Extending The Phase-In Of Phone Subsidy Reforms

The Federal Communications Commission’s unanimous, bipartisan reforms of universal service in November 2011 included changes to make the system fairer for all consumers.

Among these changes was the phase-out of excessive subsidies for basic phone service, which allowed some phone companies to charge their customers as little as $5 a month at a time when the average suburban or urban customer was paying $16. The reforms have been gradually eliminating these excessive subsidies to level the playing field for all consumers and contain the cost of the program, which is funded by universal service fees ultimately paid by consumers.

As we approach the third step of this phase-in, we are seeking comment on providing additional time to allow all interested parties to adjust. We look forward to public comment on this question as we work to make universal service fair for all consumers and businesses.

Commissioner Ajit Pai said: “Today the FCC announces a new ‘rate floor’ of $20.46 a month. What does that mean? Over a million customers in rural areas will face a rate hike of up to 46 percent in the next few months. This is bad news in tough times. Why should the FCC saddle rural Americans with rate increases when doing so may not save the Universal Service Fund a dime and may in fact divert scarce funds away from broadband deployment? And why should the FCC override state-set rates to raise costs for consumers?”
Right now, the economy is good for many people here in Washington, DC. But a recovery hasn’t
yet reached much of rural America. Let’s not add to the challenges our fellow citizens face by increasing
their phone bills. Instead, let’s freeze the rate floor indefinitely and reexamine this misguided policy.