FCC May Not Tax VoIP Services, CCIA Tells Court

File Under: 2007, Telecommunications, News

Feb 27, 2007

Washington, D.C. - The Federal Communications Commission decision to tax Voice over Internet Protocol (VoIP) services threatens the viability of o­ne of the most important, pro-consumer technologies now available, the Computer & Communications Industry Association (CCIA) told a federal court today.

In arguments before the U.S. Court of Appeals for the DC Circuit, CCIA attorneys explained that the FCC overstepped its authority when it decided to impose universal service fees o­n VoIP services. The Telecommunications Act of 1996 and case law alike, they argued, ban imposition of the fees o­n VoIP and other, computer based "information services."

"This represents the biggest unilateral expansion of FCC authority over the Internet since passage of the ’96 Act," CCIA President and CEO Ed Black said. "These fees are simply inconsistent with the agency’s own treatment of other Internet-based service applications," he said.

While traditional telephone companies must pay into the universal service fund, they also receive substantial subsidies from the fund. VoIP providers, by contrast, cannot share in these distributions. "Unless the FCC or Congress reverses precedent and classifies VoIP as a telecom service, it lacks authority to impose universal service contribution obligations or any other common carrier regulation o­n this computer-based application," CCIA Vice President of Government Affairs Cathy Sloan said.

CCIA appreciates that the USF’s revenue base is shrinking, but taxing VoIP is no way to assure solvency. The FCC should seek additional funds from established telecommunications providers while working to reform Universal Service Fund distributions.