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story category Court Rules for Vonage in Universal Service Fund Case
VoIP is considered a data service, not a telephone service
(old news - 02:36PM Saturday Mar 22 2008)
tags: legal · business · telco · VoIP · Vonage
Earlier this year, Vonage filed a lawsuit against the Nebraska Public Service Commission because it believes that it should not have to pay into the controversial Universal Service Fund. Vonage’s argument was that its VoIP service is a data service, not a phone service, and therefore they shouldn’t have to contribute fees to the telecom deployment fund. The federal court has ruled that it agrees with Vonage about this issue and has instituted a ban barring Nebraska from collecting this fee. Vonage hadn’t paid anything into the fund so there was no legal need to discuss refunds to the VoIP company after the ruling but other VoIP providers who have paid into the fund may seek such compensation. The commission has until April 2nd to file an appeal if it disagrees with this decision.

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Forums » Court Rules for Vonage in Universal Service Fund Case
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RadioDoc
58ef2c0
Premium,ExMod 2000-03
join:2000-05-11

a data service, not a phone service

OK, let's see them adjust their advertising to reflect that their product is not a "phone service'.
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GOLFnSUN
Enjoy the sun
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Avalon, NJ
·Sprint Mobile Broa..
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Re: a data service, not a phone service

said by RadioDoc See Profile :

OK, let's see them adjust their advertising to reflect that their product is not a "phone service'.
I am against the USF for any company. But if the ILECs & CLECs have to pay, I see no reason why Vonage shouldn't as well. It is still a telephone call no matter how it is routed. VOIP should get no special exemption.
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supergirl

join:2007-03-20
Pensacola, FL
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Re: a data service, not a phone service

said by GOLFnSUN See Profile :

said by RadioDoc See Profile :

OK, let's see them adjust their advertising to reflect that their product is not a "phone service'.
I am against the USF for any company. But if the ILECs & CLECs have to pay, I see no reason why Vonage shouldn't as well. It is still a telephone call no matter how it is routed. VOIP should get no special exemption.
I agree. Everybody pays or NO ONE DOES! Get rid of the USF since it amounts to rural Telco extorting people that live in cities and 'burbs. While we are at it, eliminate that stupid FCC Connection Charge too. It is revenue NOT a Tax.

Vonage advertises, including the mail I get, as a telephone service NOT a data service.

Of course, we can always throw Kevin Martin off a cliff without a parachute. Think of the Children!!!
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Anonymous_
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2 edits

Re: a data service, not a phone service

said by supergirl See Profile :

said by GOLFnSUN See Profile :

said by RadioDoc See Profile :

OK, let's see them adjust their advertising to reflect that their product is not a "phone service'.
I am against the USF for any company. But if the ILECs & CLECs have to pay, I see no reason why Vonage shouldn't as well. It is still a telephone call no matter how it is routed. VOIP should get no special exemption.
I agree. Everybody pays or NO ONE DOES! Get rid of the USF since it amounts to rural Telco extorting people that live in cities and 'burbs. While we are at it, eliminate that stupid FCC Connection Charge too. It is revenue NOT a Tax.

Vonage advertises, including the mail I get, as a telephone service NOT a data service.

Of course, we can always throw Kevin Martin off a cliff without a parachute. Think of the Children!!!
do you even know what VoIP means = Voice over Internet Protocol (UDP packets)

halfband
Premium
join:2002-06-01
Huntsville, AL
·Comcast

Is it a "phone service" well yeah in the sense that it uses a phone, but that's about it. The USF was originally set up to provide pots in rural areas that would have been money losers to wire and service. Since this fund depends on service in one area to subsidise another it kind of breaks the system if anyone gets a choice in where they get there phone service from. And that is exactly what has happened with VOIP. Vonage paying into a fund to support POTS, which they do not sell, makes little sense. This is a case of the social tinkering with the system that has been set up by the politicians being overcome by the events in advancement of technology. The USF is an obsolete idea that will shortly need an overhaul to move into the current age.
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Re: a data service, not a phone service

said by halfband See Profile :

... The USF was originally set up to provide pots in rural areas that would have been money losers to wire and service. Since this fund depends on service in one area to subsidise another ... The USF is an obsolete idea that will shortly need an overhaul to move into the current age.
So I am a rural POTS customer. Which means to me it's a surtax to support my own rural POTS. If the intention was to subsidize me from an urban area, then it should not be on my phone bill either. Or I wish! :@)
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xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: a data service, not a phone service

I think the overall idea of the Feds was to increase your rates and reduce the costs of LD (imo). Increasing the surcharge and tacking on the USF expense certainly is a step in the right direction...placing more costs on the infrastructure user and less on the telephone user.

