Proposed FCC Universal Service Fee Increase Could Shut Off Location-Based, In-Vehicle Telematics Emergency Services

WASHINGTON, D.C., OCTOBER 29, 2008 – Location-based emergency communications services delivered to vehicles could be cut off under proposed changes to how the Federal Communications Commission (FCC) collects universal service fees. That was the prediction of Dallas-based ATX Group, one of the largest providers of telematics services to global automobile manufacturers.

“In a rush to force dramatic changes to the universal service system, the FCC is on a course to make location-based emergency telematics services a casualty left for dead on the roadside,” said Steve Millstein, president of ATX.  “The U.S. has been leading in the deployment of this potentially life-saving technology and virtually every major automobile manufacturer is looking to deploy these services within the next three years, some on a global basis. Now, with the single stroke of the FCC Chairman’s pen, the vision of the intelligent vehicle potentially stops. Let’s face it, the tax will be more than the cost of service.”

If the FCC plan is adopted, vehicle owners who have opted for cars with the added safety of telematics would see their current assessment increase to a point where it exceeds the cost of airtime. The majority of vehicle owners use the service only in emergency situations.

The FCC is considering changes, proposed by Chairman Kevin Martin, which would replace a revenue-based collection system for universal service to a fixed, $1.00 per month telephone number-based system.  Under the changes, universal service fees that are currently collected on emergency telematics services would jump in several circumstances at least 3000% and impose enormous additional monthly costs on maintaining telematics equipped vehicles and rolling the service out to an automaker’s entire fleet.  In most cases, the fee will exceed the cost of the cellular service. Emergency service providers and automobile manufacturers and their affiliated dealerships fear such an increase would necessitate the end of these emergency services. All of the telematics providers currently pay universal service fees under the revenue-based system and do not oppose paying an amount consistent with the current fee structure.

“While some at the FCC may think a dollar per month for every vehicle that has emergency telematics services is not significant, they fail to recognize the fact that the majority of these services are only used in the rare instance of an emergency and are priced accordingly,” added Millstein. “We just don’t think it makes sense to assess fees on these services in the same manner the FCC would like to impose fees for traditional telephone or cell phone service.”

“The legislation that enacted Universal Service requires the fee to be equitable and cannot exceed the cost of service.  But this scheme provides no fairness to low-volume users such as vehicle owners who have purchased vehicles based in part on the car’s ability to be located and provide critical information to emergency responders,” said Gary Wallace, ATX vice president of government relations. “I also find it ironic that the FCC wants to add fees that raise the price of vehicles at a time when the U.S. auto industry is facing perhaps its worst financial crisis in history as well as have a chilling effect on intelligent vehicle technology that the U.S. Department of Transportation has been advocating for quicker deployment.”

The FCC proposal, a small part of comprehensive changes to universal service, is being considered at the eleventh hour of the current Commission’s tenure.  The make up of the Commission is expected to see significant changes in the next administration.

“The Commission should not be rushing to impose such significant changes that undermine emergency response,” said Wallace.

In-vehicle emergency communications systems providing automated crash notification, stolen vehicle recovery, in-vehicle SOS buttons, and crash severity data that are designed to assist and accelerate emergency response are referred to as “telematics” services.  Every day telematics services save lives and assist drivers who are injured or under duress in emergency situations. These intelligent vehicle technologies not only accelerate and enhance emergency response to highway emergencies, particularly along rural highways, but are seen as critical advancements toward the deployment of systems that can immediately determine whether severe trauma may be involved as well as quickly re-route traffic, mitigating congestion chokepoints. Systems deployed today on several million passenger vehicles, with dramatic growth expected over the next five years, use the cellular network with communications devices which have individual telephone numbers.  These systems are extremely low volume network users. 

The ATX Group urged the FCC to exempt emergency telematics services from the proposed connection-based collection system.  The FCC is expected to vote on the proposal at its November 4, 2008 meeting.