WASHINGTON-CTIA is changing its USF tune and siding with FCC Chairman Kevin Martin in his battle to change the way universal service is paid for. Martin-and now CTIA-wants to base universal service funds on telephone numbers, instead of the current system that works on percentages of long distance and international revenues.
“We have come to the conclusion that the best contribution mechanism is a numbers-based system,” Paul Garnett, CTIA assistant vice president of regulatory affairs, told a panel of lawmakers examining universal service last week. “We have been making the rounds at the Federal Communications Commission.”
However, CTIA’s new position does not support a straight contribution mechanism; the wireless trade association proposes several discounts for certain classes of customers. For example, CTIA proposes that regulators only access the full fee on the primary number of a wireless family plan. All other numbers would receive a 50 percent discount. CTIA argues that members of a wireless family plan work like line extension in the wireline world.
The FCC seems poised to move forward with the numbers-based approach-or a version thereof-based on comments by Thomas Navin, chief of the FCC’s Wireline Competition Bureau. Navin spoke last week to the National Association of Regulatory Utility Commissioners.
“The FCC has clear authority over telephone numbers and the base of telephone numbers is known,” said Navin, noting that a numbers-based approach is “easy for consumers to understand.”
CTIA had previously resisted a numbers-based solution to the universal shortfall, believing the approach would eventually end up costing wireless more. Garnett’s appearance before the Rural Congressional Caucus was the first time CTIA made public its new position on the issue.
Martin has advocated a numbers-based approach since the late 1990s, when he was the wireline legal adviser to former FCC Commissioner Harold Furchtgott-Roth.
CTIA’s Garnett made his comments during a Rural Congressional Caucus forum that was held to examine a draft bill proposed by Reps. Lee Terry (R-Neb.) and Rick Boucher (D-Va.), as well as other universal-service issues.
At the forum, Garnett said that if the FCC were to address the problems with the current universal-service system, “the need for legislation would go away.”
Garnett said the wireless industry is concerned with a central proposal of the Terry/Boucher draft bill that would base USF distribution on carriers’ costs. Currently, distributions are based on the costs of the rural wireline incumbent.
The universal service fund has been depleted by long-distance calls made using mobile phones or Voice over Internet Protocol technology. Martin believes that moving to a numbers plan would solve this problem. However, minority and other special-interest groups have criticized his plan, claiming that infrequent long-distance callers would be hurt by the change.
The Keep USF Fair Coalition says that changing from the current system, which assesses contributions based on long-distance and international revenues, to one that assesses a flat rate on every telephone number would “tax” 43 million Americans as much as $700 million. Since wireless carriers have a difficult time dividing long-distance and local revenues, they typically estimate the long-distance portion at about 28.5 percent of total revenues. The Keep USF Fair Coalition favors the Fair Share Plan, which would assess contributions on all long-distance telecommunications including VoIP.
The universal-service system was set up in the 1930s to bring telecommunications services to high-cost areas by using long-distance revenues. Complications arose when the Bell monopoly was broken up in the 1980s.
Universal-service support is distributed to rural wireline companies and other carriers, including wireless, who serve customers in rural-wireline territories. However, some carriers benefit from the setup, while others do not. Qwest Communications International Inc. has lost money under this system, for example, while BellSouth Corp. has gained funding.
