The Keep Universal Service Fund Fair Coalition today hammered FCC Chairman Kevin Martin’s proposal to base USF contributions on a per-number basis.

Though it is not an official proposal, Martin said in a keynote at the Telecom 05 show earlier this month that he favors moving to a system where any service that requires a phone number would be forced to contribute to the fund. However, that method would unfairly impact seniors and low-income users who make little or no long-distance calls, according to the Coalition. In a study on the impact of such a system, the group said per-number charges would result in higher federal taxes of as much as $707 million for 43 million households.

Instead, the group favors either keeping the current method of universal service funding, which places greater onus on heavy long-distance users, or moving to a hybrid method that wouldn’t impact seniors and low-income users.

“For a consumer who only makes only a handful of calls, they pay correspondingly low USF fees,” said Mary Martin, Chairman of The Seniors Coalition, which is part of the group opposing per-number charges. “Under the flat-rate proposal, that would go up 1000%.”

Martin’s proposal was aimed primarily at getting voice-over-IP companies to contribute to the USF, a concept that the coalition thinks is justified.

“We would like to see VoIP included in the USF funding base because obviously a lot of people that have the ability to pay for high-speed service and VoIP are getting off Scott-free,” said Linda Sherry, Director-National Priorities for Consumer Action.

The flat-rate proposal also would have a devastating impact on pre-paid wireless, a product that is disproportionately used by low-income and minority populations.

“Our users are low volume, and we pay off the actual usage,” said F.J. Pollak, president and CEO of TracFone Wireless, the largest pre-paid wireless reseller in the country. “Today we’re around 5 cents per customer per month. If you go to $1.50 or $2 per month, you’re talking about a $70 million tax increase on our company, which isn’t going to be easy to pass through.”