Shifting to Phone Lines/Other Connection As Basis for Universal Service Fund (USF) Fee Would Mean Increased Taxes of 1,000% or More for Colleges; Phone Service Cuts and Higher Tuition Bills Likely.
WASHINGTON, D.C.///May 11, 2006///America’s 4,325 colleges, universities and other post-secondary institutions will be socked with a net annual increase in federal Universal Service Fund (USF) phone taxes of $320 million-$480 million if the Federal Communications Commission (FCC) moves ahead with a plan to switch the USF to a flat fee of $1 or $1.50 per phone number, Web-access line and other connection, according to a new report issued today by the Keep USF Fair Coalition.
The Coalition’s “Flunking Numbers” study details how the average college and university in the United States would see its USF phone bill soar from $8,971 per year to $82,999, an average increase of 892 percent. With some schools seeing even more staggering USF tax hikes of 1,000-3,000 percent, colleges and universities would be forced to respond with tuition hikes, the endangerment of student and faculty on-campus safety, cuts in planned technology/telecommunications investments, and the reduced availability or outright elimination of college dorm phones.
Linda Sherry, director of national priorities of Consumer Action and co-chair of the Keep USF Fair Coalition, said: “The reality is that extra USF costs for colleges and universities would be passed along to students and their families either in terms of either reduced service or higher bills. U.S. colleges and universities have a huge stake in whether or not the collection method for the federal USF long-distance bill fee is shifted from its current pay-as-you-use percentage of actual long-distance calls to a connections-based flat tax on every phone number, modem and other line in use. Colleges and universities are particularly vulnerable to a connections-based methodology for USF because of the significant number of phone numbers they require and how those and other connections are used to help students learn.”
Martin Ringle, chief technology officer, Reed College, said: “At a time when colleges and universities -- both public and private -- are under intense financial pressures brought on by spiraling costs, rising enrollments, and declining government support, the exponential increase in the USF fee structure is stunning. For many institutions, including Reed College, the proposed change represents an increase of more than 1,000 percent.”
Roger N. Bonnett, telecommunications manager, Wake Forest University, said: “Any time we see a cost jump from less than $5,000 a year to more than that in a single month –- and about $84,000 annually -– we have to be very concerned. Negative impacts to Wake Forest University could include: elimination of student telephone service; the reduction in numbers assigned to Faculty and researchers operating in multiple locations, limiting access to students and their research; … money being reallocated from educational and research projects to telecom services; and a major impact on advancing telecommunication services, restricting our ability to research newer technologies our employees and students will be using.”
Dionne Speer, accountant, Information Technology Department, University of South Florida, said: “We fully support the goals of universal service, and commend the FCC for their efforts to extend telecommunications services to all Americans. It is, nevertheless, essential that the Commission also addresses universal service distribution issues by controlling future fund growth and limiting any waste within the program. Further, the contribution factor for the universal service program has been stable for the last three quarters, which calls into question the need for immediate reform of the current revenue-based approach … We hope that the Commission modifies its universal service policies in a manner that reflects the potential impact on colleges and universities, 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.”
KEY REPORT FINDINGS
The Keep USF Fair Coalition’s “Flunking Numbers” report draws on data collected by the American Council on Education (ACE) in its review of current USF payments and potential USF tax hikes for a representative cross-section of 15 U.S. colleges and institutions of all sizes, both public and private. U.S. colleges and universities are on record as protesting the consequences of a shift to a connections-based USF fee have outlined a number of grave harms to the institutions and their students and faculty, including:
* Cuts in phone service for students and faculty. From the College of St. Benedict in St. Joseph, Minnesota: “Some of these changes (under a contributions-based USF methodology) could include: the elimination of individual telephone service for our on-campus students; (and) the reduction of numbers assigned to faculty and staff, thereby limiting their access to voice communications …”
* Reduced student safety. From Harvard University: “Currently the University has one working telephone number for each student suite to ensure E911 and emergency access to every student. An additional burden of $6000/month (based on 6,000 student lines) would be very onerous for these under-used lines and would inevitably lead to a reduction in the emergency infrastructure of student telecommunications.”
* Tuition hikes. From Barry College in Miami Shores, Florida: “Our Institution does not have budgetary flexibility to offset this sizeable increase (from $4,000 a year currently to $30,000 per year under a connections-based USF) … Please consider the uphill battle our institutions of higher learning face in maintaining affordable tuitions as the FCC considers this plan that could add additional cost to the price of higher education.”
* Diversion of resources from technology investments/other programs. From Rice University: “If adopted, the FCC’s action could creative negative impact, including, but not limited to: redirecting funding from education and research-based programs to the telecommunications budget … and significant delays in efforts to upgrade and modernize telecommunications facilities on campus, limiting our ability to invest in research networks, i.e., Internet2, and new innovative services/technologies.”
A large and growing number of other U.S. colleges and universities –- including Seton Hall, St. Johns University, Wellesley College, Wesleyan University, Southern Illinois University, Texas Lutheran University, University of Utah, Upper Iowa University, University of South Florida, Macalester College, and Montana State University -- already are on record in opposition to the FCC proposal to increase USF taxes paid by millions of U.S. consumers and institutions.
ABOUT THE KEEP USF FAIR COALITION
The Keep USF Fair Coalition (http://www.keepusffair.org) is committed to keeping the Universal Service Fund collection method fair, and opposing proposals to move to a regressive, per-line flat fee. Now counting more than 115,000 members in its ranks, The Keep USF Fair Coalition was formed in April 2004. Current members include Alliance for Public Technology, Alliance For Retired Americans, American Association Of People With Disabilities, American Corn Growers Association, American Council of the Blind, Black Leadership Forum, Consumer Action, Deafness Research Foundation, Gray Panthers, Latino Issues Forum, League Of United Latin American Citizens, Maryland Consumer Rights Coalition, National Association Of The Deaf, National Grange, National Hispanic Council on Aging, National Native American Chamber of Commerce, The Seniors Coalition, Virginia Citizen’s Consumer Council and World Institute On Disability. The NAACP is a supporter of the Keep USF Fair Coalition, and is among
the many national organizations that have filed comments with the FCC in support of a non-regressive USF collection method.
On November 17, 2005, the Keep USF Fair Coalition released a report entitled “Losing Numbers: How America’s Most Vulnerable Consumers Could Suffer Under Universal Service Fund (USF) ‘Reform’”. That report concluded: “The currently consumer-friendly ‘pay for what you use’ approach to funding the Universal Service Fund would be replaced under the Martin plan with a regressive, flat-fee arrangement of $1-$2 or more per phone line – regardless of whether or not consumers even make a long-distance call. For a consumer who now dials only a handful of long-distance calls per year and pays correspondingly low USF taxes, the effective tax rate under the Martin plan would soar by more than 1,000 percent on an annual basis! With low-income and elderly consumers already socked with high gas prices, higher home energy costs and the prospect of soaring summer cooling bills and continued inflation in medical prescriptions, the wide range of diverse groups in the Keep USF Fair Coalition are
opposing the Martin ‘numbers’ based plan. These groups caution against balancing USF finances on the backs of the very consumers who use long-distance the least and are unable to afford phone bills that would rise under ‘numbers’ simply in order to subsidize high-income/high-volume callers.