The long term goal is to get all of the customers to pay their own pay...

The hope is that cellular, cable, over the top voip, long distance providers + pots, clecs all provide enough competition (again, IMO).

Voice services certainly seem competitive enough these days.
The trick is getting broadband competitive now, to enable more competition in wireless over the top voice (again, imo). USF won't go away, nor will takes. Anyone want to take a stab on why none of the communications company want to add a pass through for their federal income taxes?

said by Piggie See Profile :

said by halfband See Profile :

... The USF was originally set up to provide pots in rural areas that would have been money losers to wire and service. Since this fund depends on service in one area to subsidise another ... The USF is an obsolete idea that will shortly need an overhaul to move into the current age.
So I am a rural POTS customer. Which means to me it's a surtax to support my own rural POTS. If the intention was to subsidize me from an urban area, then it should not be on my phone bill either. Or I wish! :@)
Network Guy

join:2000-08-25
New York
·PHONE POWER
·Broadvox Direct
·Verizon Online DSL

The real issue at hand is a political one. Nobody in the finance department wants to lose a revenue stream, particularly a fruitful one from back when people were bound to LATAs and metered local calls.

Reform will eventually take place to define the liabilities and obligations for all telecom carriers. The roadmap is full of bumps, road blocks and downed bridges. It is a new era in data and telecommunications, someone somewhere will eventually forge a new constitution and I can almost guarantee it will shread to shit the existing Telecom Act of 1996.

For the meanwhile, I'm quite content to stray from paying this greed-ridden city of any more taxes than it currently rapes me out of bi-weekly.
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Amen! Raise the prices of broadband to rural areas. It is certainly cheaper to live there in other respects, right?

Finally time for us to realize the old LD is expense, local is cheap model changes....local is expensive, LD is cheap.

I think prices should certainly reflect costs, but I doubt that can exist if we are all paying the same 30 bucks a month. Our Cable friends certainly cross subsidize internally between rural and urban, when they are large enough. I doubt the day will come when pure competition exists and we all get individual prices...

said by halfband See Profile :

Is it a "phone service" well yeah in the sense that it uses a phone, but that's about it. The USF was originally set up to provide pots in rural areas that would have been money losers to wire and service. Since this fund depends on service in one area to subsidise another it kind of breaks the system if anyone gets a choice in where they get there phone service from. And that is exactly what has happened with VOIP. Vonage paying into a fund to support POTS, which they do not sell, makes little sense. This is a case of the social tinkering with the system that has been set up by the politicians being overcome by the events in advancement of technology. The USF is an obsolete idea that will shortly need an overhaul to move into the current age.

NOCMan
Verizon Fios User
Premium
join:2004-09-30
Flower Mound, TX
Why should a customer have to pay twice. Once for the DSL line and once for Vonage?

Now the cable companies should be forced to pay into the USF, but they won that battle ages ago.
RadioDoc
58ef2c0
Premium,ExMod 2000-03
join:2000-05-11

Re: a data service, not a phone service

USF does not apply to the broadband connection.
--
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Marduk

join:2004-09-05
West Chester, PA
·Comcast

Re: a data service, not a phone service

said by RadioDoc See Profile :

USF does not apply to the broadband connection.
Yeah, but phone calls can be made via the broadband connection.

Does comcast have to pay this fee as well when they "bundle" their voip services?
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: a data service, not a phone service

said by Marduk See Profile :

said by RadioDoc See Profile :

USF does not apply to the broadband connection.
Yeah, but phone calls can be made via the broadband connection.

Does comcast have to pay this fee as well when they "bundle" their voip services?
Sure.

Last I checked, there was a price stated if bundled...simpled enough. There are some default percentages the feds apply, but can be avoided with a traffic study if they they think it's too high.

Of course comcast ain't offering a nomadic service

NOCMan
Verizon Fios User
Premium
join:2004-09-30
Flower Mound, TX

They apply to DSL lines for the telephone side. Not many people can get a "DRY" loop.

The laws need to be adjusted to include cable and/or any voip provider who is providing service across a not traditional telephone line.

