FCC Allows States to Assess USF Contributions on VoIP

The FCC has ruled that states may assess contributions to their state Universal Service Fund (USF) from Voice over Internet Protocol (VoIP) providers.

About half of the states have state USF programs, which collect a fee from telephone users to subsidize local telephone service in rural areas, where the cost of providing service is higher due to greater distances between customers.

VoIP providers already contribute to the federal USF on the basis of revenues from interstate and international traffic. With this decision, VoIP providers now must contribute to state USF programs based on their intrastate (within a state) revenues so long as their requirements do not conflict with federal law or policies.

The Commission's rules currently give providers three options for establishing the federal/state universal service revenue base:

1. Using a safe harbor under which 64.9 percent of their revenues are deemed to be jurisdictionally interstate (and therefore not intrastate);
2. Conducting a traffic study to allocate revenues by jurisdiction; or
3. Developing a means of accurately classifying interconnected VoIP communications between federal and state jurisdiction.

FCC Declaratory Ruling In the Matter of Universal Service Contribution Methodology