Basing industry contributions to the Universal Service Fund on te...
Basing industry contributions to the Universal Service Fund on telephone numbers rather than revenue not only would make the fund more stable but also would benefit consumers, George Mason University’s Mercatus Center said in a Nov. 2 letter to…
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the FCC. The center said its comments are based on its own views and not those of any interest group. The current revenue-based system acts like a usage tax, Mercatus said. It raises consumer costs, leading to reduced consumer use of services and lower industry revenue, a cycle that economists call “deadweight loss,” Mercatus said. On the other hand, a numbers-based system “would have little effect on subscription rates,” at least for wireline services, it said. That’s because “demand for wireline service is almost completely inelastic, meaning that customers will generally continue to purchase the service, regardless of price changes,” the letter said. The group said “wireless service is more complicated but careful analysis still suggests benefits from changing the assessment methodology.” FCC Chairman Kevin Martin long has championed changing the contributions system to one based on telephone numbers.