Appeals Court: VoIP Must Pitch in to USF

A federal appeals court has upheld the FCCs requirement that VoIP providers contribute to the Universal Service Fund (USF).

Nearly a year ago, the FCC revamped the USF contribution base to include VoIP providers that connect to the PSTN. Vonage Holdings Corp. then filed suit against the agency.

Even though the court on Friday sided with Vonage on two small points, overall it denied the companys appeals. VoIP providers still must pitch in the safe harbor of 64.9 percent of interstate calls. Thats more than wireless carriers pay; the court said that was fair since consumers use VoIP much like they use landline services.

Because Vonage has neither shown why usage patterns for VoIP are more like those for wireless than for wireline toll service nor unsettled the commissions reasoning regarding the type of customer attracted to VoIP, we have little trouble rejecting its challenge to the safe harbor level, judges wrote in their opinion.

On the other hand, the court did away with the commissions requirement that VoIP companies provide pre-approved traffic studies. The judges said that wireless carriers dont have to get traffic studies approved in advance, so it doesnt make sense to require that of VoIP.

The court also said the commission cant double-tax VoIP carriers by making them contribute on both wholesale and retail services.


Vonage Holdings Corp.

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