FCC ruling could mean higher VoIP bills

A new plan by the FCC to keep the Universal Service Fund stocked in anticipation of the coming August exemption for DSL providers will likely lead to higher VoIP bills for consumers. The agency has ruled that companies like Vonage and SunRocket who offer Internet telephony services must now pay 7% of their revenue into the fund -- used to subsidize rural and low-income phone service -- which has been traditionally been stocked by taxing POTS and DSL providers at a rate of 10.9%. However, since DSL providers have been let off the hook for this program, the FCC needed to make up for the shortfall, so the agency both instituted the VoIP component and raised cellular carriers' contribution from 3% to 4%. Since providers tend to pass new costs on to the consumer, we can probably expect to see higher VoIP bills in the near future, but luckily the recent repeal of that Spanish-American war-era excise tax should mostly balance things out on the cellphone side of things.

[voip user @ Jun 23rd 2006 10:17AM]

what happens when the majority of calls start taking place within the internet? i.e. free internet-to-internet calls? how will they stock their funds then? seems like a worthless endeavour for them.

[Ian Jardine @ Jun 23rd 2006 10:27AM]

I already pay this fee once via my Verizon POTS line. Why should I pay again for a VoIP connections?
This could well BACKFIRE.
My next move could well be to entirely junk my POTS connection. I basically only keep this overpriced (POTS) connection as a standby. But the reality is it costs me money and isn't any more reliable than VoIP.

[CJ @ Jun 23rd 2006 10:39AM]

I agree. In order to keep their costs low, VoIP companies will need to innovate again, and remove the "last mile" connectivity completely. If they don't use the POTS system at all, it seems that there is no basis to apply the tax. Don't you think that's the direction that VoIP companies will need to go?

[Hawkeye @ Jun 23rd 2006 10:51AM]

Correct me if I'm wrong but they're increasing charges to VOIP users to subsidize rural folks? What a bunch of crap. So will the government now help me out because I live in Chicago and pay way higher property and sales tax compared to those in rural areas? They have a much lower cost of living, now VOIP users have to take another hit to make it even lower?

[Chris @ Jun 23rd 2006 10:58AM]

I can understand subsidizing low-income phone service (most people don't choose to be poor), but why the heck do I have to subsidize people who choose to live in the boonies. If they can't afford that they should move where life is more cost effective.

[Me @ Jun 23rd 2006 11:10AM]

Hey jackasses, I live in a rural area, and I'm not poor. It's just where I live. It's not like the phone companies just subsidise everything. The only reason I get dialup for $4.95 is because I have unlimited long distance calling, and that isn't cheap!

[JimmyHACK @ Jun 23rd 2006 11:13AM]

just another tax...

people only use voip's cause they are cheaper and fair priced for phone service...

now if they are even more expensive we might as well go back to old tech phones and let them go out of business

[Hawkeye @ Jun 23rd 2006 11:26AM]

Hey Me, no reason to resort to namecalling, nobody ripped on poor people or talked bad about living in a rural area. Why should I have to pay more to subsidize your phone service? Do you want to help pay for my 9K/year property taxes or 9.5% sales tax when I buy something then? Yes I choose to live where I live and pay the taxes. I do NOT choose to also pay yours. You live rural, great. Why do I need to pay for it? Has nothing to do with poor/rich. Strictly the rural portion.

[Benjamin @ Jun 23rd 2006 11:30AM]

For What it's worth, the tax doesn't subsidise users so much as it does providers. The customer density levels of rural areas compared to cities make it prohibitively expensive to foot the bill on your own as a provider.

MaBell learned this decades ago when groups in rural areas setup party lines so they could communicate without paying exorbitant amounts of money for a real phone.

[Yoyodyn @ Jun 23rd 2006 11:43AM]

I have to agree with Benjamin.
There are stillsoe rural areas where you cant get cable not matter how much money you have because the compnaies just dont run the line out that far.

I *think* I would rather pay a bit more for Vonage now, than have to pay extra high prices at the grocery store because the farmer is passing his telephone bill to us in the extra cost of eggs.

[Me @ Jun 23rd 2006 11:58AM]

I'm sorry if I offended calling people jackasses, I offend a lot. I was just saying that not everyone reaps in the subsidies. My sales tax is 9.25% because I live in the same county as the capital city, but a least we have no state income tax. Now I've seen the people that get the subsidies, the neighbors with uncle-daddies and trucks all "pimped-out" that keep me up all night. I understand why we shouldn't be pouring money from VOIP to save Bubba enough money to buy some headers. I bid you good day.

[The Lone Shepard @ Jun 23rd 2006 1:34PM]

Well, costs/fees going up sucks in general, but it doesn't seem like a significant increase to hurt the competitiveness of VoIP. SunRocket still offers $199 for a year of unlimited long-distance. Even if that were to go up 5-10%, you're still talking about a massive savings over traditional phone companies.

[hesh @ Jun 23rd 2006 1:36PM]

VoIP was a great alternative to shitty POTS carriers and their plans. I was basically forced to go with VoIP because only ONE POTS service came into my apartment complex, and they're absolutely horrible. So now I'll probably end up ditching VoIP and just using my cell as my phone line.

[Ken @ Jun 23rd 2006 3:54PM]

Oh, please people, figure it out. Rural areas are subsidized because every state has 2 senators, even if the states are devoid of people. And those senators have seniority. So legislation is written that moves money from CA & NY to the boonies.

There's a REASON Wyoming gets more "Homeland Security" money than NYC. Get a clue.

Vonage's mistake was not hiring enough lobbyists. Game over.

[Ken @ Jun 24th 2006 3:56AM]

Communist purposes? Hobos??? Chump, the rural areas that are getting subsidized are REPUBLICAN. The politicos writing this legislation are REPUBLICAN. It's not about communism, it's just about POWER and GREED.

Taxes are being raised and spending cut in Democratic states, not because of "communism" but because REPUBLICANS are intent on making NON-REPUBLICANS suffer for voting the WRONG WAY.

[Ben @ Jun 26th 2006 3:05PM]

The thing is, not a whole lot of the USF goes to rural development. It's just another way the RBOCs make money since most of the USF goes to them for providing affordable access to rural areas. If you look at the board of USAC, the company that administers the USF, they're nothing but a bunch of employees of phone companies trying to squeeze consumers of more money for their rural "projects". USF is nothing but a ripoff.