If Senate bill 277 becomes law, individuals and families in South Carolina who purchase wireless communications services will find a new tax on their monthly bills. And the money raised by the new tax will go to landline phones, even though nearly everyone owns a cell phone and the number of landline customers is in steady decline.
Nearly 20 years ago, when landline phone service was mostly a monopoly, the General Assembly created the Universal Service Fund to ensure that everyone would have access to a landline telephone, even in communities that would be too costly to serve otherwise. At the time, lawmakers decided that every landline customer who used the network should pay into the fund.
That was 20 years ago. Since then, South Carolina’s landline phone customers have paid roughly $42 million annually to phone companies in the form of a tax on their monthly bills. Today, phone monopolies are nearly extinct. As customers increasingly embrace new technology and services, they are shedding old landline phones at a steady clip. Nonetheless, the phone companies keep getting $42 million a year.
And while wireless calls travel over multiple networks, including landline networks, wireless carriers already pay to use these networks, so taxing wireless customers to support landline companies they chose to leave is the epitome of unfairness.
In light of this, it makes sense for the General Assembly to pass legislation to reevaluate the current program and determine if the continuing burden on landline consumers makes sense in today’s modern communications era. This program is funded by consumers, and before more South Carolinians are taxed to pay for this fund, the General Assembly could evaluate the competitive environment. After all, if competitors don’t need a consumer-paid subsidy to win in the marketplace, phone companies don’t either.
Sadly, this is not what the General Assembly is considering. If S.277 becomes law, phone companies will keep getting tens of millions of dollars annually and will not be held accountable for much of anything. It’s possible that the phone companies could lose all their customers and still collect all those millions annually from consumers.
S.277 requires more consumers to pay for the state’s current subsidy program. The bill will lower the tax burden on landline customers and introduce a new tax on 4.5 million wireless consumers. This new tax will be on top of the 16 percent in taxes and fees already on the average South Carolinian’s wireless bill. How is this fair? It’s not.
In order to create a sustainable state universal service program, and before requiring more consumers to pay for it, the Legislature must place people ahead of the phone companies. Make sure that consumer money given to phone companies actually benefits the individuals and families who need it. If this is done right, we may find that $42 million a year is far too much money, and taxing 4.5 million wireless consumers is unnecessary.
Call your legislators and ask them to stop S.277, demand accountability from the phone companies and save 4.5 million South Carolinians from this new tax.