TC2's David Rohde on Telecom

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Those property tax fees take all the fun out of USF decreases

By David Rohde Posted July 20, 2012

By now you may have noticed that the universal service surcharge for the third quarter dropped from 17.4% to 15.7%. The way in which the official USF “contribution factor” bounces around from quarter to quarter depends on technical factors affecting fund collection and distribution. But for users, probably as big a consideration compared to increases or decreases is whether the fee is assessed on any particular service or not.

Figuring that out involves a welter of considerations having to do with jurisdictional issues (for example, interstate vs. intrastate), legacy services vs. new technology (and interpretations thereof), “safe harbors” that capture the “if it quacks like a duck, it’s a duck” argument (especially on services like VoIP and SIP Trunking), and – particularly for AT&T users – the exact contract platform you’re on.

Still, even when you think you’ve got an apples-to-apples comparison, there’s the pesky issue of those other, far-from-trivial, percentage-based surcharges. Back in May we dealt with the faintly comical increase in the AT&T “Property Tax Allotment” fee to 4.05% of applicable revenues. For AT&T users, does the property tax surcharge increase completely cancel out the “good news” of the decrease in the USF contribution factor? Not quite.

But, as I’ve mentioned before, the regulatory and surcharge hawks at TC2 and LB3 maintain a very detailed database of surcharge information that’s continually updated and provides rolling historical information. Let’s just say that no quarterly decrease in what people casually refer to as “the USF rate” really changes the main trajectory of surcharges, which is (of course) upward.

The continual leapfrogging of property tax and other strange surcharges assures that whatever looks like a USF decrease has little impact that you can really feel. Much of that is going to have to await true surcharge reform. Until then, make sure your RFPs and other procurement vehicles properly tee up questions on exactly how, when, and why each carrier intends to place surcharges (or not) on precise services. It’s an annoying issue for everyone – especially when you know that your company doesn’t charge customers for its property tax bill – but discipline is the key to success here.

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