Friday, June 23, 2006

FCC extends USF Tax to VoIP Providers

Reported from Von Mag.

On Wednesday, the Federal Communications Commission (FCC) approved a new plan for funding the Universal Service Fund (USF), with VoIP providers having to contribute around 7 percent of their revenue into the fund.

The FCC has ordered Internet telephone service providers who connect to the public switched telephone network (PSTN) to contribute part of their venue into the USF, which subsidizes telecommunications access to rural and low-income areas along schools, hospitals and libraries. Wireless providers will also end up paying more, resulting in a rate increase for both cell phone and VoIP customers since fees are passed along to consumers.

Wireless carriers will have to contribute about 4 percent of their revenue under the new FCC plan with new contribution levels expected to take place in the fourth quarter, but there could be a loophole of sorts. If wireless or VoIP providers could prove that their long distance and international revenues were less, they would be allowed to contribute a smaller percentage of their revenues.

Companies offering long-distance and international phone services plus broadband DSL providers must contribute 10.9 percent of their revenue into a $7.3 billion fund, Reuters stated. However, DSL providers will no longer have to contribute to the program after August, setting the stage for another funding adjustment before the summer is out. FCC Chairman Kevin Martin wants to see USF contributions shifted to a mechanism based upon telephone number usage.

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