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Telecom Alert: D.C. Circuit Court Upholds FCC’s VoIP USF & Safe Harbor RulingsThe U.S. Court of Appeals for the D.C. Circuit ruled today that the FCC has statutory authority under Section 254(d) of the Telecommunications Act of 1996 to require voice over-internet protocol (VoIP) providers to make Universal Service Fund (USF) contributions and that it acted reasonably in analogizing VoIP to wireline toll service for the purposes of setting the presumptive percentage of VoIP revenues generated interstate and internationally. In 2006, the FCC issued an Order requiring providers of “interconnected” VoIP services to contribute to the USF. In re Universal Service Contribution Methodology, 21 F.C.C.R. 7518 (2006). Interconnected VoIP services “(1) enable real-time, two-way voice communications; (2) require a broadband connection from the user’s location; (3) require IP-compatible customer premises equipment; and (4) permit users to receive calls from and terminate calls to the PSTN [public switched telephone network].” Id. at 7526 ¶ 15. Vonage filed a petition for review from that Order and challenged the USF contribution requirement. It argued that the FCC had acted arbitrarily and capriciously by (1) analogizing VoIP to wireline toll service for the purposes of setting the presumptive percentage of VoIP revenues generated interstate or internationally, (2) requiring pre-approval for traffic studies submitted by VoIP providers but not for those submitted by wireless providers, and (3) suspending the “carrier’s carrier rule” with respect to VoIP (a rule that prevents double payment at the wholesale and retail level by basing USF contributions only on “end-user telecommunications revenues.”). In its decision in Vonage Holdings Corporation v. FCC, No. 06-1276, the federal appeals court determined that the FCC was within its bounds when it issued an order last June requiring interconnected VoIP service providers to contribute to the USF and in the “safe harbor” levels it adopted for them as part of its decision. The court, however, found the FCC’s explanation “wanting” as to the pre-approval of traffic studies and the suspension of the carrier’s carrier rule and, therefore, vacated those portions of the Order. A copy of the full opinion is available by clicking here. |
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