CMOR rallies for reform of Universal Service Fund

The USF funds communications services in rural and low-income areas of America by charging telecoms companies a percentage of the revenue they make from interstate telephone calls. This is known as the ‘contribution factor’ and the cost of meeting that contribution is passed on to telephone users in the shape of higher telephone fees.

Currently the contribution factor is determined quarterly, depending on the needs of the programmes the USF funds, but this can give rise to “dramatic fluctuations” in the cost of phone calls, says CMOR. In the second quarter of 2000 the fee was 5.7%; this quarter, however, the proposed fee is 12.3%.

According to CMOR: “The dramatic fluctuations in the USF fee may have minimal impact on an ordinary user’s phone bill. However, on the bill of a survey and opinion research company that does a considerable amount of interstate calling to conduct its surveys, those changes can be dramatic (and, in some cases, catastrophic) – and make it next to impossible to set budgets and set a cost structure for research.”

CMOR’s position is that the ‘contribution factor’ should be set annually, rather than quarterly – though in general it opposes “the imposition of the USF fee as a pass-through charge to telephone users”, with government affairs director Howard Fienberg describing it as “the equivalent of a tax on telephone survey and opinion research”.

Proposed reforms to the USF were debated yesterday by the House Subcommittee on Communications, Technology and the Internet.