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FCC to add VoIP to USF and increase USF fees of cellphones

Section 254 of the Telecommunications Act of 1996 authorized the Universal Service Fund (USF). The fund is to be used preserve and advance universal service throughout the county by subsidizing phone service and for paying for programs to connect schools and libraries to the Internet.

On June 21, 2006 the FCC adopted a new approach for assessing the contributions. The following is from the FCC press release.

“First, the Commission raises the existing wireless “safe harbor” percentage used to estimate interstate revenue from 28.5 percent to 37.1 percent of total end-user telecommunications revenue to better reflect growing demand for wireless services. This interim wireless safe harbor was last updated in 2002. Wireless carriers continue to retain the option to base contributions on their actual revenues or on traffic studies that estimate their actual interstate revenues.

Second, the Commission expands the base of USF contributions by extending universal service contribution obligations to providers of interconnected voice over Internet Protocol, or VoIP, service. For interconnected VoIP providers, the Commission establishes a safe harbor percentage of interstate revenue at 64.9 percent of total VoIP service revenue. Interconnected VoIP providers also may calculate their interstate revenues based on their actual revenues or by using traffic studies.“

What does this mean? Your telephone bills will be increasing. That is your cellphone bills as well as those from VoIP providers such as Vonage. VoIP providers will only be liable for the fees if they use part of the Public Switch Telephone Network (PSTN). Skype may not be affected because they do not charge for US domestic calls. Now some of the savings that VoIP has offered may not be there.

Many feel that there should be a flat monthly Universal Service fee on everyone with a phone number, regardless of the type of phone they use. FCC chairman Kevin Martin has been quoted as saying, “I still believe that this system needs fundamental reform, and I remain committed to adopting and implementing a numbers-based contribution system.”

Articles on the change can be found at;

http://www.usatoday.com/tech/news/techpolicy/2006-06-21-fcc-fees_x.htm

http://www.nytimes.com/2006/06/22/technology/22ownership.html

http://www.washingtonpost.com/wp-dyn/content/article/2006/06/21/AR2006062102002.html

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