Since 1996, Americans have become more comfortable with NEW TAXES!

Universal Service Fund

The “Gore Tax,” which is now being collected (upon directive of the FCC) by telephone companies, began as a 5% fee (tax) on all interstate long-distance charges, which will, as AT&T is explaining to its customers, “give schools and libraries access to advanced services like the Internet.”

The Universal Service Fund is a vehicle for maintaining universal service in the telecommunications sector (do you hear Socialism?). In order to support telephone service in high cost areas, this fund, which is supported by long-distance service providers, pays subsidies to local exchange carriers (LECs) in proportion to their subscriber line costs. Subsidy payments from the USF were started in 1986, and its initial eight-year plan came to an end in 1993.

The 1996 Act’s stated objective was to open up markets to competition by removing regulatory barriers to entry: The conference report refers to the bill “to provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced information technologies and services to all Americans by opening all telecommunications markets to competition”.

The Federal Telecommunications Act, passed in the Spring of 1996, called for major changes in the telecommunications industry. The act placed an emphasis on competition and deregulation, and included new rules on who could tap funds in the Universal Service Fund (USF). The act went on to include changes in how the USF could be used. The Universal Service regulations were published in the Federal Register on June 17, 1997 and took effect on July 17, 1997 – just in time for the Clinton “budget deal.”

American Enterprise fellow James K. Glassman says of the Gore Tax, “The educational benefits are more uncertain, and 80 percent of schools are already connected to the Internet anyway.” Less than 2% of telephone tax revenues are actually being designated for “connection fees.”

For the first time, the 1996 Act includes schools and libraries among the explicit beneficiaries of universal service support. The legislative history indicated that Congress intended to ensure that eligible schools and libraries have affordable access to modern telecommunications and information services that will enable them to provide educational services to all parts of the nation.

K-12 schools and libraries are eligible for discounts of 20% to 90% on telecommunications services, Internet access, and internal connections. Funds will be distributed from a single, common universal service fund that has a cap of $2.25 billion per year for the entire United States. Any unspent funds carry over for use in the next year, with slightly different carry forward rules in the first two years.

By 2006, the fee had more than doubled to 10.9%. The FCC has subsequently voted to raise the Universal Service Charge or “Gore tax” as its become known on telephone users by $1 billion and by 2006 has now grown to become a $7 billion tax. If memory serves me, Article 1, Section 8 of Constitution still says only “Congress shall have power to lay and collect taxes.” How is it that the FCC now has this authority?

In June, 2006 the FCC expanded the USF making Internet telephone calls subject to universal service fund charges for the first time, while raising by 30 percent the basic USF rate to be paid by customers with cellular service.

In 2011, the FCC made material changes in the USF program, largely benefiting the largest traditional telephone companies in the country, which now have double the access to funding than they had before those changes. Smaller traditional and wireless carriers were given reduced access to support going forward, which means that unless the FCC makes future changes, the country will depend in large measure on two carriers to carry out broadband deployment and ongoing operations in rural areas in the future, and in very rural areas of the country, service may diminish.

Rural Health Care

The FCC is encouraging the growth of telehealth in rural areas by making telecommunications rates for public and non-profit rural health care providers comparable to those paid in urban areas. The annual cap on federal universal service support for health care providers shall be $400 million per funding year. Telehealth is the use of communications technologies to provide and support health care at a distance. Examples of telehealth include the use of communications to provide patient treatment, often via still images or video, and the exchange and distribution of public health information.

Only certain health care providers are eligible to receive supported services under this FCC act. (i) Post-secondary educational institution offering health care instruction, including a teaching hospital or medical school; (ii) Community health center or health center providing health care to migrants; (iii) Local health department or agency; (iv) Community mental health center; (v) Not-for-profit hospital; (vi) Rural health clinic; or (vii) Consortium of health care providers consisting of one or more entities . Only public or non-profit health care providers shall be eligible to receive supported services.

Phone Number Portability

My phone bill from Southwestern Bell contained the following explanation:
“The Federal Telecommunications of Act of 1996 required local telephone companies to initiate measures that permit customers to keep their local telephone numbers if they change their local telephone service provider while remaining at the same location. This capability is commonly called “number portability. The Federal Communications Commission (FCC) has ruled that the costs to provide “number portability” may be recovered through a monthly service charge.”

My first reaction when I saw this new tax was, “What other local telephone services provider?” So, I called Southwestern Bell billing department to ask them about it. I spoke with Linda who very cordially told me she could not divulge that information about their competitors. She suggested I call the local operator and ask them. So I spoke with Frank who essentially repeated what Linda had told me and suggested I look in the Yellow Pages. Letting my fingers do the walking, I found a small obscure listing for a company that provided such service. So, I called them to inquire about their services. Guess what? They buy their lines from Southwestern Bell! What a deal … get billed by another company that is going to mark up their costs from the established company (SWB) and get to charge an extra fee (or tax) to boot. (Do I hear ‘conspiracy’ anywhere?)

Okay, say I don’t care about having “number portability” and want to cancel it. I call Southwestern Bell again, this time talking with April. She was again very cordial and tried her best to explain to me the new charge (within company guidelines of “what she can and cannot say.”) Come to find out that even if I never use the “number portability” service, I still have to pay for it in order to have the privilege of calling someone else who might take advantage of the service.

When is “enough – enough?” These lying politicians in Washington tell us that they are reducing our taxes … while they slip in all these additional fees. I asked April at Southwestern Bell if she had been getting many calls inquiring about this new tax. She said they had, but most people were satisfied after being told it was just another mandated tax levied by the Federal Government.

Personally, I’m getting a little tired (no, allot tired), of the government taxing, taxing, and taxing, all the while telling us they’re reducing taxes. They are simply doing what Bill Clinton and the U.S. Senate legitimized: lying!

My most recent phone bill from Southwestern Bell contains 36% taxes and fees! Someone please tell me how this is “the right thing to do.”

Internet Tax

Perhaps you’ve seen the ad or received an email stating:

Internet Tax Alert
Congress is considering long distance charges for your internet connection.
CNN has reported that the Government would be deciding at any time to allow or not allow a Charge to your phone bill equal to a Long Distance call EACH time you access the Internet.

The above alert has been labeled a “hoax” and “urban legend” by some. But, the facts can speak for themselves… the FCC, not Congress recently ruled on this exact topic and it was not “hoax.” Folks, they may not be getting additional fees (taxes) in the next several months, but you should know they have their eyes on the “deep pockets” of the Internet and will incrementally raise prices (increase taxes) disguised as some other kind of fee.

If the telecommunication companies have their way, you WILL end up paying more for basic service. The FCC has ruled that calls to ISP’s should be considered interstate transmissions, so ISPs may have to pay fees to local phone companies for using their wires. FCC Chairman William Kennard denies that consumers will end up paying higher rates. Right now, the charges are being waived as an exception, but given the huge stakes involved, you can count on a long drawn-out legal battle.

Enhanced 911

Cell phone subscribers in nearly every state pay anywhere from 20 cents to $1.50 a month for what is described in their bills as 911 improvements. In a recent Associated Press analysis, more than $200 million collected from cell phone users for upgrades to the 911 system has been diverted in the last two years to plug state budget holes, keep campaign promises and, in at least one case, buy police uniforms. In some states, the AP analysis found, less than half that money is actually going to help emergency dispatchers keep pace with the features of smart phones.