WASHINGTON—Wireless industry trade association CTIA continued to press the Federal Communications Commission to allow its members to use studies to determine long distance vs. local traffic and thus how much they owe in universal-service fund contributions. CTIA’s statements came as the FCC confirmed it will consider the issue at its meeting Wednesday
The universal-service fund system was set up in the 1930s to bring telecom services to high-cost areas by using a portion of long-distance revenues. Today, carriers contribute 10.9 percent of their long-distance revenues to the universal-service fund. Since wireless carriers have a difficult time calculating what percentage of revenues come from long-distance, the government uses an estimate (or a safe harbor) set today at 28.5 percent of all revenues. FCC Chairman Kevin Martin has proposed increasing this estimate to 37.1 percent. What is unclear is whether wireless carriers will be able to use traffic studies to determine their actual contribution amount rather than using the safe-harbor amount.
“CTIA urged the FCC to ensure that wireless carriers retain the flexibility to contribute to universal service and other programs based on their actual telecommunications revenues determined as a result of traffic studies. The commission has long expressed a preference for wireless carriers to contribute to universal service based on their actual revenues (as determined by traffic studies), not according to a safe-harbor percentage that often bears no relationship to an individual wireless carrier’s business,” said Paul Garnett, CTIA assistant vice president of regulatory affairs.
Using traffic studies would appear to be important to Verizon Wireless and T-Mobile USA Inc., which have both recently told the FCC that their studies indicate that their long-distance traffic is less than the current 28.5 percent safe harbor, said Garnett.
CTIA urged the FCC to rethink the 37.1 percent number, noting that it appears to be based on a study performed by TNS Telecoms in early 2005 using 2004 data. The TNS study was performed at the request of TracFone Wireless Inc., which believes the safe-harbor percentage is no longer necessary since carriers can determine originating and terminating cell sites for each call—and therefore can tell whether it is a long distance, international or local call.
The increase in the safe-harbor percentage is being billed as an interim step since Martin has long favored changing the way USF contributions are assessed. Martin and CTIA favor an approach that would assess the fee based on the number of telephone numbers each carrier controls.
“CTIA looks forward to continuing to work with the FCC on a more significant overhaul of the entire universal-service system, and hopes that this interim proposal ultimately only is interim,” said Garnett. “CTIA is concerned that any interim changes to the revenues-based universal-service mechanism will be inferior to more fundamental reforms to the universal-service contribution methodology.”
It appears that Martin was forced to go with an interim solution because groups like the Keep USF Fair Coalition oppose a numbers-based system.
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.
The FCC’s agenda for its June 21 meeting lists universal service as a topic. Agenda items can be deleted by majority vote up to the time of the meeting.
