U.S. households could see fees on their telephone bills rise at much as 18.1 percent by 2007 depending on what changes are made to the universal service fund which subsidizes communications services, congressional budget officials said Monday.
Telephone carriers that offer long-distance service are required to pay a percentage of the revenues into the Universal Service Fund (USF), which subsidizes telephone for low-income families as well as Internet access in schools and libraries.
Typically those fees are passed on to consumers. But with the emergence of packages of minutes for wireless or unlimited calling plans, that has raised fresh questions about whether the fund would be sustainable.
Some possibilities for reforming the system include charging a flat fee for each telephone number or expanding the services that would fall under the program, said a report by the Congressional Budget Office (CBO) for the Senate Budget Committee.
If no action is taken, a shrinking long-distance revenue base and increased demand on the USF program would cause the average payment by each household to rise 8.1 percent to $2.26 a month in 2007 from $2.09 per month in 2003, the CBO said.
The monthly average charge would likely rise to $2.47 a month by 2007 or 18.1 percent if the USF program was switched to a per-number charge or if cable high-speed Internet service was included in the revenues for calculating contributions.
Alternatively, if based on usage of multiple communications services, the monthly fee would likely be $2.28 by 2007, said the report.
Another option could be funding the USF programs through general Treasury revenues, CBO said.
"The economic cost of raising a dollar in general revenues, which may influence the supply of labor and capital, is generally less than the economic cost of raising a dollar from sector-specific taxes, which tend to distort consumers' choices by affecting the prices of goods and services," the report said.