Comprehensive, Not Piecemeal Contribution Reform Needed, USTelecom Says of Text Messages

The Universal Service Administrative Company had been seeking guidance on how to classify text messaging revenues under universal service rules. Separately, the commission is seeking comment on a petition from the Rural Independent Competitive Alliance, and USAC has filed a Request for Guidance, on two issues. First, whether rural CLECs are obligated to report end user revenues on Form 499-A “that is not collected pursuant to rates explicitly designated as charges for the provision of interstate service.” Second, USAC wants to know, and RICA’s petition seeks a ruling on, whether “end user revenues recovered pursuant to rates charged for the provision of telephone exchange service entirely within one state are intrastate revenues.”

The FCC has faced some muted criticism for not attacking contribution problems first as it overhauls the Universal Service Fund and the intercarrier compensation regime (CD Fed 23 8). USTelecom said in its comments that contribution questions are inseparable from distribution questions. “As the Commission explores moving the universal service distribution mechanisms from supporting legacy voice services to broadband connectivity, it is appropriate for the Commission to reexamine the philosophy underlying today’s USF contribution methodology, which was developed to fund support for voice service,” Cohen and Banks wrote. That, they wrote, leaves a lot of open questions: “Are the beneficiaries of a ubiquitous broadband network merely residential end users, or do edge providers whose business plans depend greatly on universal access to broadband service also derive a significant benefit? Do ‘horizontal’ end-user participants in the broadband ecosystem have the same stake in network ubiquity as ‘vertical’ edge providers? Does the point-to-point justification apply to the broadband world as it is applied to the legacy voice network?"

Other commenters in the docket faced the question of text messaging directly. AT&T, CTIA, Sprint, T-Mobile and Verizon all argued that the commission ought to consider text messaging an information services for the purposes of universal service funding. The National Telecommunications Cooperative Association and (jointly) Public Knowledge and the National Hispanic Media Coalition urged the commission to classify texts as a telecom service.

"In the alternative, however, NTCA urges the Federal Communications Commission … to confirm that text messaging constitutes ’telecommunications’ that is subject to USF assessment and/or at a minimum, to exercise its ancillary authority to require continued contributions with respect to revenues derived from text messaging services,” NTCA said in its comments.

Public Knowledge and the Coalition went further, saying it was “critical” that the FCC consider text messaging a Title II service. “Excluding text messaging from the Universal Service Fund could open the door to a steady diminution of sources for the Fund,” the groups said in their joint filing. “Excluding the text message part of this bundle would provide an incentive for carriers to shift as much revenue as possible into text messaging and away from voice (and Fund contribution). Instead of ensuring equitable and nondiscriminatory contributions to the Fund, excluding text messaging would invite gamesmanship and creative accounting by participants motivated to minimize their burden."

But Sprint, among others, said the Wireline Bureau “will have exceeded its legal authority” if it makes text messaging services contribute to universal service. Short messaging service, the most common form of text messaging, “is a service that stores and forwards text messages,” Sprint said. “Because messages are ’stored’ if the recipients device is turned off and then forwarded when it is turned on, SMS clearly meets the definition of an ‘information service,'” Sprint said.