New Net phone taxes on the way?

Internet phone users could be forced to pay new taxes on their monthly bills if federal regulators get their way.

The Wall Street Journal reported on Thursday that the Federal Communications Commission is pondering a proposal by Chairman Kevin Martin that would require voice-over Internet protocol (VoIP) firms to pay directly into the Universal Service Fund (USF), which is used to subsidize telephone service in rural and low-income areas, schools, and libraries.

An FCC spokesman reached by CNET News.com declined to confirm or deny the news report, saying the commission doesn't discuss items that may or may not be pending.

Jim Kohlenberger, executive director of the VON Coalition, which represents the VoIP industry, said it was his understanding that the proposal would require Internet phone companies to pay a fee equivalent to 7 percent of their customers' monthly bills, or about $1.75 for an average $25 tab. That fee would almost certainly be passed on to customers.

The FCC has been mulling changes to the USF contribution scheme as it attempts to make up for an expected $350 million shortfall stemming from a decision last year to declassify DSL as a "telecommunications service." Under existing law, only telecommunications services, such as long-distance, wireless, pay-phone and telephone services, are required to contribute a fixed percentage of their revenues to the multibillion-dollar fund.

Right now it's unclear how VoIP providers fit into the USF scheme. Some of those companies already contribute to the fund, either directly or via the telcos on which their services ride. Vonage, for instance, imposes a flat "regulatory recovery fee" on each phone number it issues.

Meanwhile, Congress has been considering expanding the contribution requirement to both Internet phones and broadband services.

The regulators are expected to vote on the proposal at their next monthly meeting, scheduled for June 15, according to the news accounts. VoIP industry representatives said they planned to meet with FCC staff this week and make their views known.

 

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