For Immediate Release



Event Audio


Already Paying Much More in Costly USF Tax Than It Gets in Benefits, New York State Consumers Would Pay Even More for $13,500 Per-Line-Charges in Hawaii, Abuses in Other Distant States.

ALBANY, N.Y.//May 22, 2007//The federal “Universal Service Fund” (USF) long-distance phone tax paid by New York State residents would jump from $407 million to an estimated $555 million under a controversial plan backed by Verizon, USTelecom, AT&T and other big phone companies, according to a warning issued today by the League of United Latin American Citizens (LULAC) New York State chapter, New York State Alliance for Retired Americans (ARA) and the Keep Universal Service Fund Fair Coalition, Washington, D.C.

The USF tax hike would take a bad situation and make it even worse: New York State consumers already pay much more into the controversial USF than they get back – and now the disparity would grow by another $150 million. As if paying too much USF tax wasn’t bad enough, the extra money would flow to pay for widespread waste and abuse, such as per-line subsidies of $13,500 per year for phone lines going into a resort community in Maui, Hawaii!

James Wood, president, New York State Alliance for Retired Americans (ARA), said: “What is particularly outrageous here is that older Americans in New York are already net ‘losers’ under USF. We are paying in much more at the current level – about $400 million – than we get in this state. You can appreciate that an older person on a fixed income is not going to be overjoyed to pay an 11 percent phone tax and then learn that most of that money is going out of state or, in one case, paying for phone lines at Hawaii resort. Why are seniors nationally and in New York so concerned about this issue? It’s simple: It is a bottom-line pocketbook issue.”

Peter Fontanes, New York State chapter head, LULAC, said: “LULAC believes that all users of communications in New York should pay their fair share to the USF. However, Latino and other predominantly low-volume and low-income phone users should not be disproportionately burdened by USF. The proposed system turns the current system on its head in a way that would unfairly disadvantage millions of Latino consumers in New York and around the nation.”

Maureen Thompson, executive director, Keep Universal Service Fund Fair Coalition, Washington, D.C., said: “While the Keep USF Fair Coalition supports a sustainable, affordable, effective and fair Universal Service Fund that meets the goal of assuring affordable telephone service to all New Yorkers and other Americans, we believe Congress should conduct a top-to-bottom review of the USF distributions and completely overhaul the manner in which the USF spends the hard-earned tax dollars of the American consumer. Strong and meaningful controls on the size of the USF are critically important to the continued viability of this important program.”

Under the major push now being mounted in Washington by big phone companies, New York State consumers would suffer as the result of a shift of the USF from a consumer-friendly, pay-for-what-you-use tax on long-distance to a regressive per-connection charge that would be imposed on every phone line whether or not consumers made any long-distance calls at all.

According to research from the Keep USF Fair Coalition, senior, Latino, low-income and rural consumers in New York and elsewhere would pay the most in additional USF taxes under the controversial per-connection approach. For New York State, the change in USF to a per-connection tax would mean an increase in taxes of $155 million per year at a rate of $1.20 per line, which is the tax level that phone companies are forecasting under their plan.

On November 17, 2005, the Keep USF Fair Coalition released a report entitled “Losing Numbers: How America’s Most Vulnerable Consumers Could Suffer Under Universal Service Fund (USF) ‘Reform.’” That report concluded: “The currently consumer-friendly ‘pay for what you use’ approach to funding the Universal Service Fund would be replaced under the … (connections-based) plan with a regressive, flat-fee arrangement of $1-$2 or more per phone line – regardless of whether or not consumers even make a long-distance call. For a consumer who now dials only a handful of long-distance calls per year and pays correspondingly low USF taxes, the effective tax rate under the … (connections-base) plan would soar by more than 1,000 percent on an annual basis! With low-income and elderly consumers already socked with high gas prices, higher home energy costs and the prospect of soaring summer cooling bills and continued inflation in medical prescriptions, the wide range of diverse groups in the Keep USF Fair Coalition are opposing the (industry-backed) ‘numbers’ based plan. These groups caution against balancing USF finances on the backs of the very consumers who use long-distance the least and are unable to afford phone bills that would rise under ‘numbers’ simply in order to subsidize high-income/high-volume callers.”

On February 9, 2006, the Keep USF Fair Coalition reported: “Millions of Latino and Hispanic long-distance phone customers in the United States would be socked with higher federal fees on their phone bills under a widely criticized proposal … to force phone users who make few long-distance calls or use pre-paid wireless phones to either start paying or pay more into the Universal Service Fund … Other than older Americans, Latinos and Hispanics account for the largest number of Americans who would end up paying more under the (industry) plan for USF … Three to five million Hispanic and Latino households in the United States could be included among the 43 million Americans paying more in federal phone fees …”

The mission of the New York State Alliance for Retired Americans is to ensure social and economic justice and full civil rights for all citizens so that they may enjoy lives of dignity, personal and family fulfillment and security. A primary objective of the Alliance is to enroll and mobilize retired union members and other senior and community activists into a nationwide grassroots movement advocating a progressive political and social agenda; one that respects work and strengthens families.

The League of the United Latin American Citizens, the oldest and largest Hispanic membership organization in the country, advances the economic conditions, educational attainment, political influence, health and civil rights of Hispanic Americans through community-based programs operating at more than 700 LULAC councils nationwide, including New York.

The Keep USF Fair Coalition ( is committed to keeping the Universal Service Fund collection method fair, and opposing proposals to move to a regressive, per-line flat fee. Now counting more than 115,000 members in its ranks, The Keep USF Fair Coalition was formed in April 2004. Current members include Alliance for Public Technology, Alliance For Retired Americans, American Association Of People With Disabilities, American Corn Growers Association, American Council of the Blind, California Alliance of Retired Americans, Consumer Action, Deafness Research Foundation, Gray Panthers, Latino Issues Forum, League Of United Latin American Citizens, Maryland Consumer Rights Coalition, National Association Of The Deaf, National Consumers League, National Grange, National Hispanic Council on Aging, National Native American Chamber of Commerce, The Seniors Coalition, Utility Consumer Action Network, Virginia Citizen’s Consumer Council and World Institute On Disability.

CONTACT: Ailis Aaron Wolf, (703) 276-3265 or

EDITOR’S NOTE: A streaming audio replay of this New York State news event will be available on the Web at as of 6 p.m. ET on May 22, 2007.

Powered By Blackbaud