Universal Local Service – available to all at affordable rates
Local residential and single-line small business telephone service continues to be priced below its actual cost to make it affordable for local citizens. In the past, these local prices were supported by revenues from other services like long distance, custom calling features and certain business services to larger customers. This pricing structure, called universal service, has been in place in South Carolina and other states for over 70 years as part of a national policy of providing basic local telephone service. Local wireline companies still have the legal obligation (Federal Telecommunications Act) to make service available to all citizens at rates that are reasonable and “affordable.”
While deregulation of the telephone industry has created a much more competitive marketplace (some 150 companies currently compete in SC), it also caused changes which could have affected prices for residential and small business customers. As competition drove down the price of long-distance and services used in the past to help offset the cost of local residential/small-business service, there was a risk local residential prices would be pushed up to their actual costs. Costs many consumers could not afford. To prevent this, the Congress created a national Universal Service Fund and at the same time the SC Legislature adopted a Universal Service plan for South Carolina.
While the Federal Universal Service Fund is made up of contributions from telecom companies across the U. S., the SC Universal Service Fund is made up of contributions from telecommunications companies operating inside the state. The purpose of both Funds is to offset the cost of providing local residential service.
Telecommunications companies contribute to the Funds through charges paid by their customers. These companies were required to reduce their rates by the amounts consumers were paying into the Universal Service Fund to avoid any windfalls in revenues as a result. In this manner, consumers are helping keep local service affordable for everyone. Qualifying local companies withdraw monies to offset the cost of local service particularly for service in the smaller cities, towns and especially rural communities.
The SC Office of Regulatory Service oversees the universal service plan for the state.