The Great 9-1-1 Tax Pileup

Michigan consumers are paying millions of dollars for sophisticated emergency phone-calling services that have yet to materialize.  Prescribed by Washington six years ago, the system is beset by difficulties that show what happens when the federal government imposes "unfunded mandates" on states.

In 1996, the Federal Communications Commission (FCC) ordered wireless carriers and telecommunications providers to enable 9-1-1 dispatchers to discern automatically a cellular caller's location and callback number.  Communities requesting this service were likewise required to install the equipment necessary to receive locator data.

The FCC wanted to speed up response times to emergencies reported via wireless calls. Unlike the fixed transmission routes of telephones in homes and offices, the path of a cellular signal, as it moves from tower to tower, depends on the caller's location. Consequently, 9-1-1 dispatchers have no database to match a cell call to an address. Given the increase in the cellular market, the FCC concluded that federal action was warranted.

But rather than make a case to Congress for funding the plan, the FCC directed the states to come up with the cash.  Such unfunded mandates are the means whereby federal regulators sidestep the scrutiny that comes with budgetary competition.

In 1999, the Michigan Legislature enacted a 55-cent monthly fee on cellular subscribers to fund the enhanced 9-1-1 service.  But lacking a basis on which to judge costs—the plan having been devised in Washington—state lawmakers guessed wrong.

As of August 2001, the latest data available, more than $52 million had been collected for enhanced 9-1-1 service.  But of the 83 counties in Michigan that share the fee revenue, only 21 have even partially implemented the first phase of the program—while the second phase should be underway, according to the FCC.

  State officials acknowledge that a "significant" number of 9-1-1 service centers are unprepared to implement the FCC order.  Nor is Michigan an exception.  FCC officials have expressed  "disappointment that the process of making wireless (enhanced) 9-1-1 a reality is not further along."

Meanwhile, local governments are stockpiling the tax revenue. Detroit has reported receipts of $790,653, but no costs or expenditures.  Macomb County has $680,487 on hand, while Ingham County reports $302,740.  Likewise, Kalamazoo County reported $255,280 in receipts, Livingston County $167,062, Calhoun County $180,000 and Genesee County $425,876.

Despite the dearth of progress, there's already talk of increasing and extending the tax.  At the same time, county officials are working to block a plan by telecommunications companies to recoup their share of the program costs.

At issue are plans by SBC-Ameritech and other service providers to charge 9-1-1 dispatch agencies a "transaction fee" to transmit each emergency call.  Currently, the 9-1-1 agencies contract with the companies for a fixed fee to maintain a database of telephone numbers and addresses for use in handling 9-1-1 calls.  But wireless transmissions require the telephone companies to provide unique location data every time a 9-1-1 call is handled.

The FCC has ruled that 9-1-1 dispatch agencies are, in fact, responsible for paying these transaction costs.  But local governments are lobbying the state Public Service Commission to disallow any such charges.

While it is predictable that local officials would scramble to avoid the hefty costs of enhanced 9-1-1, telephone service is not an entitlement.  To force the industry to subsidize government mandates is an invitation to regulatory extortion.  Local officials would do better to demand that the Legislature and the federal government either pay up or scrap the grand scheme.

With little data on how often dispatchers are unable to obtain location information from cellular callers, it is legitimate to question how much enhanced 9-1-1 services actually are needed.  Automakers already are offering onboard devices to facilitate roadside assistance. Insurers and wireless carriers might well seize the opportunity to market emergency relays to local 9-1-1 agencies.

What we have instead is a federal plan that wrests control of 9-1-1 services from the local officials who are most accountable to citizens, a plan that balloons local, state and federal bureaucracies and inflates costs—and fails to deliver the benefits promised.

The federal government should scrap its plan and allow the private sector to come up with the most reliable, cost-effective technology for enhancing 9-1-1 service.

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(Diane Katz is director of science, environment and technology policy at the Mackinac Center for Public Policy. Permission to reprint in whole or in part is hereby granted, provided the author and her affiliation are cited.)