Lawmakers Float New Fees on VoIP

Under draft plan, contribution base of universal service fund would include VoIP providers.

By Roy Mark | Posted Nov 18, 2005
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Those extra fees on your regular and wireless phone service could be headed for your broadband and VoIP bill too, under a draft bill that's floating in the U.S. House.

Rick Boucher (D.-Va.) and Lee Terry (R.-Neb.) launched the reform trial balloon for Universal Service Fund (USF), which is tacked onto phone and wireless service bills. The plan would be to extend the tax to broadband providers in order to fund Internet access deployments for rural and under served areas.

Currently, Voice over IP providers and cable companies providing VoIP service do not pay into the fund. Local and long distance telephone companies, wireless providers, paging firms and pay phone companies are required to contribute to the USF.

USF funds are also used to fund Internet connections in schools and libraries through a program known as the E-rate, which has been hit by charges of fraud and mismanagement as a result of House investigations.

According to a background briefing issued by Boucher's and Terry's office, "Internet based telephony and flat rate all distance calling plans have rendered obsolete the current USF methodology of imposing payment obligations only on interstate and international calls."

Under the two lawmakers' draft proposal, contributions to the USF would be increased by assessing payments on the intrastate, interstate and international revenues of telecom firms currently paying into the system. It would also add any provider of a service that uses telephone numbers, IP addresses or their functional equivalents in order to provide or enable real time voice communications.

The draft also proposes to extend USF contributions to any provider that offers a network connection for a fee to the public, such as DSL, cable modem, WiMax and broadband over powerline providers.

Congress originally set up the USF to expand telephone service to rural and underserved areas and is widely credited for funding the successful rollout of telephony throughout the United States.

"In recognition of the 16th place standing of the United States in the world in broadband deployment, The Universal Service Reform Act encourages the deployment of broadband, especially in rural areas, by allowing recipients to use universal service support to deploy broadband within their service areas," the background briefing states.

The draft requires recipients of USF payments to deploy broadband with a download speed of at least one megabit per second within five years of enactment.

Boucher's and Terry's bill would control growth of the fund by capping all high-cost support mechanisms of the USF at their current level. Future growth would be based on the annual percentage change in the total number of rural ILEC working loops plus the annual percentage change in the Gross Domestic Product-Chained Price Index (GDP-CPI).

The rural high-cost support fund is presently capped and increases annually based on this growth factor. The Terry-Boucher measure merely extends both the cap and the growth factor to all high-cost support mechanisms.

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