MIAMI, FL. (November 15, 2006) A warning today for consumers in Florida:  You stand to be among the biggest losers in the United States under a widely criticized plan to shift the burden of who pays the federal “Universal Service Fund” (USF) tax on long-distance phone bills.  A proposal backed by America’s biggest telephone companies could saddle Sunshine State consumers with a $218 million annual tax hike, according to the urgent warning from the Florida Alliance for Retired Americans (FLARA), the Florida Consumer Action Network (FCAN) and the Keep USF Fair (KUSFF) Coalition.

Under the major push now being mounted in Washington by BellSouth, Verizon, AT&T, USTelecom, IDT Corporation and others, Florida consumers would suffer as the result of a shift of the USF from a consumer-friendly, pay-for-what-you-use tax on long-distance to a regressive per-connection charge that would be imposed on every phone line whether or not consumers made any long-distance calls at all.   This fall, Verizon and BellSouth were forced by pressure from consumer groups, the Federal Communications Commission (FCC) and others to back off plans to create a new “mystery fee” to replace most of the USF tax recently eliminated for DSL broadband connections.

According to research from the Keep USF Fair Coalition, senior, Latino, low-income and rural consumers in Florida and elsewhere would pay the most in additional USF taxes under the controversial per-connection approach.    For Florida, the change in USF to a per-connection tax would mean an increase in taxes of $218 million per year at the rate of $1.50 per connection.  Florida already pays $386 million in USF taxes.  For full state-by-state data on the phone companies’ proposed USF tax hike, see the chart at http://keepusffair.org/KeepUSFFair/release_033006_graph.html.

Florida Alliance for Retired Americans President Tony Fransetta said:  “It is estimated that Florida’s older residents and other consumers would pay more than a fifth of a billion dollars in additional USF taxes under the phone industry’s unfair plan for the Universal Service Fund tax.  That is obviously a ‘wrong number’ for consumers in Florida, particularly when the burden would shift so sharply from high-income/high-volume long-distance callers to low-income/low-volume long-distance users.  Our message to Washington is clear:  Hang up now on this anti-senior and generally anti-consumer plan from the phone industry.”

Florida Consumer Action Network Executive Director Bill Newton said:  “We support the concept of the Universal Service Fund, but that certainly does not mean that we want to see the funding formula shift radically in a way that disadvantages Florida seniors, rural residents, Latinos, the poor and others.    It is critically important that USF funding remain on a basis where those who use the most long distance pay their fair share.  It makes no sense to start taxing Florida consumers for long-distance service when many of them are not even using it.”

Maureen Thompson, executive director, Keep Universal Service Fund Fair Coalition said: “The plan of big telephone companies for the Universal Service Fund is bad news for consumers because it would significantly worsen the inequities in terms of who foots the bill for USF and who reaps the benefits of the Fund. The data for Florida point out how no one in the industry has really taken the time to explore the implications for consumers of changing the USF funding scheme. It is increasingly obvious that they have not been forthcoming with this information because it paints such a damning portrait of switching to ‘numbers’ or line-based funding methodology.  It also is important to make sure that the extensive waste and inefficiency in the USF is stamped out so that the money that is spent actually reaches those who need it.”

The Keep USF Fair Coalition noted that, at the $1.50 per-connection USF charge level, all 50 states would end up paying in more than they are getting back. Even at the more modest $1-per-line level, only consumers in Alaska, North Dakota, South Dakota, Wyoming, Mississippi, Montana, Oklahoma, New Mexico, West Virginia, South Carolina and Connecticut would get more out of the USF than they are paying into it.

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 ? (connections-based) 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 ? (connections-base) 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 (industry-backed) ‘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.”

On February 9, 2006, the Keep USF Fair Coalition reported:  “Millions of Latino and Hispanic long-distance phone customers in the United States would be socked with higher federal fees on their phone bills under a widely criticized proposal ? to force phone users who make few long-distance calls or use pre-paid wireless phones to either start paying or pay more into the Universal Service Fund ? Other than older Americans, Latinos and Hispanics account for the largest number of Americans who would end up paying more under the (industry) plan for USF ? Three to five million Hispanic and Latino households in the United States could be included among the 43 million Americans paying more in federal phone fees ?”

ABOUT THE GROUPS
Based in Wellington, the Florida Alliance for Retired Americans is made up of 125,000 union and community-based retirees across the state.  Formerly known as the Florida State Council of Senior Citizens, FLARA was formed in 1963 during the fight for Medicare.  The organization now finds itself fighting once again to protect the programs and policies that ensure the health and economic security of older Americans.   The Florida Alliance for Retired Americans is on the Web at http://www.flara.org.

With more than 40,000 members, the Florida Consumer Action Network (FCAN) is Florida’s largest consumer group.  FCAN is a grassroots organization which empowers citizens to influence public policy by organizing and educating in areas where consumer voices are underrepresented.  The Florida Consumer Action Network is on the Web at http://www.fcan.org.

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 115,000 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, California Alliance of Retired Americans, 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, Utility Consumer Action Network, 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.

EDITOR’S NOTE:  A streaming audio replay of a related news event may be found on the Web at http://www.noflatfee.org as of 2 p.m. PT/5 p.m. ET on November 15, 2006.