CTIA Calls On FCC To Keep SMS Free From USF Contribution Requirements

There’s long been ambiguity surrounding SMS and how it should best be regulated.  From issues surrounding its inclusion in TCPA guidelines to SMS rate hikes from major carriers, there always seems to be a debate going.

The latest of which has to do with whether SMS should be subject to USF (Universal Service Fund) contribution requirements, and was the topic of an open letter to the FCC by the CTIA recently.  For a little background, the USF was created by the FCC in 1997 to help meet the goals of the Telecommunications Act of 1996 which states that “all providers of telecommunications services should contribute to federal universal service in some equitable and nondiscriminatory manner.”

In plain English, it means that telecommunications companies must contribute to a central fund to ensure everyone has access to basic communication services.  As of the first quarter of 2011, the USF fee, which changes quarterly, equals 15.5 percent of a telecom company’s interstate and end-user revenues.  The CTIA sees these requirements as outdated and is asking the FCC for USF reform — especially in relation to SMS.  “Since the universal service fund (USF) was created in the era of wireline communications, the outdated programs such as Lifeline and Linkup emphasize landlines, even though today’s low-income consumers prefer wireless technology,” the CTIA said in a recent blog post on the subject.”  “That’s why USF reform is critical.”

In it’s reply comments to the FCC, the CTIA explained why SMS is an integrated information service, not a telecommunication service, and therefore not subject to USF contribution requirements.  Instead, CTIA argues that the USF is funded by contribution requirements imposed on CMRS providers and telecommunications services, including contributions by wireless carriers for voice minutes.  However, it doesn’t include information services such as email, instant messaging, Twitter, Facebook and text messages.

“SMS messages rely on protocol conversion, computer processing, data storage and information retrieval functionalities,” the group said in its reply to the FCC.  “SMS is also not interconnected to the public switched network (PSTN).  Imposing USF burdens on SMS would have far-reaching negative consequences. As with any government regulations, the additional regulatory costs would ultimately be passed along to consumers.  Higher prices would also put SMS at a disadvantage to other similar information services, including email and other online messages services.”