WASHINGTON-Personal Communications Industry Association President Jay Kitchen last week blasted the new universal service structure, urging Senate lawmakers to send the Federal Communications Commission “a clear message that existing injustices in the order must be addressed.
“Unfortunately, the universal service order released by the commission on May 8 could not present a more inequitable regulatory scheme,” said Kitchen.
Kitchen was on a panel with industry, state and consumer representatives, that testified before the Senate Communications Subcommittee following testimony from FCC Chairman Reed Hundt and Commissioners James Quello, Rachelle Chong and Susan Ness.
Kitchen said that despite entreaties from Senate Majority Leader Trent Lott (R-Miss.), Senate Commerce Committee Chairman John McCain (R-Ariz.) and Senate Communications Subcommittee head Conrad Burns (R-Mont.) to exempt paging from universal service rules, “the FCC disregarded issues of equity” in forcing paging carriers to pay into the federal fund without the opportunity to withdraw monies.
The federal universal service fund, which the FCC estimates will require $2.25 billion a year, is designed to subsidize telecom services to low-income and high-cost rural subscribers, and, as a result of the 1996 telecom act, subsidize schools, libraries and rural health care clinics as well.
The FCC decision to require paging and wireless phone companies to pay into a separate, state universal service fund is “a significant legal error” that amounts to double taxation. He said the communications act intended that personal communications services licensees contribute to the federal universal service fund when wireless carriers become a substitute for local landline telephone service.
Congress passed 1993 legislation that largely deregulated commercial wireless communications at the state level. Wireless firms point to the statute in fighting against excess local and state taxes and antenna siting moratoria.
Kitchen said Kansas already has imposed a 10-percent universal service tax on paging, PCS and other telecom carriers.
McCain was particularly critical of the FCC’s universal service decision, which he called “troubling.”
“Key decisions about funding rural and high-cost areas have yet to be made,” said McCain. “This leaves the final price tag of universal service funding indefinite, although recent estimates have put it as high as $20 billion. Without knowing this final price tag, we cannot definitely judge the total impact the commission’s trilogy of decisions (interconnection, universal service and access charge reform) will have on consumer rates.”
But, shortly afterwards, McCain answered his own question.
“Phones are going to go up. You know it and I know it,” McCain told Hundt.
Hundt replied that states have to carry a significant burden in bringing new technology to the classrooms.
PCIA said it will appeal the FCC interconnection ruling.
