A Serious Phone Bill

Proposed change in financing telecommunications for schools and low income areas could cost colleges big bucks.
March 22, 2006

Philosophically and politically, officials at most colleges in the United States couldn’t agree more with the principle of “universal service,” by which the federal government seeks to ensure telephone service for all Americans by charging communications providers a fee that they then pass on to their paying customers. The decade-old program primarily benefits people and groups in low income and rural areas, as well as schools and public libraries.

But as the Federal Communications Commission contemplates a new system for paying the program’s costs, at a time of rapid change in the telecommunications industry, financial considerations are leavening college groups’ support for universal service. On Thursday, the American Council on Education sent a letter on behalf of the major higher education associations opposing an FCC proposal that, the groups argue, would result in colleges and universities being “unfairly assessed with exploding contribution requirements.”

ACUTA: The Association for Communications Technology Professionals in Higher Education estimates that institutions would see average increases of 10 times or more – which might be just a few thousand dollars for smaller colleges, but hundreds of thousands for big universities.

Right now, the government finances universal service by charging telephone companies an amount based on a percentage of their monthly long distance revenues, which companies typically pass on to consumers (your monthly bill probably includes a line that says “universal service fee”).

But as long distance telephone rates have declined, and as more and more consumers have switched to cellular service or new technologies such as voice over IP, long distance revenues have plummeted, leaving fewer and fewer funds for universal service.

As a result, the FCC, and particularly its chairman, Kevin J. Martin, have advocated a shift to a “numbers based” formula based on how many unique telephone numbers are in use. That means that businesses or other entities that own lots of phone numbers would pay the most.

Colleges and universities -- which typically provide telephone numbers for students as well as for employees, and often multiple numbers for some faculty members -- would be hit hard, facing “staggering, unbudgeted cost increases,” the higher education groups said in their letter. According to ACUTA, New York’s Hudson Valley Community College now pays about $600 a year, and its annual cost would rise to $20,000. Washington State University, which now pays $15,184 a year, would see its yearly contribution to universal service rise as high as $277,800, depending on which new formula the FCC were to adopt. (Other institutions and the potential changes in their contributions: Calvin College, to $11,000 from $700; State University of New York College at New Paltz, to $42,000 from $4,000; Southern Illinois University at Carbondale, to $200,000 from $12,000.) 

Jeri A. Semer, executive director of ACUTA, says that the increased costs could prompt colleges to rethink some of their offerings. “It would completely change the way colleges and universities looked at providing telecommunications,” she says. “They could conceivably go back to not having individual phone numbers for students, and return to a single phone in the hallway, letting students bring their own cell phones.” Such a change could have significant implications for campus safety, not to mention student life, she says.

A decision on possible changes to financing universal service is in the offing, but exactly when is not clear, FCC officials say. A fifth commissioner is about to join the panel, which has been operating without one for some time, which has had many issues on hold. The next step would probably entail an internal bureau of the FCC recommending one plan or another for financing universal service to the commission, which would then vote on whether to approve it.

Semer said that college officials are hopeful that officials at the commission have indicated that “there may be some sympathy for our position.” She added: “While they want to fund universal service in a long-term, sustainable way, they also have to understand that nonprofit institutions cannot absorb these types of increases.”

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