They also need to ensure the money is being spent to provide service to Rural areas rather than padding corporate profits.
RadioDoc
58ef2c0
Premium,ExMod 2000-03
join:2000-05-11

Re: a data service, not a phone service

Anyone in ATT land can get a 'dry loop'. The USF on POTS is irrelevant and certainly does not apply to this discussion.
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stevephl

join:2000-11-27
Colorado Springs, CO
Better yet eliminate the USF all together, not needed any longer, all subsidizes should be eliminated as well.
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

said by NOCMan See Profile :

They apply to DSL lines for the telephone side. Not many people can get a "DRY" loop.

The laws need to be adjusted to include cable and/or any voip provider who is providing service across a not traditional telephone line.

They also need to ensure the money is being spent to provide service to Rural areas rather than padding corporate profits.
AMEN.

The current fund certainly is about funding small telephone companies. Sort of doesn't make sense to subsidize a small (250,000 - random number) telephone company than the subsidy the feds caused by killing off the independent ISP industry (same rationale short of who built infrastructure first).

I'm not so sure the USF doesn't "pad corporate profits" even with the smallest companies..isn't profit profit?

sporkme
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said by RadioDoc See Profile :

USF does not apply to the broadband connection.
It's a line item on the bill. It's an item Covad and Verizon pass on to wholesale layer-2 customers. And it's around 11%.
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

said by RadioDoc See Profile :

USF does not apply to the broadband connection.
It sure does.

The broadband connection is a common carrier service and is subject to the FCC universal service fund surcharge in that it is considered an interstate charge to an end user (sorta like a VAT tax).

After considering DSL a deregulated information service, or detariffed information service, depending on a telephone company's regulatory status...USF still applied, on a frozen percentage, if I recall correctly, or a percentage basis.

VOIP...Vonage, CallVantage, etc..was already declared under federal law to be subject to usf contribution rules (hasn't failed a suit yet).

Cable companies voice generally fall under voice/pots or voip, but not broadband, the former subject to USF....since broadband isn't assessable per se...unless it is considered "interstate revenue".

I can reference docs if needed (It will take awhile since I am lazy, but it's all available on the FCC web site).
RadioDoc
58ef2c0
Premium,ExMod 2000-03
join:2000-05-11

Re: a data service, not a phone service

Your bill must look different from mine then. No USF on either DSL account.
--
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bogey780

join:2004-03-19
Here
How can a data service be a part of the PSTN?
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: a data service, not a phone service

said by bogey780 See Profile :

How can a data service be a part of the PSTN?
Better yet, how could a data service exist without the PSTN?
(It's a matter of time before the cellular networks
arent't the PSTN, if not de facto already)

Data services could use the PSTN:

dial up internet access
dial up banking
dial up phone sex
dial up directory assistance
dial up gaming
dial up bbs
voice mail (dial up)
add your own...

jgkolt
Premium
join:2004-02-21
Lakewood, OH
clubs:

wow

Vonage won something in court. This truly is the day the earth stood still. How can they not be classified as a phone service when they market as one. This must be where i need to see the details because the headlines don't sound rational.
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DMS1

join:2005-04-06
Carrollton, TX

April 1st?

It must be April Fools day already - Vonage never wins any lawsuits they are involved in.

On a serious note, I wonder if this ruling will lead to a challenge on FUSF contributions by VOIP providers.
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: April 1st?

said by DMS1 See Profile :

It must be April Fools day already - Vonage never wins any lawsuits they are involved in.

On a serious note, I wonder if this ruling will lead to a challenge on FUSF contributions by VOIP providers.
Nah, the FCC already declared VOIP in the federal jurisdiction as an information service. This was a win for the VOIP providers, particularly the incumbent telcos and cablecos.

Better to have 1 place to lobby than the entire country.
EPS

join:2008-02-13
Hingham, MA

I suppose it makes sense...

If VoIP is declared a data service, though, all that's needed is for Nebraska or the Federal Government to pass a law saying that they can still charge USF- basically the court is saying that they can't expect to squeak by using existing laws, which is all too common now.

dodgetech2

join:2002-01-01
Gouldsboro, PA

Re: I suppose it makes sense...

I'm just glad they finally won in court....regardless of what is was for..:)

The Beer
I Love It When A Plan Comes Together
Premium
join:2001-07-24
Omaha, NE
clubs:

I got the letter

I have a small VOIP service in Omaha, I got the letter from the PSC a couple of weeks ago asking us to pay in.

Glad to have that monkey off our back, now back to my Federal USF payments...

odreian615

join:2006-01-18
Chicago, IL

Can something like this work for Uverse and FIOS

I mean they are only sending data so franchise laws should not apply ?
Right?

