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Advancing The Cause of Competition in the Telecommunications Industry
NOTICE: THIRD QUARTER 2006 UNIVERSAL SERVICE FUND CONTRIBUTION FACTOR
REDUCED TO 10.5%
The Wireline Competition Bureau of the FCC announced that the
Universal Service Fund contribution factor for the Third Quarter of
2006 will be reduced to 10.5% from the current 10.9% factor. The
proposed 10.5% contribution factor will become effective unless the
FCC takes action in response to the proposed increase, which is not
Contributors are reminded that they may not mark up federal universal
service line-item amounts above the contribution factor.
FCC EXPECTED TO APPLY UNIVERSAL SERVICE FUND CONTRIBUTION REQUIREMENTS TO
VoIP; INCREASE WIRELESS SAFE HARBOR AT UPCOMING OPEN MEETING
Republican Chairman of the Federal Communications Commission, Kevin
Martin, has proposed requiring Voice over IP ("VoIP") and
Internet-based telephone service providers, offering services similar
to Vonage, to contribute a portion of their revenue to the Universal
Service Fund. Martin has also proposed increasing the amount of
contributions it collects from wireless carriers. These proposals are
set forth in a Report and Order scheduled to be considered by the full
5-member Commission at its June 21, 2006 Open Meeting. The Commission
will also vote on a further Notice of Proposed Rulemaking believed to
be related to USF reform.
Unconfirmed reports in the media indicate that Martin's proposal would
subject almost 65 percent of the revenue of VoIP providers to the 10.9
percent USF contribution factor (10.5% by the 3rd Quarter). Under the
proposal, therefore, a customer paying $24.99 per month for Vonage
service would be subject to an additional $1.77 USF surcharge.
As for wireless providers, the current revenue level subject to USF
contributions, called the "safe harbor," is 28.5 percent. Under
Martin's proposal, it is reported that the safe harbor would increase
to about 37 percent.
The proposed expansion of USF to VoIP and increase in the wireless
safe harbor comes as the agency is facing a $350 million shortfall in
the USF come August. The shortfall is the result of the Commission's
own doing due to its "de-regulation" last year of wireline broadband
services, such a DSL (digital subscriber line).
The Helein Law Group will be tracking developments closely and will be
available provide clients advice and guidance in the event the FCC
approves the Report and Order at the June 21st Open Meeting.
If you have questions, please contact Jonathan S. Marashlian at (703)
714-1313 or by e-mail: email@example.com.
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