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Six things you need to know about the new charge on your phone bill

Watchdog Dave Lieber: Why did the Texas Universal Service Fund tax increase from 3% to 24%?

1. How kind of you to pay for others. Thanks to a tax on your phone bill called the Texas Universal Service Fund, you’re helping dozens of small telephone companies across Texas string phone lines or fiber to rural areas where few people live. But it’s not like you have a choice. Everyone who uses a phone for calls, including the rural folks, is required by state law to contribute to the fund.

2. How much do you pay? There’s no one answer. Until recently, you were paying 3.3% of the basic service on your bill, without all the add-ons. But starting this month, the surcharge or tax (whatever you want to call it) jumps seven times that amount to 24%. For some people, it’s a few dollars a month (or even less). But it all depends on your personal plan. The goal is to raise $200 million to replenish the fund. This is for phone use only, not for data.

3. What happened that the USF needs replenishment? Simply, the Public Utility Commission decided to stop collecting the fee during the pandemic, they said, to save Texans money. Phone companies struggled without the funding. Then, Gov. Greg Abbott vetoed a bill that would have replenished the fund. Like the PUC commissioners he appointed, Abbott said he didn’t want to saddle Texans with more taxes. By the way, this wasn’t done by the current PUC commissioners, but by their predecessors who would later resign in disgrace after their miserable performance both during and after the state’s February 2021 freeze.

4. Who blinked and settled this? The small phone companies sued the state and won. That’s why consumers must contribute $200 million starting now.

5. Is the tax increase permanent? Probably not. As soon as the $200 million is collected, we may see the tax drop back down.

6. Why all the confusion? It’s safe to say that state officials don’t hold news conferences announcing a seven-fold increase in a statewide tax. Also, some phone companies don’t list the fee as a separate line item on monthly bills. They bury it within other charges. You have to call and ask, and even then some phone company employees can’t explain. A phone company staffer unable to explain a fee? I know. Shocking, right? Many learned about it for the first time in a July 21 Watchdog column: “Your telephone bill will increase in September, and nobody told you until now.”

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