Jun 21, 2006 4:52 PM,

FCC raises universal service fund fees

By Sarah Reedy

The Federal Communications Commission voted today to increase the amount cell-phone companies must pay to the Universal Service Fund, which subsidizes phone service in rural areas. Internet-based phone companies, previously exempt from fees, now must also contribute to the fund.

FCC Chairman Kevin Martin says that today’s actions were taken to reflect the changing telecommunications marketplace. “Maintaining the stability of the universal service contribution system is one of the commission’s most important responsibilities,” he said in a prepared statement. “We take an interim step today to ensure the stability of the fund by raising the wireless safe harbor and broadening the contribution base to include interconnected VoIP providers.”

Specifically, the FCC’s proposal will raise the mobile wireless safe harbor from 28.5% to 37.1%. Cell phone and wireless providers will have to contribute as much as 3.9% of revenue from customers for the third quarter, and providers of Internet-based phone service will contribute as much as 6.8% of revenue.

An FCC spokesman said that including Internet-based phone companies in the USF fund is a logical step considering their increasing prevalence in the telecommunications marketplace.

“VoIP is growing and it is inherently an interstate service, so it makes sense to assess VoIP,” said the spokesman. “Part of that is simply a matter of fairness as well. It is only fair that all carriers are paying on an equal footing.”

This was a much-needed step in stabilizing the fund while the commission considers comprehensive reform, a BellSouth spokesman said.

"We urge the commission to adopt a technologically neutral numbers-based approach as an equitable permanent solution, and we look forward to working with Chairman Martin and the entire commission on this much-needed fundamental reform," the spokesman said in a prepared statement.

Martin agrees that a numbers-based contribution system is the fundamental reform the system still needs. “Although today’s item should ensure the stability and sufficiency of the universal service support system, it is just an interim step,” he said.