The Jeff Pulver Blog: The DC Circuit Reviews the FCC's Order Imposing Universal Service Contribution Obligations on VoIP Providers:

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February 12, 2007

The DC Circuit Reviews the FCC's Order Imposing Universal Service Contribution Obligations on VoIP Providers:

The DC Circuit Court heard oral arguments on the appeal of the FCC's VoIP Universal Service rules on Friday. (The VON Coalition was an Intervener). I don't want to elevate hopes, but the Court appeared skeptical of some of the FCC's argument.

Last year, the FCC required VoIP providers that connect to the public-switched telephone network to contribute a percentage of their "long distance" revenue to the US Federal Universal Service Fund. Some argued that the amount of funding required of VoIP providers was excessive. Frankly, I think the oral argument focused on the wrong issues.

The primary issue on review was whether 64.9% of VoIP traffic should be considered interstate for calculation of universal service contributions. We should not be haggling over the percentage of VoIP traffic that is interstate for purposes of USF contributions. That argument is based on archaic conceptions of what voice communications were. They make no sense in an IP-enabled world where physical geography is irrelevant and where communications means so much more than voice telephony.

I think we have to recognize that the old way of assessing charges to promote universal service no longer serves the public good. We have to stop putting the fingers of the Internet innovators into the old voice telephony support dike. We need to rebuild the system. We have to rethink what we want to achieve through a universal service fund.

I must reiterate a couple of thoughts that I and others have stated like a broken record over the years, but do not yet seem to resonate. What is the public good we want to promote? I think it is ubiquitous and robust broadband that would enable each user to better control and maximize her media, Internet, communications and entertainment experience. How do we get there? I don't think we get there by compelling VoIP providers to prop up the narrowband public switched telephone network. Rather, I think it is a concerted national effort to role out broadband, with all its rich features and functionalities, to all Americans, so that they no longer need to rely only on a narrowband voice connection. Short of that, universal service funding should be based on the premise that we should be encouraging broadband rollout and uptake. To that end, universal service contributions and distributions should focus on the broadband pipes and not on the global applications that ride those pipes. Frankly, unaffiliated VoIP providers were already paying into the universal service fund, but indirectly, as users of broadband pipes and telecom services. Why is the provider of a voice application more obligated to contribute to a fund (particularly a fund from which it cannot draw support) than any of the other non-voice applications that also rely on broadband pipe to reach end users? VoIP providers are simply large volume users of telecom services. Their telecom service providers are the ones who are assessing universal service contributions on the VoIP providers and turning around and submitting those funds into the Universal Service Fund. Unless and until the VoIP providers are considered bona fide "telecom service providers" with all the rights of telecom service providers, they should not bear the burdens of telecom service providers, particularly when they already contribute as customers of telecom service providers.

And let's not forget how we got to this dilemma over a shortfall in Universal Service funds in the first place. The FCC reclassified DSL and other broadband access providers as "information service providers". Since they were no longer "telecom service providers" they were relieved of their obligations to contribute to the Universal Service Fund, resulting in a several hundred million dollar shortfall in the Universal Service Fund. The FCC looked to the emerging VoIP providers to make up for this shortfall (even though hitting up these upstarts could only account for a small percentage of the lost funding). In any event, the FCC has never designated these VoIP providers as "telecom service providers". If the argument for relieving the DSL and other broadband service providers hinged on their reclassification as something other than "telecom service providers", how could the FCC have imposed those same obligations on VoIP providers, none of whom have been designated "telecom service providers"?

Tags: Kevin Martin, voip, VON, FCC, Jeff Pulver

Posted by jeff on February 12, 2007 05:36 AM | Permalink

Additional resources: #140conf events | Watch the Jeff Pulver Show | Jeff's Qik Videos

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February 12, 2007

The DC Circuit Reviews the FCC's Order Imposing Universal Service Contribution Obligations on VoIP Providers:

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