FCC Adds Fees to VOIP, Cell Phones

By Ed Oswald | Published June 21, 2006, 2:03 PM

The Federal Communications Commission voted Wednesday to increase the amount that cell phone providers must pay into the Universal Service Fund (USF), while also requiring VoIP providers to contribute for the first time.

The increase in fees would likely mean higher monthly bills is in the cards for the millions of cellular and VOIP subscribers. Often when fees are increased, communications providers pass on the added costs to their customers.

The USF subsidizes phone service in rural and low-income areas. The added fees are a move by the FCC to keep the fund afloat, as its funding will be seriously cut after DSL providers are made exempt from making payments into the USF starting this August.

FCC chairman Kevin Martin says the new rules are only a temporary step. "I still believe that this system needs fundamental reform, and I remain committed to adopting and implementing a numbers-based contribution system," he said. "Accordingly, our work in this area is far from complete."

Under Martin's proposal, each phone number would be assessed the fee separately. However, some said that the real problem stemmed from the exemption of DSL.

"DSL and cable broadband can build where they choose and profit as they can without contributing towards making these services available to harder-to-reach people," Democratic commissioner Michael Copps said.

Fellow Democratic Commissioner Jonathan Adelstein echoed Copps' concerns, saying "I am concerned that we leave unanswered important questions about our long-term approach to the future funding of these vital programs."

The proposal calls for a contribution of up to 3.9 percent of cellular companies' revenues, and as much as 6.8 percent of VoIP revenues. Still, Copps acknowledged that it is unclear if the additional funding would replace the funds lost by the DSL exemption.

According to his figures, DSL providers contributed as much as $350 million each year to the USF.

Comments

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Hey, I have a GREAT idea.

Lets stop sending money to Iraq for a month, and use it to pay for this! Should be a few billion. :)

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Lets really be honest and call this what it is...

It is Telecom welfare. Not for the telecom companies but welfare for the rural or disadvantaged. Income re-distribution because our government thinks they know how to better spend our money.

As if this in and of itself were not bad enough, it is being enacted and managed by unelected officials who have no other agenda than the perpetuation and expansion of their own power and influence.

The entire USF concept is flawed and unconstitutional and should be dismantled. This is not a partisan thing, it goes way past that. I don't care which party has this under its wing...it needs to go.

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Does anyone know if they make their expenditures within the USF public? I'd like to see how they spend the money on this "vital program". Sounds suspiciously like a slush-fund to me. If they really need to raise money, charge the service providers a flat-rate per customer. Seems like the fairest way to inflict pain on us.

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I am ready for them to start taxing us for the air we breath and the thoughts we have....

I work in goverment and there is so much damn waste and ruin it makes a corporate company look perfect. What the goverment needs to do is clean up the act and the way they do things and they will not need to put a tax on every little thing.

My $0.02 from what I have seen in local, state, and federal goverment.

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TracFone Baby... If its good enough for the terrorists its good enough for me. No contracts no bills. Want a new phone? Pick it up. Pay for only what you use in mins and walk away a happy camper. PrePaid is definitely the way to go... and as far as VoIP... Bah its not that great anyway. I just use free services like PalTalk or MSN Live if I want to talk to people over IP. Don't waste your time and money doing it through some dumb paid service.

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I don't know which VoIP services you have used, but I have used VoIP solely for our home telephone service for two years and the quality is superior to what we had with the local telephone carrier service. We have virtually every feature the local phone company provided with their service, but at no additional charge. Likewise, while not formally supported by our VoIP carried, even faxes work flawlessly. And, we pay far less each month for service, as well. I wouldn't think of switching back, even if the local phone carrier was cheaper.

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Reregulate utilities, make universal service the law. Pretty easy actually. Just dust off the law books from the 1940s and there you go.

And yeah, they should sweep any form of internet service into the heap.

A friend of mine lives in Portland, OR and can't get any form of broadband.

I live in a fishing village in China and have a 100 Mb pipe.

'Course, we don't have kindly, tax cutting, GWB at the helm here.

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damn, more fee. So 20%+ on tax and fee on cellular service is not enough already? They have to raise more. Inflation is going up, and real income is not going anywhere, it actually down a little.And more taxes are coming. We need some new leaderships to turn this around. I don't blame Bush for this, but I do blame ourselves for voting the people who made up this government.

