A coalition of submarine cable operators is balking at a proposal that would end their exemption from contributing to the Universal Service Fund, a pool of money intended to improve access to telecommunications across America.
In a recent objection filed with the FCC and reported by TeleGeography, a group of companies that include Level 3 and Southern Cross argue that subjecting their submarine operations to the levy (currently at 15.7% of interstate revenue) would be unfair because they can’t easily pass such fees on to end users. Many of these users are outside the United States and have entered into fixed rate contracts with the companies.
The sub operators’ submission is part of a larger process in which the FCC is revisiting how fees for the Universal Service Fund are assessed and collected. Currently, revenues collected from international operations are excluded from the levy but the FCC is questioning whether the exemptions are still appropriate. As an example, the agency cites the prepaid calling card market. The market does not pay contributions on 87 percent of its revenues because they are international, even though its overall revenues have more than doubled to $2 billion since 1997.
The Universal Service Fund itself is in the process of being retooled to focus on providing broadband access rather than basic telephone services. Its biggest component, the “High Cost Program” was recently renamed the “Connect American Fund.”
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