The Federal Communications Commission announced its decision to limit payment to wireless carriers from the Universal Service Fund (USF) until the Commission will adopt a comprehensive reform of the program. Until then, the total annual support for the competitive eligible telecommunications carriers (ETCs) will be capped at the March 2008 level, FCC unveiled.

The matter FCC is currently discussing is the enormous increase in USF payments that supports cell phone service in rural areas, from $1.5 million in 2000 to over $1 billion in 2007, threatening the sustainability of the program and drastic changes in telephone bills (which include a tax paid by most Americans).

According to the Federal Communications Commission, consumers pay as much as 11 percent in USF fees on their phone bills. The cap will not include competitive ETCs serving tribal lands and Alaska Native regions, FCC said. At the same time, competitive ETCs that file their own cost data will also be exempted from the cap.

FCC motivated its decision as follows: “The Commission’s actions are intended to stem the explosive growth of USF while the Commission pursues comprehensive reform of the program.” The surprising growth in the past seven years was caused by competitive ETCs, who receive USF support based on costs of the incumbent provider rather than on their actual costs, FCC explained.

The Universal Service Fund was created in 1996 by the Congress, which stated that all Americans should have access to telecommunications at comparable rates.

“Consumers will be happy to hear the FCC is taking control of the fund’s growth,” Tom Tauke, executive vice president of public affairs at Verizon said, as quoted by CNET News. Verizon customers are among the largest contributors to the fund.