The FCC announced yesterday that it will require all VoIP services that interconnect with the PSTN (traditional phone network) to pay into the Universal Service Fund that phone companies currently pay into. This decision came after considerable lobbying by the telecom industry complaining that the fees, which help to bring phone service and Internet access to rural customers, schools, and libraries, were only being paid by phone companies and not all VoIP providers. In response, the FCC has decided that all phone-like companies will pay into the USF, but at varying rates. The rates are based on rather wild speculations of how much long distance is used by the different kinds of providers. According to the FCC, cell phones are used the least for long distance (an estimation that is far from likely), followed by land lines, and then VoIP providers. VoIP providers are estimated as having double the amount of long distance as land line providers, meaning they would pay double the amount in Universal Service fees for each customer. The FCC has taken a ‘prove us wrong’ approach saying that VoIP providers may gradually lower their contributions if they can provide exhaustive research to show that the FCC’s speculation is incorrect.
The real smoke and mirrors is about who gets the money. The telecom companies have been very slow to roll out broadband access in rural markets, and many government regulations forbid the use of VoIP services in schools. What this means is that, the Universal Service Fund, which goes to schools and rural areas to help fund Internet access and phone access, goes back to the telecom companies, who by current regulations, have to pay the least into the fund. Essentially, this is a system by which the telecom companies’ competitors help boost the telecom companies’ revenues.
With a drastic disparity in USF pay-in, and the low availability of VoIP for the USF’s primary beneficiaries, VoIP companies will have to pay more for little benefit to themselves, and telecom companies will pay less and get a good portion of that money back from the people to whom it is actually given as a subsidy.
It’s a good scam if you’re a telecom company.