USAC Asks FCC to Clarify if SMS/Text Messaging Revenue Subject to USF


On April 26, 2011, the administrator of the Universal Service Fund (“USF”), the Universal Service Administrative Corporation (“USAC”) sent a letter to the FCC’s Wireline Competition Bureau (“Bureau”) asking the Bureau to clarify whether revenue derived from Text Messaging services (also known as “SMS” for Short Messaging Service) is subject to USF contributions.

Follow the link to USAC’s letter: USAC Request for Guidance re: SMS/Text Messaging

According to USAC, it noticed disparities in the way carriers were reporting Text Messaging/SMS services revenue after examining the 2008 Form 499-As.  Some carriers, it noted, were reporting revenue from these services as “non-telecom” in Line 418.3  Others have reported text messaging revenue in Line 409, or monthly mobile services (i.e., wireless telephony, paging, messaging, and other mobile services) charges.

Despite USAC’s letter to the Bureau requesting guidance on the appropriate regulatory treatment of Text Messaging for USF reporting and contribution purposes, pursuant to the Administrative Procedures Act only the FCC can make decisions affecting the substantive rights of regulated carriers.  On December 11, 2007, several consumer advocacy groups filed a Petition for Declaratory Ruling before the FCC requesting that the FCC formally classify SMS/text messaging services as a telecommunications service and subject providers of SMS services to various requirements applicable to common carriers.  In the Matter of the Petition of Public Knowledge et al. for Declaratory Ruling Stating that Text Messaging and Short Codes are Title II Services or are Title I Services Subject to Section 202 Nondiscrimination Rules, WT Docket No. 08-07 (Dec. 11, 2007).  The FCC has yet to render a decision on this long-pending Petition.  Which begs the question, if the FCC has yet to determine the appropriate regulatory classification of these services, what authority does the Bureau have to provide guidance to USAC?

This question and others can be rightfully put to the Bureau when it submits the USAC request for guidance to public comment in the upcoming weeks.  Our firm will closely watch this matter and provide notice to clients of the Comment and Reply Comment deadlines.

If you are interested in participating in the proceeding, please contact the attorney assigned to your account or contact Jonathan Marashlian at or 703-714-1313.

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