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They just got rid of an ancient tax on telephone service, that was enacted in 1898, to finance the Spanish-American war. And now, the unelectedd FCC beauracrats are creating another tax to raise money. And just never mind that US Constitution, which states that only the elected Congress can raise federal taxes or revenues...

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The scary part is if they can bill your bits for VoIP, they can start taxing you for any data... IM, Skype...

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Whatever happened to the "free market" and "letting the market decide"? Oh yea, guess that got in the way. Republicans never saw anything they didn't want to tax before they bothered to understand it.

I wouldn't be surprised if they don't propose a tax on keystrokes next. Soon we'll all be typing in Haiku to keep the tax-mongering conservatives at bay!

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Republicans traditionally cut taxes, not raise them. Obviously, there are exceptions, but it is usually Democrats who like to raise taxes because they're more concerned about social welfare.

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Republicans only cut tax for the rich. I don't see a different from my tax returns with Bush "tax cut".

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Ed, are you a anti-government partisan? You sure leave a lot of information out..

*Companies offering long-distance and international telephone services as well as high-speed Internet service via digital subscriber lines (DSL) must currently contribute 10.9 percent of that revenue into the $7.3 billion fund.

However, DSL providers will no longer have to contribute to the program after August, so the FCC had to act to avoid a potential shortfall of hundreds of millions of dollars.

Consumers' DSL bills could go down if the savings were passed through to them.*

This is why I have to keep checking -REAL- news sources, to check these stories.. he conveniently left this part out.

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That's exactly the point of the article. DSL providers stop paying August, so they need to find some way to make up the cost. Yes, they pay now, but will stop in 2 months thanks to an exemption granted last year.

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I didn't leave the republican party; the republican party left me! Yeah, they voted in low income taxes, but they sneak in all these other taxes everywhere you turn. Not like the democratic party is advocating to cut governmental costs, but they always stood for bigger government so you know what to expect when a democrat is elected unlike the Republicans who are spending like drunken sailors when they should stand for SMALLER government.

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OK, VOIP. Its not free technology. So who pays for it? People want technology, so SOMEONE has to design it. They have to get paid.

Telephone companies don't design their OWN VOIP, they just adapt to the technology. So where did you think the money would come from, thin air? C'mon.. This isn't unreasonable.

And did we miss one of the final comments..

*Still, Copps acknowledged that it is unclear if the additional funding would replace the funds lost by the DSL exemption.*

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What is the difference to a telco or a DSL provider if I am using the bandwidth that I paid for (paying for telephone line that I only ordered to have DSL and DSL service itself)to download files from the internet or to use the bandwith for VOIP?

What is next, they will start charging taxes on Skype and the IM?

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Amen!!!

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Lol if you leave the republican party of an extra $1.70 a month for your VOIP - id hate to do see what you do to a poor old lady in a store that short changes you a few pennies. If a republican made this tax, ill be glad to pay the extra 1.70.

JEB 2008!

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This isn't money going to pay for the technology. I have no problem paying for my vonage line. I expect to pay a monthly fee. I don't have a problem paying for my cell phone line. What I object to is the constant taxing on them. This money is not going to the designer of the technology. It is going to taxes. My $39.99 cell phone bill costs me almost $60 a month after taxes, and they want to add more. My $29.99 vonage bill just went up to over $37, as different states have decided they want a piece of the pie. And now they want to add the USF to it.

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What happened to "No taxation without representation"?

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First, that was Boston.

Second that was England Tax.

Third, it was for Tea not Technology.

Fourth, that was over 200 years ago...

Fifth, it applies to goods sold in trade..

And last, it was before there WAS a United States, so there was no magna carta or Constitution, so in essence the was the pre-dawn of the USA law.

History, read it.. At least quote some stuff that is applicable.

*In reality, the colonists had been offered representation under British rule, but the offer was turned down for the following reasons: (1) colonial representatives would have no way of finding out the will of their constituents, as the fastest message that could be sent home would take two to three months each way; and (2) colonial representatives would remain a minority in Parliament, and would generally have no way of decisively changing the vote.

