Vonage Rebuffs Nebraska, Grim Outcome Seen for FCC, States
Vonage and other traditional VoIP providers don’t have to pay into the Nebraska Universal Service Fund, the 8th U.S. Circuit Court of Appeals said Friday. The St. Louis-based court was upholding a district court decision that Nebraska officials had appealed. As the lower court had, the appeals court accepted Vonage’s claim to be an information service rather than a telecom service (CD Sept 15 p8).
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The appeals court decision bodes ill for state universal service funds beset by shrinking bases, Medley Global Partners wrote Friday in a note. “This decision is a major victory for the entire VoIP industry who have long fought the states and the FCC on this issue,” Medley said. “As a result of this opinion, several states with state USF funds will no longer have legal justification for assessing intrastate USF contributions on VoIP providers.”
Another casualty is the FCC, whose efforts at reforming the federal USF and access schemes Medley said will be tangled by the appeals court decision. That ruling “throws a monkey wrench into the FCC’s ongoing process on what kind of access charge regime should apply to VoIP traffic,” Medley said.
Multiple factors have delayed FCC completion of access and USF reform, but Friday’s ruling means the agency “will need to act soon to address the sharp decline in switched access lines that puts further pressure on the contribution base of the fund,” the analysts said.
The state had been joined in its appeal by the National Association of Regulatory Utility Commissioners and the FCC, filing as friends of the court. Vonage was joined in amicus briefs by the Computer & Communications Industry Association, TIA, Information Technology Industry Council, Information Technology Association of America, Fiber-To-The-Home Council, Verizon and the Voice on the Net Coalition.