WASHINGTON-The Federal Communications Commission last week raised the safe harbor percentage that the wireless industry can use to pay into the universal-service fund, but the agency will continue to allow mobile-phone carriers to also estimate their contribution amounts based on traffic studies.
The 5-0 decision to raise the safe harbor to 37.1 percent was expected. The wireless industry had pushed hard for the continued use of traffic studies.
Today, carriers contribute 10.9 percent of their long-distance revenues to the universal-service fund.
Some wireless carriers have argued that it is difficult to calculate what percentage of revenues come from long-distance services. Thus, the government allows them to use an estimate (or a safe harbor). This safe harbor was raised last week from 28.5 percent to 37.1 percent of all revenues.
The safe harbor is one of three ways wireless carriers can calculate their USF contributions. Carriers can also use traffic studies and actual long distance revenues.
Using traffic studies benefits Verizon Wireless and T-Mobile USA Inc., both of which told the FCC that their studies indicate that their long-distance traffic is less than 28.5 percent of their revenues.
Interim step
FCC Chairman Kevin Martin said raising the safe harbor on wireless and requiring VoIP to contribute-their safe harbor was set at 69.4 percent-is only an interim step.
Martin has long favored changing the way USF contributions are assessed.
Martin and wireless trade association CTIA favor an approach that would assess the fee based on the number of telephone numbers each carrier controls.
It appears that Martin was forced to go with an interim solution because groups like the Keep USF Fair Coalition oppose a numbers-based system.
The Keep USF Fair Coalition says that changing from the current system to one that assesses a flat rate on every telephone number would “tax” 43 million Americans as much as $700 million
CTIA did not comment on the FCC’s action, but rather said the universal-service system needs reform.
“CTIA supports adoption of a numbers and capacity-based contribution methodology that addresses the concerns of low-income and low average revenue per unit customers. We look forward to working with the FCC on speedy enactment of meaningful reforms to the universal-service contribution methodology,” said CTIA President Steve Largent.
Primary-line restriction
Meanwhile, the House telecommunications subcommittee held its first universal-service hearing and the chairman of the House Commerce Committee, never a fan of the universal-service system, took aim at the one area that both the wireless industry and rural telephone companies agree: whether support should be available for one or more lines.
“This is about making certain, or should be about making certain, that anyone in rural America can have at least one telephone. It shouldn’t be about making sure that they have a gold-plated system and multiple subsidies on that one system. It’s not about providing every house with cell phones, computer hookups and the opportunity to chat on two or three lines at once,” said Rep. Joe Barton (R-Texas), chairman of the House Commerce Committee. “The growth that has occurred in the high-cost fund is unacceptable, unsustainable and unnecessary. With the right reforms, that particular program can be brought under control. This would ensure that the program can continue to do what it is supposed to do: provide people in rural areas with affordable voice-grade telephone service over one telephone line.”
What Barton is advocating is known as the primary-line restriction.
Under a primary-line restriction, one carrier can receive support for only one household. Under the current system, carriers receive support based on how many lines they serve. This system has allowed wireless carriers to receive support for serving rural customers even if the customer continues to use landline service in combination with wireless service.
The Telecommunications Act of 1996 allowed universal-service support to become portable so carriers receive the support for the customers they serve.
In an effort to protect the growth of the universal-service fund, the Federal-State Joint Board on Universal Service in 2004 recommended that support be limited to one primary line.
Rural local exchange carriers have been fighting against wireless carriers for universal-service support since both the amount of subsidies and the number of carriers receiving support have increased.
While rural LECs and wireless carriers disagree on most universal-service policy, they agree that the primary-line restriction is a bad idea.
Last year, lawmakers agreed to renew a one-year restriction on any efforts by the FCC to limit subsidies to primary lines. Congress passed a similar ban in 2004.
Goal is reform
The universal-service system was set up in the 1930s to bring telecommunications services to high-cost areas by using long-distance revenues. Since the use of wireless and Voice over Internet Protocol has increased, especially for long distance, policy makers at all levels of government are looking at reforming the system.
Barton has made no secret of his disdain for the universal-service system, but as chairman he has come to realize that some system is politically necessary.
“I’m not saying that we shouldn’t have some universal-service fund, but the current system is a gamble; it’s not fair, it’s out of date. If we can’t kill it, we ought to really, really, really work together on a bipartisan basis to seriously reform it,” said Barton.
While universal-service reform is a key issue for the Senate in its telecommunications-reform efforts, the House, led by Barton, did not include a strong universal-service provision when it passed its telecom-reform bill earlier this month.
Last week’s hearing by the House telecommunications subcommittee was meant to establish a record if the House is forced to negotiate with the Senate regarding the universal-service system, confirmed Rep. Fred Upton (R-Mich.), chairman of the House telecommunications subcommittee, to RCR Wireless News.
