U.S.-Mandated Phone Fee Could Increase 18% by 2007

U.S. households could see a government-mandated fee on their telephone bills rise as much as 18.1% by 2007 depending on what changes are made to a fund that subsidizes communications services, congressional budget officials said Monday.

Telephone carriers that offer long-distance service are required to pay a percentage of revenues into the Universal Service Fund, which subsidizes telephone service for low-income families as well as Internet access in schools and libraries.

Typically those fees are passed on to consumers. But the emergence of wireless and unlimited calling plans has raised questions about whether the fund is sustainable.

Some possibilities for revamping the system include charging a flat fee for each telephone number or expanding the services that would fall under the program, according to a report by the Congressional Budget Office.

If no action is taken, a shrinking long-distance revenue base and increased demand on the so-called USF program would cause the average payment by each household to rise 8.1% to $2.26 a month in 2007 from $2.09 a month in 2003, the report said.

The monthly average charge probably would rise to $2.47 a month by 2007, or 18.1%, if the USF program was switched to a per-number charge or if cable high-speed Internet service was included in the revenue for calculating contributions.

Alternatively, if based on usage of multiple communications services, the monthly fee probably would be $2.28 by 2007, the report said.

Another option could be funding the USF programs through general Treasury revenue, the Congressional Budget Office said.

“The economic cost of raising a dollar in general revenues ... is generally less than the economic cost of raising a dollar from sector-specific taxes, which tend to distort consumers’ choices by affecting the prices of goods and services,” the report said.