VoIP and the Universal Service Fund

December 14, 2005

There has been a good deal of buzz on the net regarding Kevin Martin's comments on forcing the VoIP industry to contribute to the Universal Service Fund (USF). There are many things that concern me with these comments.

The USF has been plagued with scandal and worse, who is really sure where this money goes? There are so many loopholes in the system that corruption was a problem waiting to happen. Worse, a lot of LECs benefit enormously from the fund and potentially use this money to lobby against having telecom competition.

So the government is forcing taxpayers to contribute to a fund that kills competition. I am not sure I get the logic here.

Mr. Martin is reported as saying all phone numbers should be paying into the fund regardless of underlying technology. As soon as this happens there will be a massive push to ENUM and people will bypass phone numbers altogether. We really don't need phone numbers and taxing them is illogical.

Worse, are we going to tax US based numbers? All phone numbers? If we tax US based numbers then how many people will switch their phone numbers to international numbers? How will we police this?

The world is changing. VoIP is changing it and the old rules don't apply. Making blanket statements about phone numbers in a world where phone numbers have less and less meaning will just push the market further and faster away from phone numbers. Then what do we do?

The answer is to get the money from broadband providers and not try to tax individual services over the lines. Another idea is to get the money from somewhere else altogether. Lower telecom rates are good for consumers and trying to skim money from an industry that can't support it is bad business. With all due respect to Chairman Martin, these comments show he is thinking about the market as it exists today and not as it will soon exist tomorrow. I am 100% against forcing VoIP providers to contribute into a potentially corrupt fund. VoIP is now just an application and doesn't require or deserve any special government penalties.