News Column

FCC Reconsiders the USF Fee on Telephone MR Bills

August 8, 2014



GLASTONBURY, Conn., Aug. 8 -- The Marketing Research Association issued the following news:

Will the Federal Communications Commission (FCC) finally bring some certainty to the telephone bills of survey, opinion and marketing research firms, or will it simply spread the tyranny to online research as well? On August 6, the FCC asked the the Federal-State Joint Board on Universal Service to recommend how the FCC should modify the "Universal Service methodology" which determines the size of the fee on your telephone bill. Those recommendations are due in April 2015.

Background

The Universal Service Fund (USF) was originally established to subsidize phone service for consumers with low incomes and those living in remote areas where connecting residents to the grid was very high. It expanded in the 1990s to subsidize access for schools and libraries and rural healthcare providers to Internet connections and information technology, and now focuses more on broadband access.

Telecommunications companies providing interstate phone service -- whether wireline, wireless, or purely voice-over-Internet-protocol (VOIP) -- must contribute to pay for the Fund. Most companies pass their contribution costs through to customers as a percentage of their usage. The USF "Contribution Factor (http://www.fcc.gov/encyclopedia/contribution-factor-quarterly-filings-universal-service-fund-usf-management-support)," which is the percentage of the interstate end-user revenue that telecommunications providers must pay, changes quarterly, depending on the needs of the USF programs, as determined by the Universal Service Administration's quarterly filings with the Federal Communications Commission (FCC).

In the second quarter of 2000, the USF fee was 5.7 percent, but has since grown dramatically (and erratically). The high point of 17.9 percent in the first quarter of 2012 has subsided a bit to to the current rate of 15.7 percent for the third quarter of 2014.

USF and the impact on research

Telephone research is still widely used in research, even as it struggles under the burdens of a growing wireless-only and wireless-mostly population and the Telephone Consumer Protection Act (TCPA) restrictions on using an autodialer to call a cell phone without express prior consent (http://www.marketingresearch.org/tcpa-restrictions-on-using-autodialers-to-call-cell-phones). That is why MRA continues to oppose the imposition of USF payments as a pass-through charge to telephone users.

Although MRA remains agnostic on the USF itself, we support efforts to limit the growth of the fund and the programs it serves, because such an unfair proportion of the cost in the funding arrangement falls directly on our membership.

MRA also advocates making the determination of the "Contribution Factor" an annual change instead of the current quarterly one, which would allow telephone users to better prepare for the costs on their phone bills. The quarterly changes can be quite jarring, and make it exceedingly difficult for subscribers to account for in their own annual budgeting.

Changes coming to the USF

The FCC and Congress are considering changes to the USF, expanding its purview. Rural phone and Internet access is not much of a concern any more and the average public school student carries more computing power in their wireless device than they might find in a desktop computer at their school or library, so the focus has shifted to expanding high-speed broadband Internet access as a USF rationale (which indicates that the USF may be a never-ending program) (http://techliberation.com/2012/08/07/universal-service-subsidies-public-choice-economics-yet-another-case-study/). With the focus having grown far beyond mere telecommunications, it is possible that the recommendation could come back from the Joint Board that the USF could be applied to every provider of Internet connectivity (and online research could feel the pinch as well).

Because they can pass the cost on to customers, telecommunications providers don't sweat these changes too much. Internet service providers, in their various forms, may or may not feel the same way. As FCC Commissioner Michael O'Reilly warned (http://transition.fcc.gov/Daily_Releases/Daily_Business/2014/db0807/FCC-14-116A1.pdf), "contributions reform should not be seen as a backdoor way of increasing the size of the universal service fund or imposing new fees on the Internet. For example, I would be concerned by any effort to assess IP addresses. I hope that the Joint Board, and ultimately the Commission, will consider reforms that modernize contributions without inhibiting broadband investment or imposing additional burdens on the consumers that pay to support universal service."

Regardless, the research profession identifies the USF fees as a real problem. This anachronistic federal program is driving up the cost of telephone research.

The dramatic fluctuations in the USF fee may have a minimal impact on an ordinary phone subscriber's bill, but for a company or organization conducting telephone research -- or the many more companies, organizations and governments purchasing that research -- those changes can be drastic. Quarterly changes make it next to impossible to budget and set a cost structure for research. This is why MRA advocates that the USF fee determination should at least be changed only annually (http://www.marketingresearch.org/universal-service-fees-and-telephone-research).

[Category: Marketing]

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