In a Further Notice of Proposed Rulemaking (“Further Notice”) released on April 30, 2012, the Federal Communications Commission (“FCC”) is seeking comment on substantially reforming its Universal Service Fund (“USF” or “Fund”) contribution methodology. The Further Notice will likely result in major contribution changes, meaning that service providers that currently pay into the Fund may be exempted from contributions, or assessed lower contributions, and providers which presently are exempt from contributions may be assessed contributions for the first time. Regardless of the net effect, virtually every provider of communications-related services stands to be affected by the FCC’s USF contribution reform proceeding. USF contributions are currently assessed at 17.4% of a provider’s telecommunications revenue.

As summarized below, the FCC’s Further Notice seeks comment in the following four areas: a) what services and service providers must contribute to USF; b) should the FCC continue the current revenues-based USF methodology or should it adopt an alternative methodology; c) how can the administration of the USF be improved; and d) can improvements be implemented to the methods by which providers recover USF costs from consumers.

I.                   WHAT SERVICES AND PROVIDERS SHOULD CONTRIBUTE TO USF?

One of the core issues on which the Further Notice seeks comment is which services and service providers should contribute to the USF in order to ensure the sustainability of the Fund. Over time, the base of USF assessable services is shrinking, as technological developments have led to the proliferation of services which are not subject to USF contribution liability.

The FCC seeks comment on two basic legal approaches regarding which services and providers should contribute to universal service: 1) clarifying on a service-by-service basis whether particular services or providers are required to contribute to the Fund; or 2) adopting a more general definition of telecommunications providers subject to USF that could be more enduring as the market continues to evolve.

            A. Service-by-Service/Provider Approach

With regard to a service-by-service or provider approach, the Further Notice seeks comment on specific proposed rule language which would subject the following types of entities to universal service contributions. These providers and services have not historically been subject to USF.

                        1. Extending USF to Enterprise Communications Service Providers. 

The Further Notice defines such providers to include providers of dedicated IP, Virtual Private Networks (VPNs), and Wide Area Networks (WANs) that are implemented with various protocols such as ATM/FR, Multiprotocol Label Switching (MPLS), and Provider Backbone Bridging (PBB), allowing providers to create a single integrated network infrastructure that can be used to provide multiple services to the enterprise customer, including (but not limited to) voice-over-IP service; data transmission service; managed email; corporate intranets; website and data hosting; caching; managed application services; Internet Protocol Television (IPTV); and/or videoconferencing. The Further Notice points out that the Universal Service Administrative Company (“USAC”) has sought FCC guidance regarding the classification of certain enterprise services that are provided over networks utilizing these newer technologies and the FCC has several pending appeals or requests for guidance involving the contribution requirements for such services.

                        2. Applying USF to Text Messaging Providers. 

 

The Further Notice points out that the FCC has not addressed whether text messaging revenues are subject to USF contribution requirements. Similarly, USAC has filed a request for guidance from the FCC regarding the proper treatment of text messaging for USF contribution purposes. USAC has stated that some carriers are reporting text messaging revenue as assessable telecommunications revenues, and other carriers are reporting revenues from these services as non-assessable information services revenues. Among other things, the Further Notice seeks comment on: the extent to which consumers are substituting text messaging for traditional voice services and other services that are subject to universal service contributions; and whether there are any reasons to treat short message service (SMS) or multimedia messaging service (MMS) differently than traditional voice services.

                        3. Extending USF to One-way VoIP Providers. 

In 2005, when the FCC first exercised regulatory authority over interconnected VoIP service providers, it defined “interconnected VoIP” as a service that permits users generally "to receive calls that originate on the [PSTN] and to terminate calls to the public switched telephone network." The FCC relied on this "two-way" definition when it extended universal service contribution obligations to interconnected VoIP service providers, thereby essentially exempting providers of one-way VoIP services. Under the proposed new rule, providers of one-way VoIP service would be subject to USF contributions, and the Further Notice seeks comment on this proposal.

                        4. Applying USF to Broadband Internet Access Service Providers. 

In proposing to extend universal service contributions to broadband Internet access services, the Further Notice requests comment on whether such contributions should apply to all forms of broadband Internet access, including wired (e.g., cable, telephone, and powerline networks, etc.), satellite, fixed and mobile wireless. The Further Notice also asks whether contributions should be applied to mass-market broadband Internet access as well as enterprise broadband Internet access.

