Free Press supports the goal of modernizing the USF, but is concerned with several aspects of the plan, including the proposed increase to the monthly subscriber line charge (SLC). Past FCC research reveals this fee is already far in excess of what these monopoly local phone companies need to recover costs, and increases in the rates amount to nothing more than a gift to the companies who authored this proposal.
Free Press Research Director S. Derek Turner made the following statement:
"While this industry-authored proposal is certainly more sound than most of the prior self-interested plans we've seen, it still falls short of adequately confronting the real problems with the Universal Service Fund. Worse, it ensures that the inflated profits of telecom companies are protected by shifting the burden of reform to ordinary consumers.
"We are pleased to see that the proposal recognizes the need to bring the USF system into the 21st century, both in terms of which services are supported and how that support is determined and awarded. And while we are also glad that the so-called access revenue replacement mechanism is proposed only as a temporary fund, though when it comes to USF at the FCC anything created as a temporary subsidy always becomes permanent.
"Our biggest concern is the proposal's deeply self-interested suggestion that the monthly subscriber line charge be increased. AT&T and Verizon each stand to save billions of dollars if the FCC lowers the intercarrier compensation charges, the fees that long-distance companies pay to rural phone companies to terminate calls on those networks. But this proposal would also let the large carriers raise rates on their own urban customers by increasing the monthly subscriber line charge. Raising this fee for everyone in the name of increasing the self-sufficiency of a small number of already highly profitable rural phone companies is unnecessary and nothing more than a major gift to the biggest telecom carriers like Verizon and AT&T.
"The FCC's own proposal, while it still perpetuates many of the flaws with the current USF and is far from ideal, is much more balanced and rational than this industry-authored plan. The FCC has already had two rounds of public comment on its own proposal, which came out of the National Broadband Plan. There was no need for the FCC to ask industry once again for their own plan, and we hope the Commission recognizes its flaws and proceeds forward with a real plan to offer the American people rational USF reform that sets politics and industry concerns aside in favor of good public policy."