Hike in Universal Service Fees Raises Importance of FCC Majority Vote on Subsidy Cap, Verizon's Tauke Says

WASHINGTON - Verizon today urged the Federal Communications Commission to approve the interim cap on subsidies paid to rural wireless carriers, which was recommended by the Federal-State Joint Board on Universal Service last year, to protect consumers from a growing financial burden.

Tom Tauke, Verizon executive vice president of public affairs, policy and communications, said that the action was critical in view of today's announcement by the Federal government that it will collect even more to fund universal service programs - a move that translates to nearly an 11 percent increase in the surcharge consumers pay on their monthly phone bills.   

The increased cost of the fund, according to Tauke, is a result of growth in subsidy payments - which skyrocketed from $1 million in 2000 to nearly $1.2 billion in 2007, a one thousand-fold increase - to Competitive Eligible Telecommunications Carriers (almost all of which are wireless companies).

"Consumers will thank the FCC when three commissioners finally call a halt to funding windfalls for some companies from the Universal Service Fund," Tauke said.  "Let's hope this new hike in the fund's contribution factor helps produce a majority vote for the cap.

"We'll know the FCC is making progress toward overall reform when there are three votes for an interim cap," he said.

The FCC announced today that the "contribution factor" - the percentage of interstate end-user revenues that is collected from phone customers via their monthly bill to fund universal service - will increase from 10.2 percent to 11.3 percent in the second quarter.

In March 2007 testimony before the Senate Committee on Commerce, Science and Transportation, Tauke said a major cause of skyrocketing subsidies for rural wireless carriers is the existence of "three, four, even five wireless carriers receiving universal service funding" in the same geographical area.   

Verizon Communications Inc. (NYSE:VZ), headquartered in New York, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving nearly 66 million customers nationwide.  Verizon's Wireline operations include Verizon Business, which delivers innovative and seamless business solutions to customers around the world, and Verizon Telecom, which brings customers the benefits of converged communications, information and entertainment services over the nation's most advanced fiber-optic network.  A Dow 30 company, Verizon employs a diverse workforce of nearly 235,000 and last year generated consolidated operating revenues of $93.5 billion.  For more information, visit www.verizon.com.

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