WASHINGTON-Wireless carriers next year will begin paying nearly 6 percent of their interstate and international revenues to the federal universal-service fund, according to figures provided by the FCC’s Common Carrier Bureau.
Even though this assessment used to be about 3 percent, the Federal Communications Commission believes wireless carriers and their customers will pay less than they do today because the FCC only will assess USF contributions based on interstate revenues. Previously, USF payments have been determined by both interstate and intrastate revenues.
While the FCC believes the assessments on wireless carriers will go down, others wonder, pointing to FCC rules that have nearly doubled the size of the universal-service fund and another proposal from a coalition of long-distance companies and local exchange carriers that could increase the fund again by $650 million.
“Clearly the whole kit-n-kaboodle is going up … The customers and the companies are paying [for universal service] dollar-for-dollar,” said Angela Giancarlo, director of federal regulatory affairs for the Personal Communications Industry Association.
The FCC Oct. 21 adopted rules that will raise the current high-cost fund from $207 million to $437 million. These rules were designed to deal only with local residential rates paid by customers by the larger phone companies, such as the Baby Bells and GTE Corp.
The federal government pays money to carriers to keep local residential rates comparable across the nation. These payments have traditionally been paid based on embedded costs, but for large telcos, payment now will be based on a cost model reflecting what it would cost to build a wireline network today.
Rules for small, rural carriers are expected to be in place beginning in 2002.
The FCC said it would pay large companies 76 percent of the subsidies based on the average state’s cost to build a network if costs were 135 percent above the national average. Using this formula, seven states will receive USF support, instead of the 20 states that receive support today.
BellSouth Corp. is the biggest winner under this formula and U S West Inc. is the big loser since a lot of the “rural” areas in its service territory are served by smaller rural telephone companies.
The fund also may shrink in the future. The FCC for at least three years has agreed to pay carriers at least the same amount as they get today to prevent rate shock, an estimated $182 million more than the model dictates.
The subsidies will be portable because they will be distributed on a wire-center basis. Western Wireless Corp., which offers some wireless residential service and would like to receive universal-service support, was pleased by the use of wire centers because that will make it easier to port the subsidy when it offers service to a former customer of an incumbent LEC.
