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Calif. healthcare bill would add 3% tax to cell-phone bills

WASHINGTON-As if battling a potentially new regulatory regime and the threat of hefty fines were not enough, California mobile-phone carriers now face a possible ballot initiative in November that could force them to add to monthly bills a surcharge to fund emergency-room care and upgrades to 911 call centers in the state.

The latest controversy, playing out as wireless firms attempt to derail a consumer bill-of-rights plan poised for a vote by the California Public Utilities Commission, has the telecom industry pouring large amounts of money and signing up top political operatives-like Republican strategist Mike Murphy and Democratic political consultants David Doak and Tom O’Donnell-to defeat the ballot initiative.

On March 1, SBC Communications Inc., 60-percent owner of Cingular Wireless L.L.C., contributed $5 million to Californians to Stop the Phone Tax, according to state records. On March 15, SBC donated another $8,000 to the cause.

Cingular Wireless, poised to become the nation’s No. 1 mobile-phone carrier if regulators and shareholders approve a proposed $41 billion purchase of AT&T Wireless Services Inc., is battling the CPUC over a $12 million fine levied against the company because of certain business practices. Cingular has denied any wrongdoing.

Other wireless carriers have also been forced to fight on multiple fronts in California, the epicenter of consumer activism that mobile-phone operators hope does not migrate east. At the CTIA show last week, several carriers said fighting with states and local communities-whether over siting or consumer issues or unfair taxation-is industry’s largest challenge.

AT&T Wireless and T-Mobile USA Inc. have each contributed $20,000 to the anti-phone tax coalition in recent months. Last October, Sprint Corp. and its affiliates, including Sprint PCS, put $7,500 toward the effort.

Kelly Hayes-Raitt, a spokeswoman for the Coalition to Preserve Emergency Care, said the telephone tax was chosen as a vehicle to raise $550 million annually because there already is a legal mechanism in place-the existing 911 surcharge-and it helps spread the cost for improved emergency care without financially draining the entire healthcare system in California.

“Anybody could end up in an emergency room any time in their lives,” said Hayes-Raitt.

Hayes-Raitt said her coalition has obtained 683,000 signatures for the initiative. The state requires 598,000 signatures to be placed on the ballot in November. On April 12, the Coalition to Preserve Emergency Care plans to submit the signatures to the secretary of state for verification.

“It [the proposed ballot initiative] really addresses the emergency-care system end-to-end,” she said, explaining that citizens with cell phones will be able to be located when they dial 911 and given emergency-care treatment, regardless of whether they have insurance. She said .75 percent of the new surcharge would go toward 911 upgrades.

Hayes-Raitt said there is evidence that California telecom carriers are siphoning significant 911 money for data entry, taking money away that is otherwise needed for upgrades to 911 call centers.

An aide to state Sen. Joseph Dunn (D) said the lawmaker recently launched an investigation into the 911 spending allegation. In addition, Dunn’s aide said the lawmaker last week introduced legislation directing the CPUC to find that money paid from the state’s 911 fund to telecom carriers is “just and reasonable.”

In a press release last week, Californians to Stop the Phone Tax said Democratic and GOP strategists are “preparing to wage an aggressive and well-funded campaign to educate Californians about the fine print of the initiative: a 400-percent phone tax increase, with no mandatory auditing provision to ensure the money is not wasted.”

Hayes-Raitt said the anti-tax group is putting out misleading information, noting money is allocated in the initiative for safeguards such as auditing and oversight. She added that the initiative would amend the state’s constitution to ensure surcharge receipts are deposited into proper emergency-care accounts instead of being put into the general treasury.

Hayes-Raitt also disputed the anti-tax group’s claim that the proposed cell-phone surcharge would not be capped. She said it would be capped at 3 percent, the same level as the federal excise tax on wireless and wireline service.

The emergency-care coalition, which Hayes-Raitt said is supported by firefighters, paramedics, hospitals and emergency room doctors, raised more than $1.6 million in 2003. On Jan. 8 this year, the California Healthcare Committee on Issues, sponsored by the California Healthcare Association, contributed $1.5 million to the Coalition to Preserve Emergency Care. Another healthcare group donated $457,000 the same day.


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