PHONETAXCALCULATOR.COM: YOUNG ADULTS TO BE ZAPPED UNDER CONTROVERSIAL FEDERAL USF PHONE TAX CHANGES

Keep USF Fair Coalition Cautions “Connection-Loaded” Young Consumers of Big Tax Hikes Under Numbers -Based Approach for Universal Service Fund

WASHINGTON, DC (June 27, 2006) -- If you are over the age of 45, you have a home phone and possibly a cell phone. But if you are under the age of 25, you may very well have four, five - or even more - “connections”: a home phone, one or more cell phones, an IM or Blackberry-style device, a broadband data connection and maybe even a separate line for online video gaming and/or a digital video recorder (DVR). That is why the Keep Universal Service Fund (USF) Fair Coalition is warning today that younger adults are among those who would fare the worst under a controversial plan now under discussion in Washington, D.C., to shift the Universal Service Fund tax on phone bills.

Under the proposed change, the USF tax would shift from the current percentage of actual long-distance calls to a flat, monthly tax of $1-$2 on all connections – including non-voice data lines – regardless of whether the connections are used for any long-distance calls. To show the potential cost to young adults of changing the USF funding formula, the Keep USF Fair Coalition is launching http://www.phonetaxcalculator.com, which allows young adults to estimate their current USF tax burden and how much it would go up under the widely criticized per-connection approach.

Visitors to http://www.phonetaxcalculator.com are urged to send a letter to the Members of Congress to oppose any unfair shifting of the burden of funding USF onto the backs of younger adults.

Linda Sherry, director of national priorities of Consumer Action and co-chair of the Keep USF Fair Coalition, said: “It makes no sense whatsoever to take a federal fee that is supposed to help more people use telecommunications services and then pay for it by penalizing the young generation of consumers who have really taken up the call to make the most of voice and data services. Funding USF based on those who make the most long-distance calls is what we do today and it makes good policy sense.”

Just how big a bite would the USF changes amount to for younger consumers?

Consider the hypothetical case of a 25-year-old married couple with (a) average monthly cell bills on two cell phones totaling $65, (b) 20 minutes a month of long-distance minutes on their home phone line, (c) and two other connections -- a broadband data line for Web/email access and a separate phone line dedicated to a home entertainment center for PPV movie purchases, DVR database updates and online gaming.

For this couple, USF taxes (assuming a $1.50-per-connection tax) would nearly triple from $32.15 a year to $90 per year – an increase of $57.85 – almost an extra month of cell phone charges for the couple in question!

This is the second warning of interest to young people about possible USF tax changes that has been issued to date by the Keep USF Fair Coalition. On May 11, 2006, the Keep USF Fair Coalition released a major report showing that America’s 4,325 colleges, universities and other post-secondary institutions will be socked with a net annual increase in federal Universal Service Fund (USF) phone taxes of $480 million if the Federal Communications Commission (FCC) moves ahead with a plan to switch the USF to a flat fee of $1.50 per phone number, Web-access line and other connection.

The Coalition’s “Flunking Numbers” study detailed how the average college and university in the United States would see its USF phone bill soar from $8,971 per year to $82,999, an average increase of 892 percent. With some schools seeing even more staggering USF tax hikes of 1,000-3,000 percent, colleges and universities would be forced to respond with tuition hikes, the endangerment of student and faculty on-campus safety, cuts in planned technology/telecommunications investments, and the reduced availability or outright elimination of college dorm phones.

ABOUT THE COALITION The Keep USF Fair Coalition (http://www.keepusffair.org) is committed to keeping the Universal Service Fund collection method fair, and opposing proposals to move to a regressive, per-line flat fee. Now counting more than 145,000 members in its ranks, The Keep USF Fair Coalition was formed in April 2004. Current members include Alliance for Public Technology, Alliance For Retired Americans, American Association Of People With Disabilities, American Corn Growers Association, American Council of the Blind, Black Leadership Forum, Consumer Action, Deafness Research Foundation, Gray Panthers, Latino Issues Forum, League Of United Latin American Citizens, Maryland Consumer Rights Coalition, National Association Of The Deaf, National Grange, National Hispanic Council on Aging, National Native American Chamber of Commerce, The Seniors Coalition, Virginia Citizen’s Consumer Council and World Institute On Disability. The NAACP is a supporter of the Keep USF Fair Coalition, and is among the many national organizations that have filed comments with the FCC in support of a non-regressive USF collection method.

On November 17, 2005, the Keep USF Fair Coalition released a report entitled “Losing Numbers: How America’s Most Vulnerable Consumers Could Suffer Under Universal Service Fund (USF) ‘Reform’”. That report concluded: “The currently consumer-friendly ‘pay for what you use’ approach to funding the Universal Service Fund would be replaced under the Martin plan with a regressive, flat-fee arrangement of $1-$2 or more per phone line – regardless of whether or not consumers even make a long-distance call. For a consumer who now dials only a handful of long-distance calls per year and pays correspondingly low USF taxes, the effective tax rate under the Martin plan would soar by more than 1,000 percent on an annual basis! With low-income and elderly consumers already socked with high gas prices, higher home energy costs and the prospect of soaring summer cooling bills and continued inflation in medical prescriptions, the wide range of diverse groups in the Keep USF Fair Coalition are opposing the Martin ‘numbers’ based plan. These groups caution against balancing USF finances on the backs of the very consumers who use long-distance the least and are unable to afford phone bills that would rise under ‘numbers’ simply in order to subsidize high-income/high-volume callers.”

CONTACT: Ailis Aaron, (703) 276-3265, or aaaron@hastingsgroup.com.