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 anticipated.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: snipped-for-privacy@thlglaw.com.The Front Lines is a free publication of The Helein Law Group, P.C., providing clients and interested parties with valuable information, news, and updates regarding regulatory and legal developments primarily impacting companies engaged in the competitive telecommunications industry.
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