The Kentucky Public Service Commission is ordering an increase in phone fees that subsidize Lifeline, a federal phone program for income-based need.

More money will be immediately approved for the Kentucky Universal Service Fund, a federal phone program called Lifeline designed to help low-income phone customer, according to a PSC news release Thursday. 

The state program used to be matched dollar for dollar by the federal government, which created Universal Service Funds under the Federal Telecommunications Act of 1996. Two years later, the PSC established the KUSF. In 2012, the Federal Communications Commission ended the matching support. Support from the federal government is $9.25 per month per Lifeline customer.

The PSC support is $3.50 per month, for a total $12.75 per month per Lifeline customer. The PSC had considered decreasing that support to $2.

The PSC issued an interim order increasing the monthly surcharge assessed on landline and wireless phones from 8 cents to 14 cents. It’s other option was to decrease monthly support. The surcharge is shown on a customer’s bill as “Kentucky Lifeline Surcharge.”

Here’s how it works. Cincinnati Bell offers a Lifeline discount of $12.75 per line for voice service. Cincinnati Bell offers basic local exchange service at $18.30 a month, meaning a Lifeline customer now pays about $5.55 a month for basic service, according to the PSC order filed in the case.

The increase is about 0.13 percent of the average single-line wireless phone bill. With the hike, the total KUSF surcharge of 14 cents represents about 0.3 percent of the average single-line wireless phone bill in Kentucky, Andrew Melnykovych, director of communications for the Kentucky Public Service Commission, said in a release.

The PSC has been investigating the solvency of the KUSF. The money is collected via the surcharge and goes into the Kentucky Finance and Administration Cabinet. It is then distributed to telephone providers – both landline and wireless – who have been certified as eligible by the PSC, the release said.

In May 2011, the program’s balance was about $11 million. That dropped to just over $400,000 in October of last year. Melnykovych said prior to April 2012, the KUSF paid out about $215,000 each month. After that, the monthly disbursement averaged about $582,000. That meant that in 2015, monthly payments from the KUSF fund exceeded revenue by an average of about $118,000.

Melnykovych said the PSC will now examine the future of the KUSF, such as whether to continue the program. The PSC held an administrative proceeding on the KUSF on Feb. 1. East Kentucky Wireless, LLC, doing business as Appalachian Wireless asked the PSC to reduce KUSF support to $2, according to the PSC order. A majority of carriers were neutral regarding the question before the PSC, the order noted.

The order notes phone carriers shall submit tariff revisions to reflect the change to the PSC.

— Follow business reporter Charles A. Mason on Twitter at twitter.com/BGDNbusiness or visit bgdailynews.com.