Internet telephony providers are in for some more rough times. The IRS and Department of Treasury helped traditional carriers cut their costs yesterday by eliminating the three percent Federal Excise Tax (FET) on long-distance telecoms. They also chose not to impose the tax on other services, such as IP telephony and wireless. Many IP telephony providers, however, have never included FET in their charges anyway.

This follows the FCC’s decision to expand the Universal Service Fund (USF) to include “interconnected VoIP" carriers. The USF was funded from the telecommunication service revenue in order to subsidize certain services, such as telecommunications access in rural areas and Internet access in schools and libraries. Continued