            B. General Definition Approach

The Further Notice also seeks comment on a broader definitional approach which would allow the FCC to craft a general rule that would specify which "providers of interstate telecommunications" must contribute, without enumerating the specific services subject to assessment. This approach would allow the FCC to act without having to resolve the statutory classification of specific services as information services or telecommunications services in order to conclude that contributions should be assessed. According to the Further Notice, such an approach could potentially produce a more sustainable contribution system by avoiding the need to continually update a list of specific services subject to an assessment.

By way of example, the Further Notice seeks comment on a possible rule such as the following:

Any interstate information service or interstate telecommunications is assessable if the provider also provides the transmission (wired or wireless), directly or indirectly through an affiliate, to end users.

Were the FCC to adopt a rule such as the one above, it seeks comment on whether the entities listed below should potentially be excluded from contribution responsibility.

                        1. Exempting Non-facilities-based Providers (Resellers) from USF. 

The Further Notice points out that the FCC's contribution methodology has never exempted non-facilities-based telecommunications providers from the obligation to contribute, and the Communications Act of 1934, as amended, does not itself distinguish between facilities-based and non-facilities-based telecommunications providers for purposes of contribution obligations. In fact, the FCC has previously found resellers to be telecommunications carriers supplying telecommunications services to their customers even though they do not own or operate the transmission facilities, and thus are subject to USF contribution responsibilities. The concept underlying the exclusion for non-facilities-based providers is that they do not necessarily provide the transmission service. Hence, the FCC seeks comment on this possible exclusion to USF contribution liability.

                        2. Exempting Broadband Internet Access. 

The rationale for an exclusion here is that the assessment of USF contributions against broadband Internet access could deter the adoption of business broadband Internet access services. The Further Notice seeks comment on this assessment. Similarly, should there be a specific exemption for mass-market broadband Internet access services (both fixed and mobile)?

                        3. Exempting Free or Advertising Supported Services.

If the above rule were to be adopted, should the FCC only do so with respect to providers that offer service for a fee? In other words, should free or advertising supported services be exempt from contribution obligations in order to encourage such offerings?

                        4. Exempting Machine-to-Machine Connections. 

Again, if a rule similar to that suggested above were to be adopted, should machine-to-machine services be excluded from USF contribution liability? Such services include smart meter/smart grids, remote health monitoring, and/or remote home security systems. Among other things, the Further Notice asks whether machine-to-machine connections should be treated the same as connections between or among people.

II.    SHOULD CONTRIBUTIONS CONTINUE TO BE BASED UPON REVENUES, OR SHOULD THEY BE BASED UPON AN ALTERNATE METHODOLOGY?

The Further Notice seeks comment on how contributions should be calculated, whether based on revenues, connections, numbers, or a hybrid system, once the FCC has resolved the threshold question of which providers should contribute.

            A. Assessing Contributions Under the Existing Revenue-Based System

The Further Notice seeks comment on how the existing revenues-based system can be reformed, including with respect to the key issues identified below.

                        1. Apportioning Revenues from Bundled Services.

The Further Notice recognizes that due to technological and marketplace changes over the last decade, providers are increasingly offering customers packages of bundled services that include both assessable telecommunications services and information services or other services that are not currently assessable, and these revenues must be apportioned between assessable and non-assessable services for USF contribution purposes. Among other things, the FCC seeks comment on the following proposed rule:

If an entity bundles non-assessable services or products (such as customer-premises equipment) with one or more assessable services, it must either treat all revenues for that bundled offering as assessable telecommunications revenues or allocate revenues associated with the bundle consistent with the price it charges for stand-alone offerings of equivalent services or products (with any discounts from bundling assumed to be discounts in non-assessable revenues).

                        2. Contributing to USF Based On All Revenue.

The current revenues-based mechanism requires contributors to distinguish revenues between interstate, international and intrastate services. Generally, intrastate revenues are excluded from a provider's contribution base and interstate and international revenues are included in the contribution base. However, many of the services that have developed and flourished in the past decade, such as wireless, interconnected VoIP, text messaging, and flat rate long distance services, do not distinguish between intrastate communications and interstate/international communication services, from the consumer's perspective. Thus, the Further Notice seeks comment on modifying or eliminating the requirement that carriers are assessed based on interstate and international revenues. The Further Notice seeks comment on one approach which would require all providers that are subject to contributions to report and contribute on all of the revenues derived from assessable services, rather than require providers to allocate revenues between the interstate and intrastate jurisdictions. The Further Notice also seeks comment on an alternative approach under which the FCC would adopt a separate allocator for each major category of service. Under such an approach, for example, the FCC would specify that voice revenues should be allocated according to a specified ratio, such as a 20% interstate and 80% intrastate ratio.

