by Keith Laing
The News Service of Florida
One of the first calls made this week by newly elected Florida Public Service Commission Chair Art Graham was that Floridians are paying too much into a federal fund created to subsidize telephone service.
For all the attention given to its decisions about electric utility rates, the PSC Graham was elected to lead earlier this week also regulates some aspects of phone service in the state.
And Graham, who ascended to the helm of the utility regulation panel just four months after joining, told the News Service of Florida he would like to see at least a partial cut in phone rates.
“One of the issues that caught my attention is the (federal) Telecom Universal Service Fund,” Graham said. “We put close to half a billion dollars in that every single year and we only utilize about a third of it. The rest of it is donated to the rest of the United States.”
The Universal Service Fund, which was created by Congress in 1996, offers subsidies in four categories: high cost, low income, rural health and schools and libraries.
In Florida, the money is typically used to fund the Lifeline program, which provides a $13.50 per month phone credit to residents who earn up to 150 percent of the federal poverty level. PSC spokeswoman Cindy Muir said that Floridians currently pay about 11 cents per month
The federal law that created the fund requires phone companies to contribute to the fund through an assessment on their revenues, which are regulated by the PSC, though the service fund is not.
All companies that provide either intrastate or interstate phone service are required to contribute a percentage of their annual revenues to the fund, though the percentage is adjusted quarterly.
The current contribution percent is 12.9 percent. The law does not specify the money has to come from customers, but in Florida, it currently does.
Graham said this week he would like to see that changed quickly.
“I think that’s kind of ridiculous that we’re collecting that kind of money,” he said. “I don’t think it’s necessary. I don’t think the goal is to just spend it because we have it. I think we should keep that in ratepayers’ pockets.”
The Federal Communications Commission, which oversees the Universal Service Fund, backs up Graham’s interpretation that customers do not have to pay into the fund.
“The way it works is companies are assessed a percentage of their interstate and intrastate revenue,” FCC spokesman Mark Wigfield told the News Service Wednesday. “They do not have to, but they may, pass it on to consumers. It is their decision.”
Wigfield said phone companies could decide to reduce the percentage of the contribution their customers pay without totally eliminating the charge on their bills. He added that the PSC could encourage phone companies to change the amount they charge customers for the Universal Service Fund, but the panel cannot require them to because it is a federal program.
AT&T Florida spokeswoman Stephanie Smith said the company does not have a position on the fund yet.
“We have not had time to evaluate such a change and are not prepared to respond at this time,” she said.
In 2008, states contributed more than $7 million into the fund, according the FCC’s year-end report. Florida chipped in $482,420, which was 6.63 percent of the national total. Figures for 2009 were not available.
In recent years, there have been accusations of abuse of the Universal Service Fund and Congress has considered limiting eligibility for the subsidies.