15 Point 3! Welcome to the new, crazier USF surcharge

As if the current 14.1% weren't bad enough, the "contribution factor" for the Universal Service Fund -- code for "money the carriers owe and don't have to pass along but do anyway" -- is going up to 15.3% on April 1. No fooling.

If your reaction is that this is getting ridiculous, you have good company. In fact, I'd be worried if that weren't your reaction. Because if something isn't done, the percentage could go up again on July 1 and potentially for several quarters to come.

What on earth is the problem? I'm going to dramatically oversimplify, but the last time you needed to contact somebody -- perhaps even a few minutes ago -- did you pick up your desk phone, call their phone number, actually reach them, and talk for a while? And even if you did do that, do you know for a fact that the call rode over a dedicated access line primarily used for interstate traffic, and that the interstate voice service you were using is circuit-switched and charged per minute?

Well you should know the answer to that -- you manage corporate telecom, after all! But the point is that the core of the USF revenue base has always been basic telephony and legacy data services. And the now-rapid changes in user behavior, mixed in with the traffic effects of the recession, are dramatically reshaping the mathematics of universal service.

The result is that, right now, the government is neither tapping a logical mix of revenue sources for USF nor applying the revenue to a mix of beneficiaries and applications that constitutes a relevant kind of "universal service" in 2010. In turn, that's producing wacky USF numbers and one helluva headache for your budget.

Now, this does not necessarily mean that either non-legacy or fully wireless services either do or do not generate outsize USF charges (especially when you consider that wireless surcharges are already large and multifarious). Even as the current contribution factor marches skyward, we're seeing a striking number of cross-currents having to do with the advancing state of MPLS migrations, the status of high-capacity wavelength services, and new federal policies encompassed in a just-released "National Broadband Plan" that are complicating even more the issue of what does and doesn't get a surcharge. We're going to take that up in a couple more posts this week to explain the current surcharge-management challenge.

But for the moment, be aware that "reforms" being easily bandied about by government officials take time to implement (or even agree on) while the crazily rising surcharges are real and tangible in the here and now. Stay tuned as we explore this aggravating but critical issue.