We fund 9-1-1 all wrong.

9-1-1 is typically funded through the Universal Service Fund (USF). You know, that 1.37 charge on your phone bill. That has to change. The current method of funding 9-1-1 based on USF is not sustainable for many reasons.

• The increasing use of cell phones destroys the one-to-one relationship between a subscriber and their 9-1-1 provider that is the basis of USF funding.
• VoIP is increasing and does not pay into USF.
• As telecommunication charges decrease due to competition in the market, a percentage-based funding scheme also decreases.
• Legal challenges (Nebraska) may further impact USF.

A pay as you go model would provide adequate funding, even as 9-1-1 use increases. There are some constraints:

• We can’t charge caller directly – that would be a disincentive to use 9-1-1 in an emergency.
• The move to mobile devices means we need to bill for 9-1-1 at the point of use, not the billing address.

An insurance model will achieve this. Here is how it works:

• A 9-1-1 jurisdiction sets a per-call rate based on its budget divided by the number of calls expected. Yearly seems like a good period for this rate-setting.
• When a caller makes a 9-1-1 call, their provider is assessed the per-call charge. This should not be difficult, as we already know the provider.
  
• 9-1-1 software could be modified to track this and prepare bills.
• The provider is allowed to add a surcharge to the bills of their subscribers equal to the total they have been billed, plus an administrative percentage, divided by the number of subscribers.
• The telecommunication provider will act as an insurance organization, by spreading the cost of 9-1-1 among all its customers.
• The administrative percentage means that acting as an insurer can be a revenue source for the telco.
• This model will work for wired phone providers too.
• The jurisdiction that takes the call gets the revenue.
  

Sample calculations
9-1-1 jurisdiction

• Annual budget $1,000,000
• 9-1-1 calls per year 20,000
• Per call charge 1,000,000/20,000 = $50.00

Cellular companies are allowed to recover costs + administrative fee. The PUC or PSB sets admin fee. For this example it is set at 5%. The Cellular provider is allowed to recover 105% of 9-1-1 charges.

Cellular company – Acme Cellular

• 10,000 subscribers
• Each subscriber makes 1,000 calls per year on average.
• Acme Cellular handles 10,000,000 calls per year.
• 1 in 5000 calls is a 9-1-1 call = 2,000 9-1-1 calls.
• A subscriber of Acme Cellular calls 9-1-1.
  
• Acme Cellular is billed $50.00 by the 9-1-1 jurisdiction.
• This happens 2,000 in a year.
• The total charge for the year to Acme Cellular is 2,000 x $50.00 = $100,000.00
• Acme Cellular gets to recover $105,000.00 for the year.
  
• This is divided among its 10,000 subscribers and billed monthly
• $105,000.00/10,000/12= $0.875.
  
• Each Acme subscriber is billed $0.875 per month for 9-1-1 service access.

I'd like to know what you think.