Universal Service funding new rules in the US

Universal Service funding new rules in the US

The USF Universal Service Fund) is aimed to assist rural and poor areas with funds to provide basic phone services. Up to now, funds were raised from wireline telephone service providers through small fees charged to their customers. Now, mobile operators and VOIP providers are increasingly replacing fixed line telephony and are increasingly tapped for contribution to USF. In the US, interstate traffic is taxed at the federal level, while intrastate traffic is taxable at the state level.

The FCC has ruled that 65% of VOIP traffic is “interstate”, and therefore taxable at the federal level. This of course open the door to taxation of VOIP service at the state level as well.

On the mobile front, the FCC ruled that 37% (up from 28.5%) of mobile revenues are interstate and subject to USF contribution.

How much will be the USF contribution? For cellular operators it will be 3.9% of revenue (up from 3%) from customers, while for VOIP providers the contribution will be 6.9% of revenues.