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Universal Service Fund, part two--Name Games & Future Changes

from December 2002

Last week's tip covered how some wireless (cell) phone bills will go up and how home telephone bills may decrease due to changes in the FCC Universal Service Fund (USF). The new regulations mean that phone companies should not charge you more than a fixed percentage, which will clear up some confusion for consumers. However, the FCC decided not to standardize how phone companies label this charge on your bill.

This leaves much room for confusion. Some carriers have labeled the fee as "Universal Connectivity Charge," "Federal Universal Service Fee," "Carrier Universal Service Charge (CUSC)," and even "Local Service Subsidy." Why not require all companies to use the same name? Telephone bills have been too confusing and could use some standards.

The rule changes help achieve three goals:

  • Account for shifting usage from wireline to wireless phones.
  • Ensure consumers are not overcharged.
  • Level the competitive impact by basing contributions to the fund on carriers current revenues instead of 6-month old figures.

But there are still concerns the government wants to address. So the way USF fees are charged to phone companies and ultimately passed on to you will likely change again. Increased bundling of local calls, long distance and other services makes it hard to add a percentage solely to interstate and international charges. Shifts in usage from traditional long distance to the Internet will decrease the revenue base on which USF fees are assessed. Therefore proposals are being considered to change the Universal Service Fund from a percentage of out-of-state calls to a flat amount per line. There could be varying flat fees based on the capacity of each line (single phone line, DSL, T-1, etc.)

How are these funds being used? Issues of fraud and lack of oversight have been raised. Click to part three in this series for more on that.

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