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News Release
Oregon Universal Service Surcharge Rate to Change February 1, 2002
December 14, 2001 (2001 - 042) (UM-731)
Contacts:  Roy Hemmingway, Chairman, 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Lee Beyer, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR – To comply with a federal court order, the Oregon Public Utility Commission has ordered the Universal Service Fund surcharge rate to be adjusted from 3.0% to 5.5% effective February 1, 2002 and limits its application to intrastate retail telephone revenues. The surcharge provides money for a fund to ensure that basic telephone service is available in high cost rural areas at reasonable and affordable rates.
October 18, 2001, the U.S. District Court issued its opinion that the assessment on interstate and international telephone revenues was in conflict with federal law in a lawsuit filed by AT&T.
In 2002, the Universal Service Fund will collect approximately $48 million. The action adjusting the surcharge rate will not increase the total dollars collected annually.
The Commission’s order ensures that the surcharge is only applied to calls made within the state and keeps the fund solvent.
Based on the change in revenue base to intrastate only, and the increase in the surcharge rate from 3.0 to 5.5 percent, some customers will pay more Oregon Universal Service support and some less.
Generally, customers with high interstate toll calling will pay less and customers with low interstate toll calling will pay more.
Residential customers in the low-to-moderate toll calling range (i.e., $0 to $25 per month in toll charges) will pay about 20 cents more per month per line. Business customers in the low-to-moderate toll calling range may pay 50 cents more per month per line depending on the local services ordered. In contrast, residential or business customers with high interstate calling (e.g., $75 per line per month) will pay between $1.00 and $1.30 less per month.
The burden of supporting the OUS Fund will also shift from long distance carriers to local exchange carriers. Long distance carriers will see a 40 to 50 percent reduction in OUS contributions and local exchange carriers will see a 30 to 60 percent increase. The percentage change for any one carrier will depend on the carrier's mix of state and interstate revenues.
The 1999 legislature created the Oregon Universal Service fund in 1999 through SB 622. It required the Commission to adopt rules to support the fund, which applied the surcharge on total Oregon retail telecommunication revenues.
Since the inception of the fund on September 1, 2001, the Commission has adjusted the rate on two prior occasions to ensure adequate level of funding.
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