WASHINGTON-The Federal Communications Commission got a new member last week and immediately began considering whether it should increase the amount wireless carriers pay into the universal-service fund.
FCC Chairman Kevin Martin swore in Robert McDowell Thursday amid reports that Martin wants to increase by 9 percentage points the amount wireless carriers use to determine how much they owe in universal-service fees. In addition, Martin wants to require contributions by Voice over Internet Protocol providers, like Vonage Holdings Corp.
The universal-service system was set up in the 1930s to bring telecom services to high-cost areas by using a portion of long-distance revenues. Today, carriers contribute 10.9 percent of their long-distance revenues to the USF fund. Since wireless carriers have a difficult time calculating what percentage of revenues come from long-distance, the government uses an estimate (or a safe harbor) set today at 28.5 percent of all revenues. Martin would like to increase this estimate to 37.1 percent.
Indeed, the universal service fund is not collecting as much revenue as it used to because many consumers use mobile phones and Internet telephony to make long-distance calls. Further, the situation is expected to get much worse in August when digital subscriber lines are no longer required to pay into the $7 billion fund.
The new proposal could be voted on or before the FCC’s next meeting June 15.
CTIA, the wireless trade association, said it was curious about the 37.1-percent figure. CTIA is pushing the FCC to continue to allow wireless carriers to use traffic studies to determine exactly how much they owe the fund, rather than using the estimate set by the FCC. “The wireless safe harbor has always been a fall back for wireless carriers that chose not to complete traffic studies for purposes of determining their interstate telecommunications revenues,” said Paul Garnett, CTIA assistant vice president of regulatory affairs.
The proposal would be “moderately negative for wireless providers, who will be required to pay more into the USF,” said Jessica Zufolo of Medley Global Advisors, a Wall Street research firm, in a note to investors. The proposal would put rural local exchange carriers “in a more secure position as the contribution base of the universal-service fund will be stabilized,” said Zufolo.
Martin has long favored changing the way USF contributions are assessed. Martin and CTIA favor an approach that would assess the fee based on the number of telephone numbers each carrier controls. Other groups, like the Keep USF Fair Coalition, oppose this proposal.
The Keep USF Fair Coalition says that changing from the current system, which assesses contributions based on long distance and international revenues, to one which assesses a flat rate on every telephone number would “tax” 43 million Americans as much as $700 million. R
