Released: June 01, 2006

New fee for wireless and Internet phones

Source: By Paul Davidson, USA Today

Subscribers of Internet-based phone and wireless services would face higher bills this year under a federal proposal to impose or increase universal service charges on those offerings. Many Internet-based phone customers would be hit hardest, with monthly increases of about $1.75, narrowing the cost advantage those offerings now enjoy over traditional phone service.

Members of the Federal Communications Commission are reviewing the proposal by Chairman Kevin Martin and are expected to consider it at their June 15 meeting, say three FCC officials with knowledge of the agency’s plans. They requested anonymity because the commissioners have not voted on it.

Passage is likely because a Republican commissioner, telecom lawyer Robert McDowell, should be sworn in soon, giving the GOP a 3-2 majority, says analyst Jessica Zufolo of Medley Global Advisors.

Now, universal service fees (USF) are assessed on landline and wireless long-distance phone services to help pay for phone service in rural areas, among other things. The 10.9% surcharge bankrolls a $7 billion annual fund.

As landline long-distance calls decline, Martin wants a flat tax for all phone numbers.

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