COALITION PROPOSES NEW WAY OF COLLECTING USF CONTRIBUTIONS
Coalition of long distance companies and user groups proposed revising method of collecting Universal Service Fund contributions from carriers, approach that could please some in industry, dismay others. Proposal, outlined to news media Mon. and submitted to FCC in Nov. 7 ex parte letter, was put forward by AT&T, WorldCom, E-commerce Telecom Users Group (ETUG) and Ad Hoc Telecom Users Committee. It would replace revenue-based contribution scheme with flat-rate per- connection fee. Current system collects contributions from carriers for $5.5 billion USF based on percentage of carrier’s interstate revenues. Coalition members told group that current method was unfair to long distance companies that bore bigger share of it than other parts of industry.
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Current system is “not competitively neutral and unfairly burdens long distance customers,” AT&T Vp Joel Lubin said. To add to problem, universal service fund (USF) is growing at same time as long distance revenues are declining because of falling prices, he said. That means it will take increasingly larger percentage of long distance revenues to pay for USF unless method is changed, Lubin said. In addition, trend toward bundled service plans makes it difficult to separate out interstate revenues for USF purposes, he said. ETUG Counsel Brian Moir said user groups joined coalition because “users are seeing ever-spiraling increases” in rates and “the FCC should have set up a plan that was technology- and industry-neutral.”
Proposal comes as FCC considers revising contribution scheme as part of notice of proposed rulemaking (01-145). Coalition plan would lower long distance contributions but would raise those of ILECs and wireless. “The current system is neither sustainable nor competitively neutral,” group told FCC. It proposed 2-step transition to give carriers time to develop systems needed to support capacity-based assessment: (1) By Jan. 2002, Commission would implement new per-line assessment for wireline residential and single-line businesses, plus wireless and pager connections. (2) System would be applied to multiline business switched and private line connections by Jan. 2003. Actual amounts proposed: (1) $1 per connection for consumer wireline, wireless consumer and business, cable telephony, wireline single line business. (2) 25 cents per connection for consumer and business pagers. (3) Multiline business connections would shoulder more than others, but actual amount would have to be determined. In first year, big business connections would pay remaining amount not covered by other users. In 2nd year, once systems were in place, permanent assessment would be revealed.
All of figures are per month and would be passed onto users as USF contributions are now. Users would benefit because fees would be more consistent than they are now, coalition said. Long distance, local telcos and wireless providers all add fees of varying amounts to bills, creating confusion, it said.
USTA Vp Lawrence Sarjeant strongly opposed idea, saying “a per-line charge is an unlawful way to collect carriers’ contributions to the Universal Service Fund” because it doesn’t satisfy Telecom Act’s requirement “for a competitively neutral support mechanism.” Sarjeant said “the large IXCs’ effort to change the universal service contribution mechanism is simply an attempt to fatten their bottom lines at the expense of other telecommunications carriers.”