IXCs MAY BE REQUIRED TO CONTRIBUTE LESS TO USF, FCC STUDY SAYS
Three new alternative universal service contribution systems proposed by FCC in Dec. (CD Dec 16 p1) would benefit long distance carriers significantly while increasing or leaving same rates for LECs and mobile carriers, according to new study released by FCC’s Wireline Bureau. No new parties would be added to contribution system under any of proposed plans. Commission expressed concerns on current revenue- based contribution system, saying it was increasingly difficult for contributors to identify interstate telecom revenue because of bundling and migration.
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Study showed first connection-based methodology, which imposed minimum contribution obligation on all interstate telecom carriers and flat charge for each end-user connection, depending on nature or capacity of connection, that would benefit long distance carriers, such as AT&T and WorldCom, increasing payments for LECs. For example, LECs that contributed 26-27% of total universal services fund under current revenue-based plan, would have to pay 45-49% of total in 2004-2007. At same time, IXCs that currently paid 51-59% of total fund would cut their contributions to 22-23% under connection-based system in next 4 years, study said.
Second connection-based methodology, which would assess all connections based purely on capacity and would require that contribution obligations for each switched end-user connection would be shared between access and transport providers, would benefit LECs and long distance providers, but would hurt mobile wireless operators significantly. Under 2nd proposal, CMRS operators, which currently contribute 15-22% of total universal service fund, would be required to pay 41-43% of total. Payments by IXC that currently made 51-59% of total would drop to 29-34% in next 4 years under new system, and share of contributions by LECs also would decrease to 20-23% from about 26-27%.
Under 3rd number-based proposed methodology, which would assess providers of switched connections based on their working telephone numbers, long distance providers would benefit most and LECs least. For example, LECs that currently contribute only 26-27% of total fund would be required to pay about 55-58% under number-based proposal in next 4 years, study said. IXCs, whose current share of contribution is 51-59% would have to pay only about 14% of total fund, while wireless carriers’ share would increase to about 28-31% from 15-22% they currently contribute.
Study also said first connection-based and number-based contribution systems wouldn’t make any significant changes for either residential or business users, while 2nd connection-based methodology would carry significant shift in assessments from businesses to households. For example, under 2nd connection-based plan, percentage of fund met from residential assessments would rise to 67-68% in next 4 years from 39-41%, while business assessments would drop to 32-33% from 59-61% of total fund.
Under 2nd connection-based plan, IXC monthly contribution per household with one prescribed line would dip slightly to about 71 cents from 83 cents, while mobile wireless contribution per residential handset would jump to $1.41 per month in 2004 reaching $1.45 in 2007 from $0.45 and $0.71 in 2002 and 2003, respectively. LEC monthly contribution per primary residential phone would rise to $0.71 in 2004 from $0.43 in 2002.
Total assessments on business services under 2nd connection-based plan would decrease almost half, study said. It said contributions for some small business categories would triple or more, but for large business services it would plunge by up to 70%. For example, monthly contribution of business mobile wireless telephony handset services would jump to $1.41 in 2004 from $0.85 in 2002. Assessments on single-line business connection services would go up to $1.41 per month in 2004 compared with $0.43 per month under revenue-based plan, and assessments on presubscribed multi- line business trunk would increase to $1.41 per month in 2004 from $0.56 per month in 2002.
As opposed to small business services, assessments on large business categories would experience significant cuts under 2nd connection-based plan, study showed. For example, monthly assessment on DS3 interstate private line service priced at $7,000 per month would be cut to $316.89 from $560.59 in 2002, and for OC3 interstate private line service priced at $17,500 per month, monthly contributions would slide to $475.33 per month from $1,401.48 in 2002. Other 2 proposals would have only small effect on share based on business size. Commission said comments on study were due March 31, replies April 18 -- http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-03- 31A1.pdf