Wednesday, March 29, 2006

Keep USF Fair Coalition Criticizes Martin Plan

The Keep USF Fair Coalition released a study criticizing a plan by Federal Communications Commission (FCC) Chairman Kevin Martin to reform the federal "Universal Service Fund" (USF) fee on long-distance phone bills. Under the plan, the USF fee would shift from a "pay as you go" charge on long-distance calls to a flat $1 fee per phone line.

The Keep USF Fair Coalition said consumers in California, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas and Virginia would be the biggest losers because more money would flow out of their states.

The Coalition also noted that $1 line charge would only cover about $6.5 billion of the $7.1 billion currently being spent out of the Universal Service Fund. At the more likely $1.50 per-line charge level, all 50 states would end up paying in more than they are getting back.

  • 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. The coalition argued 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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