USF Reform Battle Lines Being Drawn

With the Federal Communications Commission set to undertake the Herculean task of reforming today’s voice-focused Universal Service system to one focused on broadband, policy wonks are taking the opportunity to promote their own agendas, including a mixture of policy recommendations with which small telcos would agree—and others with which small telcos would disagree.

A report by an economist at KSF Partners, on the other hand, omits any discussion about the CETC program. Instead, the report titled “A Growing Burden: Taxes and Fees on Wireless Service,”, argues that the average U.S. wireless consumer now faces taxes, fees and government surcharges of 16.3%, which it says is double the average 7.4% rate imposed on other general goods and services. Dollars that wireless companies receive through the CETC program are not factored into the calculation–not surprisingly, considering that KSF clients include several wireless carriers. As the report explains, some of the charges on wireless are exacted at the state or even local level, and the author speculates that the charges have increased as government entities seek new revenue streams in a down economy. The report also points the finger at the USF program, however, noting self-servingly that the fund size has been increasing without explaining the role that CETCs have played in causing that increase.