FCC Adds Fees to VOIP, Cell Phones

By Ed Oswald, BetaNews

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.