USA: New service fees a threat to telematics

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 connected vehicle (or telematics) services to global automobile manufacturers.

If the proposed fee is adopted without an exception for telematics providers, 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 telematics service only in emergency situations.

Last year, the FCC first considered the plan, proposed by then FCC 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.

ATX: “While some 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.  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”.

Read more here.

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