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Time for More Universal Service Reform

- July 24, 2006 - 0 Comments

WASHINGTON, D.C. — Recently, the FCC has expanded the contribution method for funding Universal Service at the federal level by expanding the contributions of wireless providers and by requiring that Voice over IP providers pay into the system. Although many VoIP providers had been paying into Universal Service voluntarily, the FCC order makes it mandatory and will likely raise the level of the fees. The FCC’s action will stabilize the Universal Service fund for a while, but it raises almost as many questions as it answers.By including VoIP providers in the Universal Service requirements, the FCC is eliminating an anomoly that created an opportunity for arbitrage by some VoIP providers. But by continuing the same contribution system that has different services paying into Universal Service at different rates, the opportunity for arbitrage still exists, just in the opposite direction.The correct answer would be to treat like services similarly, regardless of technology. The best and easiest way to achieve technology neutrality and eliminate arbitrage opportunities is to base Universal Service contribution on the use of PSTN numbers. A single monthly charge per number would treat all services — traditional telephony, cellular, VoIP — alike and would be easy for consumers to understand. FCC Chairman Kevin Martin proposed a numbers based system for Universal Service collection when he was a Commissioner. Hopefully, he will be able to convince his colleagues on the FCC to adopt this simple and fair method to fund Universal Service.

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