WASHINGTON, D.C.//November 14, 2007///Just days before the Federal Communications Commission (FCC) may crack down on federal Universal Service Fund (USF) phone bill tax waste and abuse, a major new national opinion survey shows that more than seven in 10 Americans (71 percent) - including 75 percent of Republicans, 69 percent of Democrats and 67 percent of Independents -- support a cap on the "high cost" portion of the Universal Service Fund (USF) in the wake of recent increases in USF subsidies to wireless telephone companies.
The Opinion Research Corporation survey of 1009 Americans was conducted between November 2-5, 2007 for the Web-based Cap The Fund campaign (http://www.CapTheFund.org), which was launched on September 27, 2007 and already has been used by consumers to send over 225,000 pro-cap emails to Congress, the FCC and USF State-Federal Joint Board. The "high cost" portion of the USF was intended to provide phone service to people in remote rural areas, but has been criticized for turning into little more than an open-ended slush fund of subsidies for often undeserving wireless and rural telephone companies.
The Cap the Fund national opinion survey also reveals that only about one in three Americans (35 percent) - including just 29 percent of Republicans, 41 percent of Democrats and 28 percent of Independents - support using the USF or any other phone bill tax "to expand broadband Internet access in rural America." By contrast, over three in five Americans (62 percent) - including 67 percent of Republicans, 57 percent of Democrats and 66 percent of Independents - oppose a USF-funded broadband build-out push. Only about a quarter (26 percent) of those over the age of 65 supports using these phone taxes for federal rural broadband build out.
Commenting on the survey, Flora "Grandma" Green, national spokesperson, The Seniors Coalition, said: "We can only hope that the Federal Communications Commission will listen to fed-up American taxpayers and cap the 'high cost' portion of the federal Universal Service Fund phone bill tax. If the FCC can't get the job done, Congress should step in and clean up the outrageous waste of USF tax dollars that is now going on. We agree with the loud-and-clear message from American consumers: Don't add more money to the USF or expand its mission to include broadband service until the Universal Service Fund tax subsidy scandal is cleaned up once and for all."
Dee Hodges, president, Maryland Taxpayers Association, said: "The USF is yet another example of supposedly good federal intentions that get turned into a runaway tax subsidy program that lines the pocket of corporations and wealthy Americans. The 'high-cost' portion of the Universal Service Fund was supposed to help consumers in remote and other rural areas without access to phone service, but the high-cost portion of the Universal Service Fund is now a seemingly bottomless pit of tax subsidy handouts that do little or nothing to help the consumers originally targeted for aid. It's time to cap the USF. The FCC needs to stop picking the pockets of American phone consumers."
Graham Hueber, senior researcher, Opinion Research Corporation, said: "The survey findings make it clear that Americans see a need to rein in perceived excesses in the Universal Service Fund. But there are more to these findings than just a rear-view mirror view about the need to clean up an existing problem. The public also comes down very strongly with no prompting whatsoever against the use of federal phone bill taxes to build-out rural broadband. It seems very clear from these findings that federal regulators who want to keep the public happy face two major challenges: first, they need to clean up existing USF woes and then they need to avoid further USF-related rural broadband expansion entanglements that could unleash a new wave of perceived waste and abuse."
DETAILED SURVEY FINDINGS
Other highlights from the Cap The Fund survey conducted by ORC include the following:
Nearly seven in 10 Americans (69 percent) - including 73 percent of Republicans, 69 percent of Democrats and 65 percent of Independents - would support an end to "providing USF subsidies to wireless companies where unsubsidized service already is being provided" by wireless competitors. Fewer than one in five Americans (23 percent) would keep USF spending in place the way it stands today.
Women are more likely than men - by a margin of 75 percent to 66 percent - to support a cap on the "high cost" portion of USF spending. Fewer than one in four Americans (22 percent) would keep "high cost" USF spending the way it operates today.
Two out of three Americans -- including 70 percent of Republicans, 63 percent of Democrats and 63 percent of Independents -- say they are very concerned about reports of certain "high cost" Universal Service payments, such as "more than $13,000 per telephone line that were being made to subsidize phone lines going into the Hawaii resort community of Maui."
