Your phone and taxes

Phone bills and the United States Tax System

Have you ever wondered about that tiny charge added to your phone bill called Universal Service Fund? Usually, it’s not a lot of money. So, you just pass over it and pay the amount owed. Well, here’s the dope on the USF.

The USF has its roots way back in 1934. Back then, it was the government’s first attempt at regulating the new telephone system. “Universal” was originally used by AT&T to mean, “...inter-connection to other networks, not service to all customers”. …after years of regulation, the term came to include infrastructural development of telephony and service to everyone at a reasonable price.” (Wikipedia). Perhaps you’ve heard of it more recently as a means to connect those in rural areas to the wider phone system. In 1996 the USF was revised to include broadband and the poor, too. Please, bear in mind; this is a Governmental monitored and spent fund. It amounts to a subsidy to ALL the phone companies to provide the afore-mentioned services. This subsidy is paid out of the USF surcharge on your bill. In these regs is a little known piece of information. That the phone companies can also add a surcharge to their customers bills to finance or recoup their costs on this build-out of the system. So, not only are we paying for the high speed broadband build-out by surcharges levied by the phone companies but, also by the government through our taxes. I’m talking BILLIONS of dollars in subsidies from the U.S. government.

I read an article in the USAtoday, Oct. 28, 2011 titled “Rural Broadband Progress” by Scott Martin. The Universal Service Fund has been re-named and revamped. It has become an $8 billion dollar fund. In this fund is now the old USF, now known as Connect America Fund, a $4.5 billion fund, and a NEW fund, known as the Mobility Fund. Doing the math, I figure the MF (no, it’s not THAT MF!!) has assets in the neighborhood of $3.5 billion. So, let us move on the nut of this blog.

We have the CAF for phone and hi speed broadband for those in rural areas and those too poor to afford it on their own. Then, there is the MF to provide wireless access to them too, both of these funded by the surcharge on your bill. If you clicked on the link provided above and read that article, then this part isn’t new to you. In the new funding package there is a provision to allow the telephone companies to also add a surcharge to your bill to help defray their lost revenue! Not only do you now have to pay the CAF Tax but, also give the phone companies money to close their losses!! FCC officials say this will amount to 10 to 15 cents extra on customers’ bills. Apparently, the FCC believes that Sprint, Verizon, T-Mobile, etc. won’t see this as a new revenue stream to increase their profits. The FCC believes that the altruism in these phone companies will restrain their overwhelming greed for profits. Big profits equal big bonuses for big-wigs.
YOU do the math.

I’m sorry, I’m laughing so hard, I have to stop now….