KEEP UNIVERSAL SERVICE FUND (USF) FAIR COALITION: NEW INDUSTRY USF GROUP SHOULD DISCLOSE HOW MANY MILLIONS OF THEIR CUSTOMERS WOULD PAY MORE UNDER “NUMBERS”-BASED LONG-DISTANCE PHONE TAX

KUSFF Notes that Members of Coalition Are Supporting Numbers-Based Fee In
Order to Evade USF Payments Ordered Just Last Week by Federal
Communications Commission (FCC)

WASHINGTON, DC (July 11, 2006) -- The Keep USF Fair Coalition today urged the members of the “USF by the Numbers Coalition” to publicly disclose how many millions of their customers would end up paying higher Universal Service Fund (USF) long-distance phone taxes if the collection methodology for the Fund is changed to a regressive, flat tax that would significantly and unfairly shift more of the USF financing burden to senior citizens, minorities, rural residents, and low-income individuals.

The Keep USF Fair (KUSFF) Coalition also noted the timing of the launch of the “USF by the Numbers Coalition,” which features corporations with pre-paid calling card divisions that opposed the July 5, 2006 decision by the Federal Communications Commission (FCC) to extend the USF tax to calling cards. It appears that this hastily assembled group is seeking to reverse the Commission’s decision by supporting a policy step that would slash the USF burden on its key members.

Keep USF Fair Coalition Co-Chair and Consumer Action Director of National Priorities Linda Sherry said: “There is a good reason why every consumer, minority and seniors group on the record to date has spoken against switching the USF funding mechanism to the unfair and anti-consumer ‘numbers’ approach recommended by this industry coalition. Our research shows that 43 million low-volume long-distance users – including 16-million households of primarily elderly and poor individuals – would pay more under a numbers-based approach.”

KUSFF Coalition Executive Director Maureen Thompson added: “The members of this industry-run coalition owe it to consumers to stop talking about meaningless USF ‘averages’ and to start disclosing how many millions of their customers would pay more USF taxes under the industry’s ‘numbers’-based approach. Nobody pays an ‘average’ tax. Let’s get the information about each company’s winners and losers out in the open so that we can have a real debate about the industry’s plans for the Universal Service Fund. We should be focusing on making sure that abuses in the fund have been brought under control and that the growth in the fund is constrained. Zapping millions of America’s most vulnerable consumers with higher federal phone taxes is not the right answer here.”

Consumer opposition to changing the USF tax has grown steadily in the last two years. The Keep USF Fair Coalition’s successful campaign has prompted U.S. consumers to send one million letters and emails to Congress and the FCC in opposition to the proposal to shift from the current pay-for-what-you-use USF tax to the anti-consumer “numbers”-based collection methodology.

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 ‘Reform’”. That report showed that a numbers-based methodology formula for USF would result in higher federal phone taxes (or forced phone bill hikes) of as much as $707 million for 43 million low-volume long-distance user households in the United States. Of greatest concern within the group of harmed consumers: the most vulnerable of Americans – 16 million households of primarily low-income and elderly individuals – who currently can afford few or no long-distance phone calls, but would have to pay up to $383 million in higher USF taxes under the numbers-based methodology.

The KUSFF report noted: “The currently consumer-friendly ‘pay for what you use’ approach to funding the Universal Service Fund would be replaced ? 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 ? would soar by more than 1,000 percent on an annual basis!”

On February 27, 2006, the Keep USF Fair Coalition issued a separate report debunking the panic being manufactured by those who want to change the Universal Service Fund fee to a flat per-line (or “numbers”) charge. That report, entitled “Exposing the Hoax: The Phony 'Crisis' of the Universal Service Fund,” noted: “Proponents of killing or expanding the federal Universal Service Fund (USF) fee paid by consumers on long-distance charges share one thing in common: the claim that the Fund contribution formula is ‘broken’ and ‘needs to be repaired.’ ... However, the facts suggest that the case for a change so radical as shifting USF to a numbers-based formula is the telecommunications equivalents of weapons of mass destruction (WMDs) in Iraq: The evidence of a problem isn’t there.”

On May 11, 2006, the Keep USF Fair Coalition reported 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 phone taxes of $320 million-$480 million if the Federal Communications Commission moves ahead with a plan to switch the USF to a flat fee of $1 or $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. Dozens of U.S. colleges and universities have opposed switching to a numbers-based collection methodology for USF.

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 Consumers League, 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.

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