The Haves & The Have Nots

Every American aspires to own information. After all, those who own it have power. But what happens when one or two segments of society become information-deprived because they can't afford access? Simple. Society fragments into the haves and the have nots.

The telecommunications industry dares to challenge this notion for consumers with its plan for offering Universal Service. Universal Service support mechanisms have helped make telephone service affordable for low-income consumers and consumers who live in areas where the cost of providing service is high.

Prior to the 1996 Telecommunications Act, only long-distance companies footed the bill for Universal Service. However, thanks to the Act, any telecommunications carrier that provides service between states will contribute to Universal Service in 1998. This adds local telephone companies, cellular companies, paging and pay phone providers to the mix of long-distance providers. Generally, carriers pay roughly 4% of what they billed for the previous year.

In the wireless industry, every carrier wants to be the owner of the information. After all, if you own it, you have power. But what happens when, for lack of information, some carriers end up paying more in fees than their competitors? It becomes a fractured industry made up of the perceived haves and the have nots.

This could be happening to some carriers as a result of the Common Carrier Bureau's recent proposed universal contribution factors, which go into effect this month. Because of some language (read: information) in the proposal, some carriers may end up paying more for Universal Service than others. Obviously, those who could be paying more would perceive this as unfair and discriminatory.

Leading up to the proposal, there has been some controversy among the commissioners about what truly qualifies carriers for contributions. Specifically, FCC Commissioner Harold Furchtgott-Roth objected to the fact that the language suggests that perhaps both interstate and intrastate roles can be identified for contribution. He maintains that the Act creates federal authority over interstate communications services, but that intrastate services should be protected state jurisdictions.

Some of the jargon of the proposal could tip the apple cart. It would allow federal assessment of interstate telecommunications carriers that also provide intra-state services. This would put these carriers at a competitive disadvantage. First, interstate carriers would have to pay more because they have obligations that intrastate carriers do not. For example, a carrier with intrastate revenues wouldn't have to pay anything. However, a carrier with both would have to pay a percentage of its total revenue. Second, carriers that have both interstate and intrastate revenues also are at a competitive disadvantage with those that provide strictly interstate service in regard to rate recovery. Carriers can recover some of the universal funding through interstate billing. However, not so with intra-state billing.

We should watch this carefully because carriers, by and large, do not like to pay more than their peers, even if it does go for a good cause. And if it becomes apparent that one company is paying more than a competitor, the Universal Service contribution model becomes corrupted. Because then, among carriers, it would appear that some own the information while others do not.