WASHINGTON-In 1998, the wireless industry started paying into the Universal Service Fund. In
1999, the industry could find out how much money can be withdrawn from the fund.
The government uses USF
money to connect schools, libraries and rural health-care centers to the Internet, and provide telecom service to low-
income individuals and those living in rural areas.
The wireless industry began contributing to the federal USF Jan.
1, 1998. Prior to that, universal service was financed through access charges paid by the long-distance industry to local
phone companies.
Each local exchange carrier receives a subsidy for each customer it serves.
In figuring out
how much to charge telecommunications companies for universal service contributions, the Federal Communications
Commission last October adopted a model platform combining elements from models proposed by the Baby Bells, the
long-distance industry and government. This synthesis platform is not the completed product, however.
The FCC
still has to determine which information to load into its formula. For example, the amount of cable needed to offer a
customer service could change how much money carriers receive from the fund. At one point, the Bell companies’
model differed from the long-distance model by 6 feet.
The FCC said it expects to have the model operating by the
July 1 implementation deadline. The Federal-State Joint Board on Universal Service said last November it did not
expect the USF to be significantly more than the current fund.
Wireless carriers also are waiting to see the FCC’s
ruling on revenue percentages to be paid to the USF. The FCC in October said wireless carriers could calculate their
universal-service contributions based on interstate revenues of 15 percent for cellular and personal communications
services; 12 percent for paging services; and 1 percent for analog specialized mobile radio services. These percentages
are interim and could change when the FCC completes its work in the fall.
The wireless industry weighed in last
week on the concept of using a percentage benchmark to determine interstate revenues. The industry approved this
idea, but stressed the FCC’s numbers must be considered a safe harbor. Carriers should be allowed to use their own data
to determine revenues, the industry said.
“Flexibility is the buzzword,” said Jay Kitchen, president of
the Personal Communications Industry Association. “While the safe harbors may be helpful to some, this is not a
one-size-fits-all industry.”
Whether wireless carriers have to pay into individual state universal-service funds
is still up in the air. Since each state is responsible for paying for a percentage of the cost to serve all customers in its
state, most states have created a separate USF. The states require carriers to pay into these funds. And, in Texas, that
includes wireless carriers.
When Texas included commercial mobile radio service, CMRS carriers balked, saying
they are not subject to state regulators unless they offer substitute local exchange service so they don’t have to pay into
state USFs. The FCC disagreed, saying states could levy USF contributions even though states cannot regulate CMRS
rates.
When the FCC and industry disagree, they often go to court, and on Jan. 8, the sides debated the issue before
the U.S. Court of Appeals for the District of Columbia Circuit. Oral arguments seemed to revolve around whether
Congress intended for CMRS providers to pay into state USFs.