Nearly two out of three Americans (64 percent) - including 68 percent of Republicans, 60 percent of Democrats and 69 percent of Independents - think that federal taxes (including the Universal Service Fund fee) now being assessed on phone bills is "too high." Fewer than three in 10 Americans (29 percent) think the tax level is "about right" and 1 percent says it is "too low."
When told about a report from the Inspector General's office of the U.S. Federal Communications Commission finding that more than one in five dollars under the "high-cost" portion of the USF could not be properly accounted for by the government or industry recipients, about eight in 10 Americans (78 percent) - including 79 percent of Republicans, 79 percent of Democrats and 78 percent of Independents - support a cap on the "high cost" portion of the USF and say the federal government should "not spend more money on it until all tax dollars can be accounted for properly."
62 percent of Americans - including 67 percent of Republicans, 58 percent of Democrats and 61 percent of Independents - agree with the following statement: "Congress has moved to keep the Internet "tax free" when it comes to the things that consumers like you purchase online. Some people say that, if Washington wants to be consistent on the Internet and taxes, it should NOT use part of the federal taxes on your long-distance phone calls to subsidize rural broadband access." Only about a third (34 percent) of Americans disagrees with the statement.
The full text of the ORC survey is available for review at http://www.CapTheFund.org.
METHODOLOGY
The new survey results prepared for Cap The Fund are based on Opinion Research Corporation (ORC) telephone interviews conducted among a sample of 1,009 adults (502 men and 507 women) age 18 and over, living in private households, in the continental United States. Interviewing was completed during the period of November 2-5, 2007. Completed interviews of the 1,009 adults were weighted by four variables: age, gender, region and race, to ensure reliable and accurate representation of the total adult population of the country. The margin of error at a 95 percent confidence level is plus or minus 3 percentage points for the sample of 1,009 adults. Smaller sub-groups will have larger error margins.
ABOUT CAP THE FUND
On September 27, 2007, the Cap The Fund (http://www.CapTheFund.org) campaign was launched to allow fed-up American taxpayers a way to let the Congress, the FCC and the USF State-Federal Joint Board know of the high level of public support for capping the out-of-control "high cost" portion of the Universal Service Fund. Current members of Cap The Fund include The Senior Coalition, Americans for Tax Reform, the Maryland Taxpayers Association and The Media Freedom Project.
Runaway spending on the high-cost portion of the federal USF phone tax have caused it to skyrocket from $2.2 billion in 1999 to about $4 billion in 2006. The overall USF tax has surged to $7 billion, up from less than $4 billion in 1998. To pay for the Universal Service Fund, the tax rate applied to long distance revenues has skyrocketed five-fold from 2.1 percent to its current level of just under 11 percent. Unwary U.S. taxpayers pay up to $13,345 per telephone line per year for federally subsidized phone service under the U.S. government's steep USF phone bill tax.
Rather than providing phone service to low-income consumers in need, the bulk of USF taxpayer dollars are now part of a multi-billion wealth-transfer that goes from the pockets of U.S. taxpayers to small, uneconomical private rural telephone companies that often have only a few hundred customers and are so engorged with tax dollars that they can afford to pay out more in dividends to shareholders than they actually charge for phone service. Increasingly, USF funds are also flowing to large wireless companies that provide what is often purely duplicative service competing with unsubsidized service providers.
Examples of current and recent USF tax subsidy recipients that have been highlighted by Cap The Fund include: one of the five biggest private-equity buyout firms in America, which is on track to take in up to $200 million a year in USF tax subsidies; a phone company headed by a tobacco company heir who owns multi-million dollars homes in Washington, D.C., Nantucket and a seaside estate in Georgia; a wireless company that subsidizes a NASCAR race team and also pays its top executives to play golf at Augusta National Golf Club, including picking up the cost of travel on company jets (from 2001-2005, this wireless telephone company's jets were reported to have landed more than 150 times at the airport in Augusta, Georgia); a telephone company created by a NBA team co-owner who liked a New York City restaurant so much that he and other investors moved it to a small town in the Midwest; and a rural telephone company founded by the owner of a $12 million Manhattan townhouse and also involving a principal who was the advisor to the ruling family of one of the world's leading oil-producing nations.
CONTACT: Ailis Aaron Wolf, (703) 276-3265 or aaaron@hastingsgroup.com.
EDITOR'S NOTE: A streaming audio recording of the news event will be available on the Web as of 5 p.m. ET on November 14, 2007 at www.CaptheFund.org.