                        3. Eliminating the Wholesaler USF Exemption;

    Value Added Approach for Customers.

 

The Further Notice seeks comment on a potential rule change under which the FCC would eliminate the current exemption from contribution obligations for wholesalers and instead assess each provider, with credits provided to subsequent providers in the value chain. Under such an approach, in a revenue-based system, a wholesaler would contribute on its wholesale revenues while a reseller of those services would contribute based upon its markup. The Further Notice proposes the following potential rule in this regard:

A contributor must contribute based on its projected assessable revenue less a credit for telecommunications services or telecommunications purchased from other contributors. Contributors shall report such revenues on the FCC Form 499-A and 499-Q Telecommunications Reporting Worksheets or such other forms or filings as the Commission may prescribe from time to time. Projected revenue information shall be subject to an annual true up, as prescribed from time to time by the Commission in its Telecommunications Reporting Worksheet instructions.

The Further Notice also seeks comment on alternatives to the value-added approach. The current instructions to the FCC Forms 499 require wholesalers to distinguish between 1) revenues from sales to telecommunications providers that "can reasonably be expected to contribute to" the Fund (carrier’s carrier revenues) and 2) revenues from all other sources (end user revenues, including revenues from sale directly to end users as well as revenues from sale to non-contributing resellers or other noncontributory entities). While the FCC has not codified rules specifying the precise manner in which wholesalers verify that their customers are contributing, most providers obtain certifications from their customers specifying that the customer is purchasing service for resale in the form of telecommunications and that it contributes directly to the federal USF support mechanisms. Many carriers have argued that the current resellers certification process is burdensome and ineffective, in essence requiring wholesale providers to act as "enforcement agents to the Commission" by requiring them to collect certifications from reseller customers attesting to being a USF contributor. To address this, the Further Notice seeks comment on whether the FCC should adopt a rule mandating greater specificity in contributor certifications regarding the services on which the certifying entity is contributing, so that wholesalers are in a better position to determine which of their revenues should be classified as carrier’s carrier revenues. The Further Notice proposes specific rule language in this regard.

                        4. Reforming Prepaid Calling Card USF Contributions and Reporting.

 

The Further Notice observes that different prepaid calling card providers may be interpreting the FCC's rules in different ways, resulting in varying contributions to the USF by such providers and the creation of an unlevel playing field for competitors of these prepaid calling card services. USAC has sought guidance from the FCC on USF contribution obligations with respect to prepaid calling card services. In particular, USAC has inquired with respect to the FCC regarding the following situations: where the prepaid calling card does not have a face value, or where the customer pays less than face value because of discounting; the prepaid calling card provider does not know how much the end user paid for the card; and the cards are measured in units of time rather than by dollar amounts.

The Further Notice seeks comment on modifying the definition of prepaid calling card to add the phrase "or service" to the definition to make clear that the prepaid calling card rules will encompass new ways to market creative prepaid telecommunications services that do not involve using a PIN or a device (e.g., rechargeable Internet communications services). Under the proposed definition, a prepaid calling card would be defined as follows:

The term “prepaid calling card” means a card or similar device or service that allows users to pay in advance for a specified amount of calling, without regard to additional features, functions, or capabilities available in conjunction with the calling service

The Further Notice seeks comment on alternative methods prepaid calling card providers should use to report revenues from prepaid calling card services. Today, prepaid calling card providers are required to report and contribute on the end user revenues from the sale of prepaid calling card services. The current version of the FCC Form 499 instructions calls for reporting of such revenues by the prepaid calling card provider, whether the end user purchases the card from the prepaid calling card service provider or a distributor, marketing agent, or retailer. Some argue that this method, which requires providers to report the "face value" of a card as assessable revenue, not the amount actually paid by the provider’s end user customer, is unrealistic considering that many cards do not have a face value, and contributing providers often do not know and have no control over the ultimate retail price of a calling card. Among other things, the FCC seeks comment on limiting the contribution and reporting requirements of prepaid calling card providers to reporting amounts paid only by the person or firm to whom the provider directly sells the card. Under this approach, where a provider sells the card to an intermediate distributor, the provider would report revenue actually received from that intermediate distributor.

