The State Public Service Commission has issued a ruling that likely will add a new fee to cell phone users’ bills in South Carolina by the end of the year.
The PSC ruled earlier this month that wireless providers are in competition with landline telephone companies, a determination that could result in wireless customers paying into the state Universal Service Fund, just as landline customers have done for years.
The fee would make wireless customers pay a percentage of their bill — between 1.1 percent and 1.3 percent — for the service fund and cap the fund at the current amount, $42million.
Landline phone users have long paid into the fund through a tax on their monthly bills and currently pay 2.65 percent. Cell users already pay a federal tax for the fund. But as fewer people have chosen landlines and more have chosen cell service, revenue in the South Carolina fund has dropped.
Expanding the number of people who pay into the fund would drop the tax rate for landline customers, who number about 1.1 million in the state compared to more than 4million wireless users.
The issue was hotly contested inside the Legislature last year and a bill to require cell users to pay into the fund remains in the House Labor, Commerce and Industry Committee.
Last fall, the PSC heard a motion by a landline coalition that asked that the PSC make the determination wireless companies were in competition with the landline companies, a ruling that would then require wireless providers to contribute to the USF.
PSC Commissioner Elliott Elam of Lexington made the motion to agree with the landline companies, saying the record in the case “overwhelmingly” supports their motion.
“I believe that this ruling levels the playing field with regard to the payment by telecommunications carriers into the Universal Service Fund, especially since wireless carriers depend upon wireline facilities in order to function,” he said, according to a copy of the PSC directive posted on the PSC website. “Wireless carriers and their customers benefit from a financially sound wireline industry. Payment into the USF will now be fairly distributed between wireless and wireline carriers.”
The PSC vote was unanimous.
Dukes Scott, executive director of the state Office of Regulatory Staff, which represents consumers in utility matters before the PSC, told The Greenville News he is awaiting the official order from the PSC in the case which would, if it follows the ruling, trigger a new fee on cell users’ bills, possibly by the end of the year.
Landline users have for years been paying into the fund, which helps cover the cost of phone service for hard-to-reach areas and for low-income residents.
A bill to require the contribution of cell users passed the Senate last year but stalled in the House.
Wireless company executives have said the legislation does not hold carriers who use the fund accountable, offers a permanent subsidy for older technology and creates a new tax without providing a new benefit.
Scott said the ruling does not address many of the other issues contained in the legislation, such as a cap on the state Universal Service Fund, accountability provisions and covering telecommunication service over the internet.
Last year, the National Taxpayers Union mobilized opposition to the petition before the PSC.
“These companies think that they’ve got the political muscle to force wireless consumers to pay a new tax,” the union states in an email. “If the companies are successful, almost every individual and family that uses wireless service will be required to pay a new tax on their monthly bill, and the PSC will give all the money to the landline phone companies. Your help is needed again to stop the creation of a taxpayer-funded handout for these companies.”
The South Carolina Telephone Coalition, representing landline companies, said in a filing before the PSC that a ruling on the issue is “long overdue.”
“Wireless carriers are providing services in South Carolina that compete with local landline services,” the group argued. “As such, they are required to contribute to state USF to keep service affordable for all South Carolina citizens, just as all other telecommunication carriers do, and as required by South Carolina law. Every day that goes by is a day that wireless carriers should be contributing to the state USF and do not.