Surcharge on phone bills approved

April 11, 2001

By Dave L’Heureux, The State

By Dave L’Heureux, The State, Columbia, S.C. Knight Ridder/Tribune Business News

Apr. 11–Starting Oct. 1, South Carolina consumers will have to pay a new 1.4 percent surcharge on their monthly phone bills.

The S.C. Public Service Commission, responding to a 1996 legislative directive, Tuesday voted 7-0 in favor of the surcharge to create a $40 million “universal service fund.” The surcharge will be applied to the entire telephone bill, except for state and federal taxes. As a result, customers who, for example, receive a $20 monthly bill excluding taxes will pay a surcharge of 28 cents.

The surcharge will feed a fund designed to reduce access charges for in-state, long-distance calls by half, to 3 cents per minute.

It will also create an “explicit” subsidy to help in-state telephone carriers subsidize costs of local services, especially in rural areas.

“It’s badly needed, especially for single-line rural areas of South Carolina, where people pay $20 for service that really costs $60 to provide,” Commissioner Randy Mitchell said.

The state fund replaces “implicit” local service subsidies lost as competition has reduced prices for long-distance and business service, which provided most of the subsidy.

It will help local service providers continue to provide service to customers at less than the true cost.

In 1996, the S.C. General Assembly ordered the PSC to create a universal service fund similar to a federal fund that holds down interstate rates.

Long-distance companies such as AT&T and political organizations such as the Coalition Against Unfair Telephone Taxes opposed the fund. Opponents had claimed the fund could add up to $13 a month to South Carolina telephone bills.

PSC Chairman Bill Saunders said it was time, after five years of study and debate, to create the universal service fund in SC.

Commissioners agreed, after talks with PSC staff an Verizon Wireless, to exclude wireless telephone revenues from the base of contributions to the universal service fund.

They also agreed to make local carriers provide detailed financial data to qualify for the compensation from the fund. The PSC will administer the fund.

Several executives f local service providers who had urged the PSC to authorize a $340 million fund said the $40 million fund still will help them hold down the costs their customers pay for telephone service.

The $40 million fund also won praise from the S.C. Small Business Chamber of Commerce, which had opposed the larger fund proposal as “unaffordable.”

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