Alternatively, the Further Notice seeks comment on adopting a bright line standard which would codify in greater detail the applications of prepaid calling card providers so as to reduce or eliminate competitive disparities among such providers. The FCC, in this context, seeks comment on a markup for prepaid calling card providers to use in determining end user revenues. For example, a 50% markup on the price paid by marketing agents, distributors or retailers to the prepaid calling card provider might serve as a reasonable proxy for determining the price paid for the card by end users. In this regard, the Further Notice seeks comments on the level of the proxy, and whether a higher or lower standard markup would be more representative of industry practice or would better serve in creating an incentive for providers to work with their marketing agents, distributors and retailers to identify the actual price paid by end users.

                        5. Extending USF to Distributors and Retailers.

The Further Notice also seeks comment regarding a value-added approach to assessing prepaid calling card revenues, which could potentially reduce the USF contribution liability of prepaid providers but subject distributors and retailers to USF contribution responsibility for the first time. Under this approach, discussed above at page 5, each provider in the service value chain (including wholesalers, distributors, and reselling retailers) would contribute based on the value the provider adds to the service. As applied to the prepaid calling card marketplace, any firm that derives revenue from the sale of prepaid calling card services would report and contribute based on that revenue and would be permitted to take a credit based on contributions made by other contributors in the chain. Given the structure of the prepaid marketplace, this concept would presumably require any intermediate distributor or retailer to report and make contributions, including some retail stores that would be contributing to the USF for the first time. The FCC seeks comment generally on this approach, including whether it should consider an exemption from reporting and contribution obligations for certain categories of retailers or distributors.

                        6. Applying USF to International-Only Providers. 

 

The Further Notice seeks comment on whether the FCC should eliminate the limited international revenue exemption (or LIRE) for providers whose revenues are predominantly or exclusively international.

Under the FCC's current rules, carriers that only have international revenues, but have no interstate revenues, are not currently required to contribute to the Fund. In addition, under LIRE, if a provider’s interstate revenue is less than 12% of its combined interstate and international revenue total, then that provider is exempt from contributions on its international revenues.

Among other things, the Further Notice seeks comment on whether it can require international-only and LIRE qualifying providers to contribute to the USF, in part because these providers also benefit from being able to originate or terminate traffic in the United States. If the FCC were to assess all international telecommunications revenues, should it also eliminate the LIRE? The Further Notice seeks comment on various alternative models pursuant to which it could maintain an alternative LIRE.

                        7. Reforming the De Minimis Exemption.

 

Under the current de minimis exemption, providers are exempt from USF contribution and from filing FCC Form 499-Q if their contribution to universal service in any given year is less than $10,000. In 2010, about 55% of all filers qualified for the de minimis exemption. The Further Notice seeks to base the de minimis exemption on assessable revenue rather than contributions.

The Further Notice seeks comment on the following revised de minimis rule:

If a potential contributor’s annual assessable revenues in any given year is $50,000 or less, that contributor will not be required to submit a contribution or Telecommunications Reporting Worksheet for that year unless it is required to do so by our rules governing TRS, numbering administration, or shared costs of local number portability.

            B. Assessing Contributions Based on Connections

 

As an alternative to the current revenues-based system, the Further Notice seeks comment on moving to a potential system based on connections. Under a connections-based system, providers would be assessed based on the number of connections to a communications network provided to customers. Providers would contribute a set amount per connection, regardless of the revenues derived from that connection. Under various proposals, there would be one standard monthly assessment for certain kinds of connections, typically provided to individuals, and a higher standard monthly assessment for higher speed or capacity connections, typically provided to enterprise customers. There might be several tiers for assessments based on speed or capacity. The standard assessment and higher assessment levels for higher-speed or capacity connections would be calculated by applying a formula based on the USF demand requirement and the number of connections, however that term is defined.

One of the key facets of a connections-based model would be how to define an “assessable connection”. In this regard, the Further Notice proposes two approaches, a facilities-based definition and a service-based definition.

Under a facilities-based definition, the connection itself, and not the services that are provided over the connection, would be assessed. For example a physical line to a residential home would be assessed as one "assessable connection" even if it provided multiple assessable services to the customer. A multiline business connection would likewise be assessed based on speed or capacity of the facility and not the services provided over the facility.

The Further Notice seeks comment on the following potential definition of connection:

Connection. A facility that provides end users with access to any assessable service, whether circuit-switched, packet-switched, wireline or wireless, leased line or provisioned wireless channel.

