March 13, 2015

Dear Senator,

On behalf of the 17,193 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in South Carolina, I am writing to express our opposition to Senate Bill 277, which would for the first time expand the state’s universal service fee to wireless services.

The state’s existing universal service fee was created more than 70 years ago in order to provide subsidies to wireline or landline service providers across the state.  Consumers now have many choices for communications services, and an increasing number are “cutting the cord” from traditional wired telephone services in favor of mobile offerings that provide a number of features unavailable through wireline services.  In South Carolina, almost 40 percent of households have ended their dependence on wired telephone services and switched exclusively to wireless services.

There are now nearly 4.5 million wireless customers in South Carolina, and that number is growing.  As many of these consumers have dropped landlines in favor of wireless services, the contributions to and the need for the universal service fund have decreased.  Yet the state continues to collect fees from landline customers amounting to nearly $40 million per year, and distributes these subsidies to landline service providers.  The declining fee collection is the major factor behind S. 277, which seeks to increase funding to the universal service fund by imposing new taxes on wireless bills, even though the subsidies will only be provided to landline telephone service providers.  In other words, the legislation intends to take from Peter in order to pay Paul.

While some might be inclined to say that a fee on services does not constitute a tax, CCAGW has long maintained that fees like the universal service fund amount to little more than hidden taxes on both wireless and landline services, and to call them otherwise does a disservice to consumers.  Wireless consumers in South Carolina already pay more than their fair share of taxes to the state and local government each month, with these “fees” and taxes comprising approximately 16 percent of their monthly bills, nearly double the amount of the state tax for other goods and services.

CAGW asks that you vote against S. 277 in order to prevent the unfortunate and unfair consequences this legislation would have on consumers and taxpayers in South Carolina by increasing taxes and the cost for wireless services in the state.  Thank you for your consideration. 

Sincerely,

Thomas A. Schatz

President, CCAGW