See 6 replies to this post

pende_tim
Premium
join:2004-01-04
Andover, NJ

So....

If it is a data service in Nebraska, is should also be a data service in the US and be exempt from the Federal USF also.
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xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: So....

said by pende_tim See Profile :

If it is a data service in Nebraska, is should also be a data service in the US and be exempt from the Federal USF also.
Careful what you ask for...

We pass a lot of goofy laws in Illinois you might not be interested in...maybe they should be federal as well?
xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

said by pende_tim See Profile :

If it is a data service in Nebraska, is should also be a data service in the US and be exempt from the Federal USF also.
True. Nebraska rocks!

Beef should be disallowed because Illinois say so...give it time, we've already killed off Foie Gras in Chicago.

I didn't read the NE order, but did they call it data services or information services? If the former, they will be sued again...the TA96 has been challenged and upheld a number of times. Vonage has already been given the blessing of being under the federal jurisdication.

It sounds like you are a true states rights guy..yet the republicans keep countering states rights...and the states rights folks keep voting them in.

I won't go on...

La Luna
Surviving Ashraful
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Warwick, NY
clubs:
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·Vonage

What about....

...something like Skype? That is a "phone service" too, ie, it allows the user to make phone calls over the "internet". If the only standard is "it's a phone service, Vonage users should have to pay", shouldn't Skype (and all other such services) users have to pay also?

PolarBear
The bear formerly known as aaron8301
Premium
join:2005-01-03
·CableOne

Making the wrong point

Everyone here is stuck debating whether or not Vonage is a phone service, when WHAT they provide isn't really the point. It's HOW they provide it.

The USF is to help pay for the deployment of physical lines to rural areas. Vonage does not own or construct any lines, thus can and will never use the USF. And if they can never use it, why should they have to pay into it?

Saying Vonage should pay into the USF is like saying xBox or PS3 should have to pay into the USF, because they use the lines, too. I can make voice "calls" with Skype, MSN/Win Live, and Yahoo Messenger, too, so should they have to pay into the USF? No, and neither should Vonage.
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See 7 replies to this post
nitzan
Premium,VIP
join:2008-02-27
·ViaTalk
·Comcast

Vonage wins = customers win! (in this case)

You guys keep saying "Vonage should pay", "Vonage shouldn't pay". Let me remind you for a minute - Vonage pays nothing into USF. it's the customer that pays into the USF.

As a provider, I am totally against having to pay into the USF not because I will have to pay it - I won't. I am against it because my customers will have to pay it.

USF, E911, and all the other junk fees regulators are trying to force-feed VoIP consumers will eventually drive business overseas if allowed to continue. If a consumer can pay a company in Germany half of what they pay a US-based company for the exact same service, what motivation would they have to stay with the American company?
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xsiddalx

join:2005-03-11
Chicago, IL
·AT&T Yahoo

Re: Vonage wins = customers win! (in this case)

For that matter, you don't pay gas, electric, fed taxes, fica, sit, unemployment, real estate taxes, employees, etc...they all all drive business...they all suck. pass all the costs on line item....give us a contract of 0 plus fees... lol

To answer your question...
Why should a german entrepreneur not invest in competing with you (even services are exportable if the dollar is cheap enough)?

Why not pass through all your costs as force fed? Pretty sure we'd we'd all like to make money without spending any...

said by nitzan See Profile :

You guys keep saying "Vonage should pay", "Vonage shouldn't pay". Let me remind you for a minute - Vonage pays nothing into USF. it's the customer that pays into the USF.

As a provider, I am totally against having to pay into the USF not because I will have to pay it - I won't. I am against it because my customers will have to pay it.

USF, E911, and all the other junk fees regulators are trying to force-feed VoIP consumers will eventually drive business overseas if allowed to continue. If a consumer can pay a company in Germany half of what they pay a US-based company for the exact same service, what motivation would they have to stay with the American company?

micah

@att.net

who pays for it!!

right on!! it is the customer that pays for this fee and not vonage. By winning vonage actually had just lowered the customer's bill

cuda

@sbcglobal.net

Its all the same anyway

VoiP, DSL, POTS...etc. Its all converted to just bits of data. Voip just goes thru different switches in the same CO on the otherside of the room. But Zipping thru all those wires... its all bits of data anyway.

cuda

@sbcglobal.net

come to think of it...

If its purely a data service, maybe the should be restricted to only calling other vonage customers. They call people with POTS lines. Which means they jump and ride along the current phone system anyway.
Forums » Court Rules for Vonage in Universal Service Fund Case


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