the vehicle. With the recent deployment of advanced ACN systems that can help determine crash severity, the potential is growing to help rural responders make decision as to what kind of response is initially dispatched to the far-away crash scene.

"This proposed fee also would be a major impediment to providing lower-cost, ACN systems that could be broadly deployed on the large number of vehicle models beyond the luxury automobile segment where telematics today is primarily confined," added Millstein. "It is ironic that this proposed fee would be applied to telematics at a time when the FCC and the federal Department of Transportation are advocating broader deployment of location-based emergency response and Next-Generation 911 systems, both goals that telematics providers can provide in part today. We look forward to working with the FCC to resolve this contradiction."

ATX Group serves markets in both North America and Western Europe. The company's telematics services are provided through the two-way communication of voice and data between a subscriber's telematics-equipped automobile and ATX response and data centers.