Digital Trends

VoIP won't be so cheap anymore: the Federal Communication Commission has ordered Internet-based phone services to pay into the Universal Service Fund, just like "real" phone compani

The Federal Communication Commission has ruled (PDF) that companies which provide Internet-based telephony (VoIP) services must pay a portion of their revenue to the Universal Service Fund, which subsidized telephone and emergency services to low-income and rural areas, as well as communications and Internet access for hospitals, emergency services, schools, and libraries.

Under the interim regulations adopted by the FCC, interconnected VoIP providers—that is, services which interconnect with standard telephone networks—will have to pay about 7 percent of their revenue into the Universal Service Fund, although the amount can be adjusted every quarter. Providers can calculate the contribution based on total revenue or using traffic studies.

The Universal Service Fund currently stands at about $7.3 billion, but DSL providers will no longer be obligated to contribute to the fund as of August, 2006, creating a potential revenue shortfall. As such, the FCC is imposing Universal Service Fund contributions on VoIP operators as well as increasing contributions from wireless operators (which had their contributions increased to about 4 percent of their revenue).

The FCC is considering completely reformulating funding mechanisms for the Universal Service Fund, so the current changes are considered interim measures until a new system is adopted. FCC Chair Kevin Martin has indicated he supports contributions based on telephone numbers in service rather than overall revenue.