Where does your phone tax go?

* Where does the Universal Services Fund go?

Today, we'll continue where we left off in the debate about using a 7% VoIP tax to provide income into the Universal Services Fund. According to a BellSouth spokesperson, USF funds are not directly distributed to end-users. The funds are distributed to the various telcos to offset certain costs to provide services to certain classes of clientele.

One example of how the USF is spent is to provide phone service to low income subscribers - typically a limited service called a "Lifeline" service." Details of this service are available here.

Another example is using USF for schools and libraries - making sure both have affordable phone and information services. Eligible schools can "purchase all commercially available telecommunications services, Internet access and internal connections at discounted rates" according to the fund's provisions.

Yet another way the USF is spent is to offer affordable communications services to healthcare facilities - again targeted to rural facilities. The objective is to make sure that rural hospitals won't go without advanced medical services like teleradiology simply because they can't afford to pay for the high-speed data lines needed to send X-rays to a distant location.

Finally, the USF can also be used for extenuating circumstances, such as providing immediate funds to help rebuild communications facilities knocked out by Hurricane Katrina last year.

We conclude that, one way or another, most of the uses of the USF will be paid by some sort of tax or by indirect costs passed on to the consumer-at-large (for instance, higher healthcare fees or higher phone bills to pay for disaster recovery.) Generally, neither Steve nor Larry are very happy to pay out more in taxes, but the $2 or so paid per month to the USF seems to be a reasonably small price to pay for the services rendered.

If you'd like more details about the USF, click here.

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