February 17, 2006

Latino, welfare groups oppose FCC flat-fee for phone bills

By Elaine Marsilio
Scripps Howard Foundation Wire

WASHINGTON - Latino and welfare rights organizations lashed out against a plan to apply a monthly flat fee to all phone numbers to generate revenue for programs that help poor people afford telephone service.

They say the plan, which would replace a fee on long-distance phone service, would fall unfairly on people who use the least amount of telephone services.

The Universal Service Fund, totaling $7.1 billion in 2005, currently relies on a 10.2 percent fee assessed on interstate and international long-distance revenues. The fund, operated by the Federal Communications Commission, has been losing revenue recently as consumers have switched to wireless phones or VoIP, Internet phone service.

If the commission approves, the flat fee – which opponents estimate will be $1 to $2 per month – would be applied to all phone numbers, including fax, VoIP and wireless. Service providers must pay the 10.2 percent fee to the fund, which they may pass on to customers, said an FCC spokesman, who declined to allow the use of his name.

The flat fee would replace the current method of obtaining revenue, he said, which would broaden the revenue base.

Revenue from the fee never goes to the U.S. Treasury, and Congress does not approve it, so it is not a tax, he said. In addition to helping poor people pay for phone service, the fee also finances Internet and telecommunications services in classrooms, libraries, rural health care agencies and for consumers in isolated areas.

In July, FCC Chairman Kevin J. Martin told a conference of utility commissioners in Austin, Texas, that the universal service mechanism was failing. He said heavy consumer movement to wireless and VoIP was hurting fee collections from traditional long-distance market.

“These problems that exist with the universal service fund are far reaching, affecting several industries – wireline, wireless and cable,” he said.

Some Latino and welfare rights groups, which are part of the non-profit Keep USF Fair Coalition, said during a phone conference last week that the flat fee would be unfair because many Latinos already cannot afford their phone service.

Ana Montes, director of technology and consumer education for the Latino Issues Forum, said that, among the 43 million Americans who make few long-distance calls, 3 million to 5 million Hispanic and Latino households would begin paying or pay more into the fund if the commission approves the flat fee.

Montes said many Hispanics would end up paying to subsidize the cost of high-volume callers.

“This is a population that is barely earning minimum wage,” Montes said. “It hurts, and it hurts them on a daily basis.”

The fund provided $800 million in 2005 for two programs, Life Line and Link Up, which help low-income families pay for monthly phone service and installation fees. According to an FCC report, in 2005 more than 6.9 million people used Life Line and 1.7 million people used Link Up.

Hispanics who are not legal residents usually do not qualify for the FCC’s assistance programs, Montes said in an interview. Those who do not speak English often don’t know about the programs.

“A lot of Latinos do not seek out those services,” she said.

The 2005 FCC universal service report states that 95 percent of white, black and Hispanic households earning between $25,000 and $29,999 in 2004 – below the national median household income of about $44,000 – had telephone service.

Verizon spokesman Brian Blevins said in an e-mail the company does pass the service fund fee on to customers. As of December, Verizon had 48.8 million subscribers nationally to basic telephone access lines. In the Nation’s Capital, the company offers basic phone service for as low as $6 a month and a long-distance plan that starts at $1.50.

Blevins said he could not divulge how many customers make few long-distance calls because the information is “highly competitive.”

Gabriela Lemus, director of policy and legislation for the League of United Latin American Citizens, said the flat fee would cause a drastic shift in the source of fees because low-volume callers would pay the same as high-volume callers.

Hilary Shelton, director of the NAACP’s Washington Bureau, said in an interview that his organization agrees that a flat fee would hit many low-income minorities disproportionately.

“Increases to basic living expenses like basic telecommunication services to someone on a fixed income could really create hardships in these communities,” Shelton said.

The NAACP filed comments with the FCC opposing the flat fee in late 2005, Shelton said.

The coalition has also looked into the impact the fund may have on deaf, disabled and elderly individuals.

“We cannot look at this from the perspective that it will impact only one group. The fund needs to be kept intact,” Montes said.

The coalition filed a report opposing the FCC plan in November, stating the commission should consider consumer impact before changing how contributions are made.

The commission does not have a deadline for a vote, but the FCC spokesman said Martin considers the plan a priority.

“The bottom line is consumers pay either way,” the spokesman said. “They pay now, they will always pay.”

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