by CIO Staff

FCC: VoIP Firms Must Contribute to Subsidy Fund

Jun 22, 20062 mins

The Federal Communications Commission (FCC) on Wednesday mandated that all providers of voice-over-IP (VoIP) services, like Vonage, pay a percentage of their revenue into the Universal Service Fund, which offers phone service and Internet access at subsidized rates to low-income or rural areas, as well as educational and health-care facilities, Reuters reports.

Wireless telephone service providers were also affected by the FCC’s move, as they’ll have to pay a higher percentage than they already do into the Universal Service Fund, which will likely lead to an increase in the rates their customers pay, according to Reuters.

Firms that offer long-distance international phone service and high-speed DSL Web access currently pay 10.9 percent of their revenue from that service into the fund, but in August, providers of DSL service will no longer have to contribute, Reuters reports. To make up for the lost cash, the FCC decided to require VoIP providers to pay into the fund, according to Reuters.

Web phone service providers would pay roughly 7 percent of their revenue into the Universal Service Fund under the existing contribution factor, though that number is modified every quarter based on providers’ payments, Reuters reports.

Providers of wireless phone services would pay out 4 percent of their revenue as part of the new FCC plan, an increase of one percentage point on what they currently pay, according to Reuters.

The FCC expects the changes to take effect sometime in the fourth quarter of 2006, Reuters reports.

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.