The British government, as well as Loyalists in the colonies, would have argued that the colonists had virtual representation in their interests. Colonists were unimpressed by this point, and British Prime Minister William Pitt agreed. In an appearance before Parliament on January 14, 1766, Pitt stated, "The idea of a virtual representation of America in this House is the most contemptible that ever entered into the head of man. It does not deserve a serious refutation."*

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Do you have a Congressman? Then you have representation. Now shut up.

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Score+1

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Mine is too busy taking corporate bribes and sending jobs overseas.

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ouch, +1 for the burn...

Just saw last night that Lego is closing its Connecticut manufacturing plant and moving it to Mexico. God bless America....

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Once again the republicans tax you where you least want it. Look for your bill to increase starting August 1st. If they're not spying on your internet use, they're taxing you over and over and over, and then using the money to give themselves yet another big pay raise like they did last week. In other reports today, Republican FCC Chairman Kevin Martin supported additional charges based on telephone numbers; that is, if you live in a city, you get charged more! Jeebus.

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*Republican FCC Chairman Kevin Martin supported additional charges based on telephone numbers*

Dude quit ad-libing to prove a point, we got it, you are upset.. but NO WHERE in the article does it state "republican FCC Chairman"

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Wow, even republicans don't want to be called "republican" anymore. I wouldn't either given how they've screwed everything up in this country. FACT: The FCC Chairman is a republican.

I wasn't quoting the story, "dude." Deal with it, since you obviously support the tax-and-spend conservative crowd.

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This is total BS.

People are just so greedy. Everyone wants their hand in the pie.

@sshats.

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OK, yes, I know this translates to even more money, but the FCC allows the phone companies to recoup their expenses via fees. Otherwise the phone companies wouldn't be encouraged to develop new technology..

I guess its too much to ask that a company do something for the good of ALL mankind, huh? Plus even a 10 cent charge translates to billions a year for a large TelCo like Cingular...

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No, it doesn't. Not even close.

At ten cents per line per month, it takes more than 833 million lines to come up with a billion dollars in a year. Cingular had about 56 million customers at the end of Q1-06, so it would collect, at 10 cents per subscriber, $5.6 million in a month, or $67.2 million in a year. That's a far cry from "billions a year."

Phone companies recoup their expenses from the money they charge you. Mandated costs, such as 911 and universal coverage, may be recovered separately from the base charges for connections, calls, and services like call-waiting or voicemail, but the profits and R&D come out of the non-mandated section.

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Wow are we anal or what? I was being facetious not factual. See this is what I get for being "loose" with the translation. If I get too detailed, I get nailed for being too wordy. If I leave details out, and ASSUME people can read between the lines, I get someone that tries to "correct" me even when I know I was just exagerating.

And no, I am NOT wrong, have you ever worked for a Telco? I have, so I think this much about is true. The FCC allows the phone companies to charge fees in excess of their normal "mandated" section, they even charge you a "port" fee, its on your bill, read it.

They are allowed to charge, even BEFORE they come out, for upgrades to customers to offset their pricing. This prevents "gouging" customers later.

This way you don't end up with people complaining their phone bill jumps 20 bucks for something they just implemented. 911 and tax fees are a separate line item, those are Federal manadated fees, but along with those "other" fees which are also federal taxes the Telcos can and DO add a dollar here and a dollar there for towers, upgrades, etc...

I went to a class on this very subject with 2 different Telephone companies, so I think I have a little more insight than what you think.

And yes, I know 10 cents doesn't really translate to "billions", I threw that in for "shock" purposes. To you it looks like they are charging a "nominal nuisance" fee, but the Telcos, they are within the law AND they charge it because they got APPROVAL from the Feds to do it.

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You realize you ALWAYS do the same thing in response to other people's comments, right?

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Really? Prove it!

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Man, took u 2 mins 2 reply, nice!!!

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How long was it this time?

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2 mins again, c'mon!!!

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30 seconds

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Maybe they are just automated responses.:)

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Wow, Higher cellular bills, just what i've always wanted!

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Mind if I send you my bill then? :-)

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Sure, but it'll be your credit that gets ruined when i fail to pay, :) lol

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