CCIA Challenges FCC on Decision To Impose USF on VoIP

File Under: 2006, Telecommunications

Oct 25, 2006

Washington, D.C. - The Computer & Communications Industry Association (CCIA) challenged today a recent FCC order that for the first time imposed Universal Service fees o­n Voice over Internet Protocol ("VoIP") service. CCIA filed a petition with the federal U.S. Court of Appeals for the D.C. Circuit questioning the FCC’s statutory authority to impose such a tax o­n an Internet-based application.

This decision, imposing classic telephone regulation o­n Internet-based services, contradicts established precedent and is fundamentally inconsistent with the 'hands off the Internet' position taken by the U.S. Congress, and the agency’s own treatment of other Internet-based services.

"The FCC decision to impose a USF tax o­n ‘interconnected VoIP’ offerings threatens the viability of this up-and-coming technology that has the potential to inject competition into the traditional telephone market," said Ed Black, President and CEO of CCIA. "Furthermore, the FCC overstepped its authority in taking this unprecedented action and clearly contradicted the will of Congress and the dictates of sound public policy."

Some key arguments in CCIA’s brief include:

· The Commission’s decision to apply USF taxes to VoIP is inconsistent with its treatment of other Internet-based services and is inherently unfair and unwise.

· In a departure from the logic underlying the Vonage Order, the Commission opens the door to full common carrier state and federal regulation of VoIP.

· The FCC’s failure to classify "interconnected VoIP" offerings as either "telecommunications" or "information" services allows the Commission to place all the burdensome regulations imposed o­n traditional telecommunications services o­n VoIP companies without conferring o­n them any of the benefits. CCIA believes that this "asymmetrical regulation" is both grossly unfair and counter productive.

CCIA recognizes that the shrinking revenue base of the Universal Service Fund threatens its long-term stability. However, imposing a USF tax o­n VoIP offerings as a stopgap measure not o­nly takes pressure off the FCC to initiate true Universal Service reform, but also unnecessarily threatens the burgeoning VoIP market. "Unless the FCC reverses all precedent and classifies VoIP as a telecommunications service, it lacks authority to impose universal service contribution obligations o­n this computer based application," said Cathy Sloan, VP Government Affairs. "The FCC should be encouraging this exciting Internet technology as o­ne of the consumer benefits of broadband access."

In this matter, CCIA feels obligated, given its history of fighting for competition and innovation in high-tech markets, to challenge this order and fight o­n behalf of emerging VoIP companies everywhere.