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Considering the Telecom Surcharges Conundrum

  • No Jitter
  • 3/5/2018
  • Mark Sheard & Pat Gilpatrick

The only way to ensure you're getting the most cost-effective network services is to do the math, including a proper surcharge analysis.

By now, enterprise customers should be aware of the spiraling costs associated with federal Universal Service Fund (USF) regulatory fees assessed on U.S. carrier services and which are "directly regulated by the FCC."  If not, listen to this TechCaliber podcast for a discussion of the challenge.

As of first-quarter 2018, the USF percentage is 19.5% (up more than 100% from the first quarter of 2009). Even worse, when applied (on top of) the various other carrier fees (e.g. property tax, cost recovery or administrative expense), the total USF impact can increase a user's service charges by 21% or more.  Add to that those other carrier surcharges, and the total overhead can now be more than 30%.  This excludes state and local taxes!  In high tax states, we have seen recent examples where surcharges and taxes have exceeded 50% of the monthly recurring services charges. That's a 50% uplift on the headline rates for services.

Less well known are the differences in the way carriers apply surcharges to their services, and determining how carriers assess USF charges isn't always easy.