Bill would change method for collecting prepaid wireless surcharges

The Transportation and Telecommunications Committee heard testimony Feb. 13 on a bill that would provide a new method for collecting the Wireless E911 surcharge and the Telecommunications Relay System surcharge from prepaid wireless services.

LB1091, introduced by Valentine Sen. Deb Fischer, would create a formula that converts the 911 and relay surcharges into a percentage that would be paid to the seller of the prepaid services in order to collect a surcharge from the consumer at the time the retail transaction occurs.

The surcharge would be collected and remitted by the seller in the same manner as the state sales tax and the seller also would be allowed to retain 3 percent of the surcharge.

The prepaid wireless model accounts for 21 percent of the current overall wireless market, Fischer said, and approximately 80 percent of these services are sold through traditional retail outlets.

“LB1091 provides a simple and effective avenue for collecting these surcharges and is the best solution to make sure the state receives the required surcharge for all wireless users,” she said.

Beth Canuteson, a representative from AT&T, testified in support of the bill. Canuteson said the surcharges currently are added to a subscriber’s monthly bill, collected by the service providers and remitted to the correct state agency. This method does not work with prepaid services, she said, because those customers do not receive a monthly bill and wireless companies end up paying fees on behalf of the prepaid customer.

Canuteson said the bill would create a method for prepaid services that is more efficient, transparent to the customer and fair to post-paid customers who receive the surcharge in their monthly bill.

Nancy Riedel, director of state tax policy for Verizon Wireless, also testified in support of the bill. There are ways for wireless carriers to obtain surcharges from prepaid wireless users, Riedel said, but they are not reliable and sometimes result in carriers paying the state’s 911 service fees.

“This is a well vetted methodology and a consistent way to capture this market to support [the state’s] 911 services,” she said.

Jerry Vap, chairman of the state Public Service Commission, testified in a neutral capacity. Allowing retailers to retain 3 percent of the surcharges may result in a slight reduction in funds from the surcharges, Vap said.

No opposing testimony was given and the committee advanced the bill to general file Feb. 15 on a 7-0 vote.