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The Honolulu Advertiser
Posted on: Thursday, June 22, 2006

Phone fee expected to go up

By Paul Davidson
USA Today

Bills for many wireless and Internet-based phone subscribers may rise slightly after federal regulators yesterday agreed to impose or increase universal service fees on the services.

The universal service fee is a 10.9 percent charge on landline and wireless long-distance phone calls that subsidizes phone service in rural areas.

But the $7 billion fund faces a $350 million shortfall because DSL broadband services will stop paying into it this summer. The FCC deregulated DSL last year, and DSL bills could drop if phone companies pass the savings to customers.

Voice over Internet Protocol and wireless services must now make up the difference. Subscribers of VoIP services such as Vonage, which pay no universal service fees, will be hit with a 7 percent fee because the FCC assumes most of their calls are long-distance.

Vonage's Chris Murray says consumer impact should be minimal because of the government's recent decision to scrap the 3 percent excise tax on long-distance calls.

Most cable VoIP subscribers pay a 3.1 percent universal service fee, but that would jump to 7 percent. The standard charge for cell-phone subscribers would rise to 4 percent from 3.1 percent.

Separately, the FCC launched a review of media ownership rules that could lead to more consolidation among broadcast and newspaper giants. The agency's two Democrats criticized the Republican majority for failing to allow for adequate public input.