Proposed new phone charge: Is it a boon or a boondoggle?
Nov 28, 2005 12:46 PM, By Hembree Brandon
The FCC wants to change from the current pay-for-what-you-use method to a monthly flat fee levied on every telephone number — traditional, cellular, Internet.
Talk is cheap? Yeah, sure — until you open your phone bill and try to puzzle through all those mysterious add-on charges that make up a good chunk of the total due.
Now, your friends at the Federal Communications Commission are floating a proposal to make you pay even more (yeah, that’s the agency that went ballistic over a nanosecond of Janet Jackson cleavage during a Super Bowl halftime show, but willy-nilly has allowed sponsors to cram more and more and more ads into TV shows that are themselves infinitely more offensive than the Timberlake/Jackson faux pas that 99.9 percent of viewers missed anyhow).
The controversial hike in the Universal Service Fund would hit phone users for an estimated additional $707 million per year, with a disproportionate share falling on rural users, lower income users, and those who make few or no long distance calls. For some low-use subscribers, the increase could be as much as 1,000 percent, opponents contend.
The Universal Service Fund (USF) was originally enacted with the lofty goal of providing all Americans with modern telecommunications services — with emphasis on sparsely populated rural areas where the cost of providing service is high, schools and libraries, rural health care systems, and low income/disabled persons.
Most major telecommunications companies providing interstate service are required to “contribute” to the USF. But with changes in the industry, and the recent rapid rise of Internet-based telephone service, money coming into the fund has been significantly reduced. The collection system is “outdated,” says FCC Chairman Kevin Martin, and “simply doesn’t reflect today’s competitive, dynamic communications market.”
The USF charge currently generates about $7 billion per year, and discussion of the proposed increase and extending the charge to other telecommunications venues will likely be a part of Congress’ expected overhaul next year of the Telecom Act.
The FCC wants to change from the current pay-for-what-you-use method to a monthly flat fee levied on every telephone number — traditional, cellular, Internet.
Organizations opposing the change say it would shift the burden of the USF to those the fund was created to help, while giving big business a tax cut. The Keep Universal Service Fund Fair Coalition says the FCC has not done an analysis of “who would pay the piper” in switching to a numbers-based approach.
Hear Us Now, run by the independent, non-profit Consumers Union organization, says the USF change would “shift more costs onto the average phone customer, while doing nothing to make the programs more efficient and effective…The result would be a significant increase in monthly phone fees and a significant cost for those who remain on the traditional phone network.” Rural users, it says, could be paying “significantly higher phone rates.”
Further, charges Hear Us Now, “Egregious examples of waste and fraud by a few rural telephone companies have brought criticism to the program and calls for reform.”
The challenge for rural communities, it says, is to “find a way to introduce some competition without undermining the USF support system.” This will require that “communities and rural phone companies embrace reforms that insure stronger oversight and accountability.”
e-mail: hbrandon@primediabusiness.com
