LINCOLN — In a year, you may be getting a little surprise on your phone bill.
A state agency has ordered changes in the way fees are paid by users of cellphones and other telephones to finance communication improvements in rural areas.
Instead of being assessed a fee based on the amount of your phone bill — now 6.95 percent — there will be an as-yet-determined flat fee for every phone connection you have in your home or business.
Officials with the Nebraska Public Service Commission say that it is too soon to predict the impact on individual phone bills because the amount of the new connection fee hasn’t been set and will be studied over the next year.
One of the five members of the Public Service Commission predicted that the new fee won’t inspire a tax revolt.
“It’s going to be a change, but not a sticker shock change,” said Frank Landis of Lincoln.
But the plan for a new fee has prompted a state senator and another member of the commission to question whether enough has been done with existing funds to adequately provide service across the state.
By law, the state’s universal service fund, coupled with a similar federal fund, is charged with providing affordable and “reasonably comparable” telecommunications services all across the state, even in sparsely settled rural areas where cattle far outnumber paying telephone customers.
A national research group, Broadband Now, recently estimated that 16 percent of Nebraska’s population was “underserved” when it comes to Internet access. The group ranked the state 39th in Internet connections.
The commission’s new fee would be designed to stabilize the amount of money that goes to the universal service fund. The PSC adopted the switch to a “per connection” fee after three years of study and soliciting comments from Internet and phone companies.
The universal service fund over the past 20 years has provided nearly $1 billion to build cellphone towers, improve broadband services across the state and help rural hospitals get high-speed connections. It also provides a subsidy of $3.50 a month to about 6,500 low-income Nebraskans to help them pay for phone services.
But over the past 14 years the amount of money collected by the state’s universal service surcharge has declined as bundling of cable, Internet and phone services and other factors have lowered phone bills. The fee now brings in roughly half of what it used to, about $33 million this year, and that is expected to decline to about $27 million next year.
That’s not good news for areas of the state where there’s still no or spotty cellphone service. That has implications for 911 calls, because about two-thirds of the phone connections in Nebraska are now wireless. And less revenue also means slower progress in bringing high-speed Internet to the rural areas across the state.
“Some companies have done a really good job of reaching out where they can, but when you get out to western Nebraska, that’s where the difficulty comes,” said State Sen. Curt Friesen of Henderson, who chairs the Legislature’s Transportation and Telecommunications Committee.
The committee has scheduled public hearings in the next month to determine whether the universal service fund has done enough to expand services.
Omaha’s representative on the PSC, Crystal Rhoades, a Democrat, said that while she agrees with the change to a per-connection fee, she thinks the commission should have done more study into how far broadband services should be expanded and how much that might cost. She said she also wants better accountability of how the money is spent, to avoid “double dipping” of both state and federal universal service funds on the same projects.
After spending $1 billion in state universal service funds and another billion in federal money, Rhoades said it’s disappointing that many areas of Nebraska still don’t have high-speed Internet.
“I think we can do better,” she said.
Landis, a Republican who represents Lincoln and southeast Nebraska, said he understands Rhoades’ concerns but said they will be addressed as the PSC studies how much to charge for the new connection-based fee. The amount of the new fee will be set by the PSC over the next year.
Landis said his personal goal is to establish a fee that raises $35 million to $40 million a year, about what the current fee brings in today.
“The whole purpose here is to stabilize the fund,” he said. “We do not want to create rate shock.”
So where might this fee end up?
If you do the math and divide the number of connections across the state (about 2.6 million) into the amount desired by Landis ($35 million to $40 million), you come up with a fee of $1.15 to $1.25 per connection per month.
Apply that to the number of cellphones you have in your house, add your landline, and you can guess where the fee might end up.
But it’s a lot more complicated than that, PSC officials said. For instance, should large companies or universities pay a fee on every phone connection they have? Or should fees for them be capped at a certain number of connections?
There are other possible complications. Some wireless phone companies have already asked that the change ordered by the PSC be reconsidered, which raises the prospect of a legal challenge.
And some tax-watchdog groups think current phone fees are already too high. Nebraska’s fees on cellphone bills were recently ranked second highest in the country by the Tax Foundation.
“A change from taxing a percentage of the bill to a flat fee could very well raise taxes on those who choose a cost-effective plan and can least afford a tax increase,” said Matthew Litt of Americans for Prosperity-Nebraska. “We will continue to monitor this.”