Under a service-based definition, the definition of the connection "unit" would focus on the service or services being delivered over the facility. Under such a definition, each interstate telecommunications service using the connection would be assessed as one "unit", as could any service that had an interstate telecommunications component. For example, in contrast to the facilities-based definition, if a customer purchases two services that have been determined to be assessable and that are delivered over the same facility, the provider would be assessed for the two connections. Multiline business services could likewise be assessed based on the services that are provided over the connection.

In this regard, the Further Notice seeks comment on the following potential service-based definition of connection:

Connection. An assessable service provided to an end user.

As indicated above, any connections-based assessment will potentially need to take into account speed or capacity tiers and how to define any such tiers. The Further Notice seeks comment on how assessment based on speed or capacity tiers would operate under a service or facility-based definition of "connection" and whether such an assessment structure would be beneficial. In this regard, the FCC notes that certain types of providers have historically requested that they be treated differently for USF contribution purposes in the context of past proposals based on a per unit assessment. For example, paging providers have sought a reduced assessment because of the limited functionality of the service. Likewise, providers offering free services, telematics, wireless prepaid plans, family wireless plans have, in the past, all requested that such connections be treated differently because a flat one dollar per month assessment would increase their USF obligation dramatically. The Further Notice observes that a recent development is the growth in machine-to-machine connections, enabling such innovations as smart meter/smart grids, remote health monitoring, or supply chain tracking. The FCC seeks comment on whether such connections should be assessed at the same level, or at flat rate, as other connections.

            C. Assessing Contributions Based on Numbers 

 

The Further Notice also seeks comment on moving away from the current revenues-based contribution system and adopting a numbers-based contribution methodology. This is an alternative model to a connections-based model.

Under a numbers-based system, in its simplest form, providers would be assessed based on their count of North American Numbering Plan phone numbers. There would be a standard monthly assessment per phone number, such as one dollar per month, with potentially higher and lower tiers for certain categories of numbers based on how these numbers are assigned or used. The monthly assessment per number would be calculated by applying a formula based on the USF demand requirement and the relevant count of numbers, however that term is defined.

One core issue which the FCC would need to address under a numbers-based approach would be how to define an "assessable number” for purposes of a numbers-based contributions methodology. In this regard, the Further Notice seeks comment on the following definition of assessable numbers:

An “Assessable Number” is a NANP telephone number that is in use by an end user and that enables the end user to receive communications from or terminate communications to (1) an interstate public telecommunications network or (2) a network that traverses (in any manner) an interstate public telecommunications network in the United States and its Territories and possessions. Assessable Numbers include geographic as well as non-geographic telephone numbers (such as toll-free numbers and 500-NXX numbers) as long as they meet the other criteria described in this part for Assessable Numbers.

The Further Notice seeks comment as well on the following kinds of special numbers: cyclical numbers, assigned but not operational numbers, available but not assigned numbers, assigned but non-working numbers, numbers used for routing purposes, toll-free numbers, all public or private interstate networks, and numbers provided to end users. 

In addition, the Further Notice seeks comment on whether to provide differing treatment to certain types of numbers or whether to exclude altogether certain types of numbers from the definition of assessable numbers. For example, should a numbers-based approach count equally all numbers that are used for family plans, or should such numbers be assessed at a reduced rate? In addition, should the following types of services be exempt under a numbers-based contribution methodology: telematics providers, one-way service providers, two-way paging services, and alarm companies. For example, should a number assigned to a telematics device, where the customer is not paying a monthly fee and the device can only make a "call" in an emergency situation be assessed differently from a number to a consumer cell phone or business landline?

III.              IMPROVING ADMINISTRATION OF THE CONTRIBUTION SYSTEM

The Further Notice seeks comment on potential changes that would provide greater clarity regarding contribution obligations, reduce costs associated with administering the contribution system, and improve the operation of the contributions system. In this regard, the FCC seeks comment in the areas discussed below.

            A. Updating the FCC Forms 499

The FCC proposes to adopt a formalized annual process for the FCC's Wireline Competition Bureau to adopt updated FCC Forms 499 and their accompanying instructions. The proposed rule on which FCC seeks comment would read as follows:

Telecommunications Reporting Worksheet Revisions. The Wireline Competition Bureau shall annually issue a Public Notice seeking comment on the Telecommunications Reporting Worksheets and accompanying instructions. No later than 60 days prior to the annual filing deadline, the Wireline Competition Bureau shall issue a Public Notice attaching the finalized Telecommunications Reporting Worksheet and instructions.

Under this approach, industry participants would have the opportunity to comment on proposed annual revisions to the FCC Forms 499 and accompanying instructions. The Further Notice observes that some of the reforms proposed could, if adopted, require extensive revision of the FCC Forms 499.

