Once again, USAC and the federal Universal Service Fund are driving fundamental classification questions regarding telecom services. In the latest example, USAC has requested the FCC’s guidance on how to treat text messaging services for universal service purposes. Several parties have tried before to have the FCC opine on the classification of text messaging services, with no luck so far. Only time will tell whether USAC’s request will spur FCC action where others have failed.
In a Public Notice released yesterday, the FCC sought comment on a Guidance Request from USAC concerning the reporting of revenues from text messaging services (which is most commonly provided via short message service (SMS) technology). In the Guidance Request, USAC stated that audits of the Form 499-As of "multiple contributors" have identified a disparity in the reporting of text messaging revenues. According to USAC, some providers report the revenue as non-telecom revenue on line 418.3 of the Form, while others report it as mobile service revenue on line 409 of the Form.
USAC notes that the Commission "has not determined the regulatory classification of text messaging" and, as a result, USAC "is unable to determine the proper classification of text messaging revenues." Based on this assertion, it is safe to assume that USAC either has placed on hold the audits it referenced, or it shied away from reclassifying text messaging revenues in the interim.
This, of course, is not the first time that parties have been faced with the classification of text messaging. As we’ve covered before, blocking of SMS and "short codes" has led to litigation in the past, as have text-based marketing campaigns. These proceedings typically have drawn little outside interest. Most directly, in December 2007, Public Knowledge and several other consumer organizations asked the FCC to classify text messaging as a Title II service, or alternatively, to apply non-discrimination obligations to text messaging if it is governed by Title I. The FCC received comment on the Public Knowledge petition, but it has not taken further action. It is hard to see how the USAC Guidance Request will fare any better.