A Texas state law requiring wireless companies to contribute $75 million annually for 10 years to a Telecommunications Infrastructure Fund to equip schools, libraries and hospitals with communications has the industry troubled.
The fund will provide grants and loans to public schools to buy equipment, including computers, printers, video and other types, along with intracampus and intercampus wiring required to use the equipment and related costs including installation, program development and training.
But commercial mobile radio service providers-as the law defines the assessed wireless companies including paging, cellular and enhanced specialized mobile radio sectors-feel the assessment is unjust.
“Paging carriers were not aware the legislation was being passed,” said Mark Stachiw, legal counsel for AirTouch Paging in Texas. It was adopted in May.
Telecommunications utilities companies, which include long-distance providers, exchange carriers and interexchange carriers, also must pay $75 million annually to the fund. Among both the utility companies and the wireless providers, individual companies will be assessed in proportion to their revenues.
However, that the two industries should pay the same amount is disproportional and unfair, wireless companies argue. Stachiw noted total revenues among wireless companies affected by the assessment are less than that of utility companies. In fact, the comptroller estimated the wireless sector’s assessment will be about five percent to six percent of its $1.5 billion gross revenues. The assessment for the utility group figures to be less than one percent of the group’s estimated $9 billion gross revenues.
As a result, “The wireless assessment is six to eight times greater per dollar of revenue,” Stachiw pointed out.
Further, once infrastructure in the various community institutions is installed and in use, utility companies will profit from service fees collected when the institutions use the landline networks, said Stachiw. Thus, the utilities group will see a return on part of their assessment, he explained.
The section of the Telecommunications Infrastructure Fund addressing wireless providers states the Texas legislature determined the commercial mobile service providers will benefit from the public network by their ability to “originate and terminate calls that transverse mobile and cellular networks,” and by the advancement of the public network through the said projects endowed by the fund. As such, policy requires the commercial wireless providers, “contribute an appropriate amount” to the fund.
Complicating the issue further, each company to be assessed by the fund does not yet know how much it will have to pay. This amount depends on other companies’ revenues, which the state is determining.
The wireless industry is still young and rapidly growing. As such, smaller wireless companies may not be able to afford the assessment, said Stachiw, adding that smaller players may be turning very little or no profit. Letting go five or six percent of gross revenues could destroy them. Conversely, the exchange carriers and long-distance providers are larger, established companies.
A key consequence of the assessment, pointed out Stachiw, is its effect on wireless competition. Young companies may fall in the red and new ones may be discouraged from forming.
Where many states conduct a legislative session annually, Texas only convenes every two years. Paging Companies for a Fair Assessment has been formed to work for change and has not ruled out possible litigation.
