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Friday, June 02, 2006

Assessing USF on VoIP ... Questions, Questions, Questions...

As reported by a number of folks, the FCC is poised to assess federal universal service charges on interconnected VoIP providers, like Vonage, Sunrocket, and cable operators.

We haven't seen any reports on the FCC's legal theory for doing so, but we expect an interesting read once the order comes out.

Here are few things to think about ....

In the FCC's 2004 Vonage Order (appeal pending at the 8th Circuit), the FCC stated that Vonage's service is interstate and that it is either a telecommunications service or an information service.

If VoIP is an interstate telecommunications service, then it would seem that 100% of revenues would be subject to USF, rather than 65% as reported in the press. If it's an information service, then it's hard to see how any USF gets assessed at all (numbers-based flow through aside).

A "telecommunication service" finding on VoIP would be interesting for a number of other reasons too.

For example, "telecommunications service" finding would seem to resolve in Time Warner's favor its interconnection dispute with the South Carolina Public Service Commission (which denied Time Warner a CLEC license), which is pending at the FCC.

As another example, this would be the first time that the FCC has established a software application as a "telecommunications service." What's ironic is that this software-based "telecommunications service" can only be utilized over an unregulated "information service" -- cable modem or DSL (neither of which are subject to USF).

Software = telecom service; physical network facilities = information service?

Fascinating stuff ... either way, the FCC is sure to be heading to some court of appeals to defend this one. And given the kluge of results-oriented decisions leading up to this point, our money is on the appellants.

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