WASHINGTON-Celpage Inc., a top paging company that dominates the Caribbean region, last week challenged the Federal Communications Commission’s universal service ruling in federal appeals court here.
“The FCC erred in its decision to require paging companies to contribute to the universal service fund,” said Luis G. Romero-Font, chief executive officer of Celpage.
Celpage serves 200,000 subscribers in Puerto Rico, where it is headquartered, and in the U.S. Virgin Islands. The company has other wireless operations in Brazil, Argentina and Costa Rica.
Frederick Joyce, a lawyer for Celpage, said the firm went straight to court instead of seeking reconsideration of the FCC ruling because the agency already had rejected the paging company’s arguments.
“They are imposing an illegal and discriminatory tax on the paging industry, which cannot draw from the fund like other telecommunications companies,” Romero-Font stated. “It is not only blatantly unfair, but contrary to the express will of Congress and the statutes which the FCC is supposed to implement.”
Several key lawmakers, including Senate Majority Leader Trent Lott (R-Miss.), Senate Commerce Committee Chairman John McCain (R-Ariz.) and House telecommunications subcommittee Chairman Billy Tauzin (R-La.), wrote FCC Chairman Reed Hundt prior to last month’s ruling and urged him not to force paging carriers to pay into the $2 billion annual universal service fund.
FCC officials are said to have told the industry that the telecom act required paging company contributions to the fund.
It has been predicted that the cost of subsidizing basic telephone service for low-income and high-cost subscribers in rural areas and Internet access to schools, libraries and rural health care facilities-a pet project of Hundt and Vice President Al Gore-will cost multiples more than $2 billion a year.
The FCC has yet to devise a formula for paying for the universal service fund. Local telephone companies, which historically have provided universal service, claim it will be difficult to do because of the decline in access fee charges paid by long-distance carriers to local telcos.
Personal Communications Industry Association President Jay Kitchen has vowed to appeal the universal service decision to the Supreme Court, if necessary.
Celpage said the ruling, if not overturned, will force carriers like itself to pass on the additional costs to paging subscribers in order subsidize telephone companies.
In addition to the federal fund, estimated to be 2 percent of gross revenues, the firm said states can tax paging carriers as well.
“This could end up increasing the service costs to all paging subscribers by 10 percent,” Romero-Font stated.
Universal service, access charges and interconnection are the three major components of the 1996 telecom act. The wireless industry is fighting battles on two of the three fronts.
