One big benefit of telecommunications deregulation is competition that causes private phone companies to drive down costs and improve the quality of all phone services. Long-distances bills that used to cost hundreds of dollars each month are now substantially less.
But when companies compete with previously franchised monopolies, it also puts pressure on the companies that are obligated to provide the expensive infrastructure needed to get landline service to rural communities for those who have no other option.
So nearly 20 years ago, the General Assembly created a fund to ensure that landline infrastructure was accessible to everyone. The state Universal Service Fund provides support for telecommunications services and helps to ensure that all citizens have access to affordable service. Lawmakers decided that everyone who used the network should pay into the fund, and that meant landline customers, because they were pretty much the only people who could access the network at that time.
But they’re no longer the only people who use the infrastructure. Today, telecommunications customers can access the network in a number of ways, including wireless and voice over Internet protocol. While some think we should just get rid of landlines and rely entirely on mobile phones or other means of access, that simply is not feasible. Many large and small businesses must have them to function. And many rural communities exist where mobile service is not robust, and infrastructure for landlines is costly.
Even more significantly, calls made from mobile phones don’t happen in the cloud; they require a cell tower that transmits the call through a land wire to the landline network that connects your call. Without land wire, cell phones cannot work.
Ten years ago, nearly all calls were made from landlines. Today, cell phone usage has surged, and landline use is dropping dramatically. The dwindling of contributors to the Universal Service Fund has forced a small portion of telecommunications users to pay for the infrastructure that all telecommunications users enjoy.
A bill in the state Senate, S.277, corrects this inequity and strengthens the system we all must access. It updates laws that were passed before the technological revolution.
One of the bill’s most important elements is to keep costs down by capping the Universal Service Fund at $40 million. Today, it’s capped at $170 million. So depending upon their communication choices, consumers may see a slight net decrease or increase, or no change in the fee they pay to support the fund.
Business and taxpayer groups support the bill.
Businesses support it because, as noted by Lewis Gossett, president and CEO of the S.C. Manufacturers Alliance, companies large and small are paying disproportionately higher landline fees as a result of the way the fund is set up. “Everyone who uses the fund should participate in the system that makes service available to all South Carolinians,” he said.
The bill would not constitute a tax increase; no one is advocating putting more money into this fund. In fact, one major wireless carrier, AT&T, supports S.277. So does Don Weaver, president of the S.C. Association of Taxpayers, who has devoted 25 years to fighting tax increases. “If this was a tax increase, we would be aggressively fighting it,” he said. “But we understand and support tax equity because it is good public policy.”
This is a consumer-friendly bill because citizens in high-cost areas, including many elderly, also bear disproportionate costs.
The proposed law would simply require any one who uses landline networks to make calls — including those on cell phones — to pay a modest fee to support a statewide system that our Legislature has deemed critical to every South Carolinian.