            B. Reducing the Frequency of Adjustments to the USF Contribution Factor

Each quarter, the FCC announces by Public Notice adjustments to the USF contribution factor. Over the last seven quarters, this has contributed to a fluctuation in the contribution factor from a low of 13% in one quarter to a high of over 17% in another quarter. 

If the FCC continues a revenue-based system or alternative system that utilizes a contribution factor, the Further Notice seeks comment on modifying the frequency of changes to the contribution factor. Specifically, comment is sought on revising the contribution factor less frequently, such as annually.

            C. Pay and Dispute Policy

The Further Notice seeks comment on whether the FCC should codify its existing “pay and dispute” policy. Under USAC policies, contributors that wish to challenge a disputed USAC invoice must nonetheless keep their accounts current by paying the full billed amount, in order to avoid late fees, interest charges and penalties. The Further Notice observes that although this has consistently been USAC’s policy, contributors continue to challenge it. Thus, the Further Notice proposes to adopt a formal rule which would require contributors to pay invoiced amounts first and then dispute such invoices, to avoid late fees, interest charges and penalties.

            D. Paper Filing Fees

The FCC has implemented several initiatives to encourage and facilitate the electronic filing of FCC Forms 499. To further this effort, the Further Notice seeks comment on a proposed filing fee of $50 for entities filing paper copies of the FCC Forms 499 instead of submitting such forms electronically.

            E. Filer Deregistration

Among other things, the Further Notice proposes to require FCC Form 499 registered entities that no longer meet the requirements to register to file a “deregistration” with the FCC. Currently, if a contributor has previously filed an FCC Form 499-A or Form 499-Q but has not notified USAC that it no longer provides services, USAC may estimate the provider’s quarterly revenues and send an invoice to that provider for its estimated contributions. A formal deregistration requirement could eliminate such unnecessary invoices and streamline the process when a provider elects to cease operations.

The Further Notice seeks comment on broadening this requirement by extending it to any possible value added revenue system (see above at page 5) which the FCC may adopt. Such a rule, which would codify the existing FCC policy, would require a telecommunications provider providing services to another provider to ascertain whether its customer that is required to register has in fact registered with the FCC prior to offering service to that customer.

IV.      DISCLOSING AND INVOICING OF UNIVERSAL SERVICE

CHARGES TO CUSTOMERS

The Further Notice also seeks comment on issues related to the billing and recovery of universal service contributions from customers.

            A. Showing on Invoicing How USF is Calculated

The FCC notes that in most customer bills, a separate line item is included for USF charges. However, current rules do not require contributors to indicate the applicable USF contribution factor or how the USF on a customer's bill is calculated. The Further Notice seeks comment on whether this should be changed to provide more information to consumers. For example, the FCC asks, should a rule be adopted indicating that contributors must identify on the consumer bill that portion of the bill that is subject to USF assessment? 

            B. Disclosure of USF Charge at Point-Of-Sale

The Further Notice also seeks comment on whether the FCC should mandate that carriers disclose at the time of initial service subscription the amount of the quoted rate or other assessable unit that would be subject to USF assessment. The Further Notice asks: "are there alternative approaches the Commission should take to ensure greater disclosure of such charges to consumers in a way that advances price comparison and evaluation?" The FCC also seeks comment on, if such a rule were adopted, should it apply equally to all customers, or should it be limited to mass-market customers who typically have less leverage than businesses, institutions and government entities that purchase communication services?

            C. Prohibiting the Recovery of USF Through a Separate Line Item

Another proposal on which the Further Notice seeks comment is to prohibit carriers from recovering their universal service contributions from end users through a line item or surcharge on end user bills. While contributors would retain flexibility to include the cost of contributing to the USF in determining their overall rate structure, they would not be permitted to represent any line item on end user bills as a federal universal service charge. In this regard, the Further Notice seeks comment on the following proposed rule:

Federal universal service contribution costs may not be recovered by contributors as a separate line-item charge on a customer’s bill.

Public comment in the proceeding is due 30 days after publication of the Further Notice in the Federal Register, and replies are due 60 days after publication in the Federal Register.

This article was authored by the Law Offices of Thomas K. Crowe, P.C., a Washington D.C.-based specialty law firm serving the communications industry.  Contact the firm by phone at 202-263-3640, by email at [email protected], or via the firm’s website, www.tkcrowe.com.

Edited by Stefania Viscusi