Tekstar Communications, owned by Perham-based Arvig, agreed to pay $146,000 and reduce its intrastate switched access rates as part of a settlement with the Minnesota Department of Commerce.
The agreement settles charges that Tekstar violated state telecommunication law by engaging in telephone "traffic pumping."
The settlement, which will be submitted to the Public Utilities Commission for approval, does not include any finding or admission of wrongdoing by Tekstar.
In a written statement to the Focus, Arvig's Director of Business Development, David Schornack, said, "Tekstar Communications has a long-standing tradition of bringing the latest communications technology to our communities, and providing friendly and helpful customer service. We want to continue to focus our time and resources on providing our business and residential customers with the technology products they want and need at a fair price. The best way for us to accomplish that goal was a timely settlement of this regulatory action."
"Traffic pumping" occurs when out-of-state chat lines funnel calls through rural telecommunication providers, which can collect high access fees. These fees later impact the bottom line on consumers' phone bills.
The practice is virtually invisible to most Minnesotans since the fees are not line-item reflected on monthly phone bills; instead, they're passed on to consumers in the form of higher rates.
As traffic pumping became more prevalent and the cost for consumers increased, many national carriers asked regulators to intervene. Rural competitive carriers have been allowed to charge high per-minute access fees, but recent changes by the Federal Communications Commission have helped to reduce those fees.
The Department of Commerce took action against Tekstar on behalf of consumers, according to a press release from the department.
"We stopped these kinds of companies from exploiting loopholes and charging high fees on unsuspecting telephone customers in Minnesota," said Commissioner Mike Rothman. "I hope this settlement sends a strong message that the Commerce Department will not tolerate phone companies that ignore laws designed to protect Minnesota consumers."