Thursday, October 11, 2012

Rising USF "Tax" Rate and Urgency of Reforms

On September 12 the FCC issued a public notice announcing that for the fourth quarter of 2012 the universal service contribution factor will be 17.4%. That's an increase over the previous quarter and almost 2% higher than it stood in the fourth quarter of 2011.
As I explained in my blog post "New USF Tax Adds Urgency to Reform Effort," "the contribution factor translates into the line-item surcharge amount that is added to the interstate long-distance portion of consumer’s monthly phone bills." So consumers will be tapped with a 17.4% surcharge or "tax" on the long-distance part of their monthly phone bill for the next few months.
Below is an updated chart showing the dramatic growth of the USF tax burden on consumers in recent years:
This upward march in USF surcharges and the growth of the fund highlight the need to carry forward the reforms that the FCC begun in its 2011 USF Reform Order. FCC Chairman Julius Genachowski deserves credit for forging ahead with that order, as I discuss in my blog post "Universal Service Reforms Must Continue to be Implemented." Also critical is the FCC's more recent notice on USF contribution reform. We will likely have more to say about contribution reform in the months ahead.