Talk to your carriers now about regulatory changes that could raise your enterprise’s telecom bills, specifically those for MPLS services.
Your MPLS costs could increase 15.3% if federal Universal Service Fund (USF) surcharges are applied.
USF supports programs for low-income subscribers, schools, libraries and other organizations. The fund gets its money from a surcharge – now a record high 15.3% – levied on international and interstate carrier revenue. The FCC recalculates the fee quarterly based on demand from USF-supported programs and carrier revenue projections. (The current federal USF fee is always available here.) Though carriers are responsible for paying the fee, they can and do pass it through to businesses and residential subscribers on their phone bills.
The USF is managed by the Universal Service Administrative Company. Learn more about USF here.
Traditionally, the FCC hadn’t asked carriers to contribute to the USF from revenue they earned on MPLS (multi-protocol label switching) services. So carriers didn’t pass USF surcharges through to enterprises on MPLS bills. That’s one of the reasons MPLS was so attractive to enterprises when they migrated to it from frame relay.
But the FCC included MPLS in a list of USF-eligible services in the instructions for a USF reporting worksheet released last year. (See p. 5 where MPLS is included in list of “interstate telecommunications” services.) Only a few carriers, including Global Crossing, apply USF surcharges to MPLS invoices today. But there’s reason to believe that others – like AT&T and Verizon Business – could soon follow suit. That would add 15.3% to enterprises’ MPLS bills with those carriers.
The FCC is reforming the USF as part of its National Broadband Plan and more guidance about how the surcharge should be levied is expected soon. Read more about how USF will change with the National Broadband Plan.
So ask the question now. You might not get the answer you like, but it will definitely prompt further discussions, clarify your carrier’s position, and, potentially, drive further concessions into your final contract.
Contact your Telwares account executive today if you have questions about how new applications of USF surcharges change your procurement and negotiation strategies.
