A new report warns of a "staggering increase" in telephone taxes for colleges if the FCC changes its method of collecting money for the Universal Service Fund (USF). ', '

"The reality is that extra USF costs for colleges and universities would be passed along to students and families either in terms of reduced service or higher bills," said Linda Sherry, co-chair of the Keep USF Fair Coalition.

The group released a study today called "Flunking Numbers" that is critical of an industry proposal to revamp the USF's revenue collection system. The USF places a tax on long distance calls to fund telephone service for the poor, and to support telecommunications services for libraries, schools, and rural health care providers. Phone companies must collect the revenue and give it to the fund.

But the USF has been plagued by collection problems as more phone services migrate to the Internet. In October of last year, FCC Chair Kevin Martin declared its collections system "outdated." Some telecom firms propose revamping the present USF system with a "flat-fee" scheme in which providers would pay into the fund based on working telephone numbers rather than long distance service volume.

The Keep USF Fair Coalition, an alliance of consumer and civil rights groups, opposes this reform, charging that it will "will unfairly discriminate against low-volume users since their USF fees would be the same as a high-volume users."

The Coalition's "Flunking Numbers" report says that a "flat tax" based USF system would hit colleges and universities the hardest, since they provide individual phone numbers to millions of students who live in dormitories. The study, based on data collected by the American Council on Education, estimates the net annual increase in costs to higher education at from $320 to $480 million.

The report also includes a collection of statements by university officials who condemn the flat fee idea and warn of service cuts and tuition hikes as a consequence.

"We hope that the Commission modifies its universal service policies in a manner that reflects the potential impact on colleges and universities," says Dionne Speer, accountant at the University of South Florida, "and suggest that no reform proposals be formally adopted by the Commission until such time as to the full impact of those proposals is studied and understood.”

Tate speaks to rural cellular convention

Meanwhile, on May 9th, the FCC's newest Commissioner, Deborah Taylor Tate, outlined her ideas about the future of the Universal Service Fund to the Rural Cellular Association, holding their annual convention in Palm Springs, Florida.

Actually, Tate sent them a video tape of herself making those remarks, which made no specific reference to the flat fee controversy.

Tate emphasized that there is "no one solution" to the question of USF funding, but offered a range of possible answers, including "fixing the USF collection mechanism," restricting some rural regions to just one USF funded carrier, and creating separate funding systems for wired and wireless phone services.

"Rural wireless providers, who, by some accounts, receive nearly $1 billion under the current rules, need to do their part in helping us reach a balanced solution that is in the best interests of all Americans," Tate said.

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