Telecom Firms: Don't Pay Down Deficit With USF

Telecom companies wrote to the White House and congressional leaders urging them to abandon a proposal to pay down the deficit using money in the Universal Service Fund (USF), an $8 billion pool devoted to subsidizing telecom services for rural households.

US Telecom, the lobbying association for telephone companies including Verizon and AT&T, said that debt limit negotiators are considering a proposal to divert $1 billion from the fund to help pay for deficit reduction. Congressional aides said the proposal to divert USF funds was part of a document circulated by the GOP conference earlier this week outlining a strategy for addressing the deficit. They said the document, which also recommended using spectrum auction revenue as part of the package, set off a flurry of concern from industry this week. In a letter to negotiators, the carriers panned the USF proposal as effectively creating a "new tax" by transforming USF contributions into taxation. USF currently consists of contributions from telecom carriers, who recover the money through a charge on consumer telephone bills.