A Senate proposal to make cell phone users pay a fair share of a service fee would take an increasing burden off those who have traditional landline phones. But wireless companies don’t like the idea.
The proposal swirls around something called the “Universal Service Fund,” which currently gets money in South Carolina from a 2.7 percent USF fee on landline phone bills to help to “make phone service affordable and available to all Americans, including consumers with low incomes, those living in areas where the costs of providing telephone service is high, schools and libraries and rural health care providers,” according to the Federal Communications Commission.
What the bill envisions is to create parity in paying for the fee. Why? Because when phone companies started charging the fee to meet government requirements to ensure good service in mostly rural areas, most people had land lines. Since then, people have changed how they use phones. Now, South Carolinians have 4 million wireless accounts, but only 1.2 million landline phones, according to Dukes Scott, head of the state Office of Regulatory Staff.
The problem, says state Sen. Luke Rankin (R-Horry) who sponsored the bill, is that all phones rely on landline technology — and cell phone users have been piggybacking for free on landline infrastructure. And because the number of landline phones keeps dropping, the USF fee on landline phones has been increasing to keep up with government requirements. Meanwhile, cell users have not put money into the pot.
“There’s no bogeyman in this at all,” said Rankin, an Horry County Republican. “Twenty five other states do it the exact same way. The federal government requires the wireless to pay into the [federal] USF fund. It’s a public benefit and you’re capping the present-day cost so it’s not some exorbitant tax increase.”
Among other things, Rankin’s measure calls for amount of the state fund that the USF money goes into to drop from $171 million to $41 million and be capped at that amount. As for the USF fee, Rankin’s plan would broaden the base of consumers paying it to boost parity.
Will you pay more?
Cell phone customers will pay more if the measure becomes law. A 1.1 percent state USF would be applied. But if you have a landline phone, your rate will also be cut in about half from 2.7 percent. So if you don’t have a wireless phone, you’ll save money. If you do, you’ll probably end up about equal.
Wireless companies generally don’t like the fee surcharge because, well, it raises a customer’s bill slightly, as highlighted in this open letter from Verizon:
“In our view, a vote for S277 is a vote to expand antiquated subsidy system by imposing a new tax on wireless customers to fund companies rather than universal service for South Carolinians.”
But AT&T, which has landlines and wireless phones, backs the measure.
“It ensures that the size of the USF fund will not increase like it could under current law,” said AT&T spokesman Clifton Metcalf. “It also ensures that people who have speech or hearing difficulties will continue to be able to reach their families, friends, physicians or other businesses. And in doing so, it ensures that all consumers are treated equally, regardless of the technology they use to stay connected.
“The wireless and wired networks are interconnected. Even calls made from one wireless device to another travel over wired facilities between cell towers. So having a strong wired network in a rural area, for example, is just as important to a granddaughter using her cell phone to call her grandmother’s cell phone as it is for a patient using a traditional phone line to call his doctor’s office.”
A Senate Judiciary subcommittee is scheduled to take up the proposal 9 a.m. Thursday. More.
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