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Financing Universal Telephone Service |
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March 2005 |
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S. Alden/Photolink/Photodisc/Getty Images |
Notes
Numbers in the text and tables of this paper may not sum to totals because of rounding.
Unless otherwise indicated, all years referred to in this paper are calendar years.
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Under the Telecommunications Act of 1996, the Universal Service Fund (USF) supports both traditional telephone service and advanced telecommunications services, particularly in rural and other remote regions that otherwise might not be served by telecommunications companies. Since the enactment of the 1996 law, universal access has been financed by a federal tax on interstate and international long-distance calls. However, a recent decline in revenues generated by long-distance service has raised concern about the desirability of that financing mechanism.
This Congressional Budget Office (CBO) paper--prepared at the request of the Senate Budget Committee--examines recent trends in the financing sources that underlie universal service and analyzes options for change. In keeping with CBO's mandate to provide objective, impartial analysis, this report makes no recommendations.
Philip Webre of CBO's Microeconomic and Financial Studies Division prepared the paper under the supervision of Roger Hitchner and David Moore. The paper benefited from comments by Coleman Bazelon, Billy Jack Gregg, Jim Lande, and Paul Vasington. (The assistance of those external reviewers implies no responsibility for the final product, which rests solely with CBO.) Within CBO, Kim Cawley, Bob Dennis, Pete Fontaine, Arlene Holen, Bob Murphy, Sarah Puro, Tom Woodward, Dennis Zimmerman, and Melissa Zimmerman offered helpful suggestions.
Loretta Lettner edited the manuscript, and Christian Spoor proofread it. Angela Z. McCollough prepared drafts of the paper. Maureen Costantino designed the cover and prepared the paper for publication. Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic version for CBO's Web site.
Douglas Holtz-Eakin
Director
March 2005
Tables |
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S-1. |
Receipts and Outlays of the Universal Service Fund, 1999 to 2004 |
S-2. |
The Contribution Base for the Universal Service Fund in Relation to Telecommunications Revenues, 1997 to 2004 |
S-3. |
Distribution of Telecommunications Companies' Contributions to the USF Under Different Financing Mechanisms, 2003 and 2007 |
S-4. |
Distribution of Business and Residential Consumers' Share of USF Contributions Under Different Financing Mechanisms, 2003 and 2007 |
1-1. |
Receipts and Outlays of the Universal Service Fund, 1999 to 2004 |
1-2. |
Telecommunications Industry Revenues, 2003 |
1-3. |
The Contribution Base for the Universal Service Fund in Relation to Telecommunications Revenues, 1997 to 2004 |
2-1. |
Distribution of Telecommunications Companies' Contributions to the USF Under Different Financing Mechanisms, 2003 and 2007 |
2-2. |
Distribution of Business and Residential Consumers' Share of USF Contributions Under Different Financing Mechanisms, 2003 and 2007 |
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Figures |
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1-1. |
Annual Changes in Consumer Long-Distance Prices |
1-2. |
Share of Contributions to the Universal Service Fund, by Type of Company |
1-3. |
Universal Service Fund Contribution Factors, by Quarter |
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Boxes |
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1-1. |
How USF Contributions Are Collected |
1-2. |
Fees for Telecommunications Spending |
1-3. |
The Universal Service Fund and the Antideficiency Act |
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