Tuesday, June 20, 2006

FCC Requires USF Support from VoIP, Increased Fees from Wireless

The FCC voted to adopt two proposals for boosting contributions for the Universal Service Fund (USF).

First, the FCC will raise 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 FCC will expand the base of USF contributions by extending universal service contribution obligations to providers of interconnected VoIP service. For interconnected VoIP providers, the FCC 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.

"Maintaining the stability of the universal service contribution system is one of the Commission's most important responsibilities. We take an interim step today to ensure the stability of the fund by raising the wireless safe harbor and broadening the contribution base to include interconnected VoIP providers. We take these actions because we recognize the changing telecommunications marketplace, said FCC Chairman Kevin Martin.

In a statement, FCC Commissioner Michael Copps commented: "I think the jury may still be out on whether today's action actually puts enough additional funds into the universal service fund as DSL's non-participation takes out. By some accounts DSL providers contribute $350 million a year to the fund, perhaps more.... I don't see with slam-dunk certainty that contributions from interconnected VoIP (which is, for all its impressive growth, still a relatively nascent industry) and from wireless carriers (whose possibly increased use of traffic studies could lead to unforeseen consequences) offset the funds lost by DSL's non-participation. Surely it would be an intolerable result to end up with the fund having less revenue, not more, for the foreseeable future. Last summer we pledged this result would not happen. Nine months later we seem to accept the possibility of a diminished fund."http://www.fcc.gov

  • Every year, the nation's universal service fund (USF) pays out approximately $673 million for low-income programs and about $3.0 billion to support high-cost rural services.

  • In May 2006, the FCC voted to adopt an order that requires facilities-based broadband Internet access providers and interconnected VOIP providers to provide Law Enforcement Agencies (LEAs) with all of the resources of the Communications Assistance for Law Enforcement Act (CALEA), enacted in 1994.