Thursday, August 11, 2005

FCC Vows No Tolerance for USF Violations

The FCC issued $1.5 million in fines to two telecom carriers for apparent violations to of the Universal Service Fund (USF) and regulatory fee rules. In a statement, the FCC said it was demonstrating a "no tolerance policy for any carrier that fails to pay its required USF and other regulatory obligations. Apparent violations like these distort the marketplace by causing carriers in compliance with the requirements to carry a disproportionate share of the costs of funding these programs and frustrate the purposes for which Congress and the Commission established the programs."

The two carrier being fined are Telecom Management, Inc., and OCMC, Inc.

The USF program ensures that consumers in all regions of the nation have access to affordable, quality telecommunications services. Regulatory fees distribute the cost of certain regulatory activities. Under the Communications Act and the Commission's rules, every telecommunications carrier that provides interstate service must contribute to these programs on an equitable basis.

  • In June 2005, the FCC launched a formal inquiry into the management, administration and oversight of the Universal Service Fund, which helps provide affordable phone service in rural areas, fund Internet access and telecommunications equipment in the schools and libraries, bring telemedicine services to rural areas, and assist low-income families with their phone bills. Since 1997, the Universal Service Administrative Company, or USAC, which administers the fund, has disbursed approximately $30.3 billion from the fund. Money collected for the USF has been declining for some time. The FCC has been considering changes to the way it collects money for the USF. Currently consumers pay a percentage of their long distance service bill each month. The FCC is considering switching to a monthly flat fee based on telephone numbers.

  • Every year, the nation's universal service fund (USF) pays out approximately $673 million for low-income programs and about $3.0 billion to support high-cost rural services.

  • In February 2005, a group of consumer organizations called the "Keep USF Fair Coalition" filed a "Fair Share Plan" for Universal Service Fund (USF) collection with the FCC. he coalition argues that under the current revenue system, high volume long distance users pay the most, while those who use less pay less. It believes the new system under consideration would shift the burden of paying for Universal Service to those who use the system the least. The "Fair Share Plan" proposes to expand the USF contribution base to include all revenues derived from telecommunications, including services using VoIP. It proposes to establish a contribution factor cap to be applied to the revenue-based approach; carriers would still be assessed based on revenues up to that cap amount, and would still have the right to charge their end users a USF recovery charge not to exceed the percentage they are charged. The balance of the funds needed to support USF would come from a numbers-based charge.

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