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VoIP calls affected as FCC adopts rural broadband subsidies

The U.S. Federal Communications Commission (FCC) unanimously adopted a radical changeover Thursday to the US$4.5 billion Universal Service Fund, created by a fee attached to telephone bills, and will now channel most of subsidies to expand rural broadband use, rather than rural phone service.

The long overdue change is pitting traditional phone service provider AT&T against Comcast, which provides calling services over its broadband network, and is exposing the FCC’s intellectual confusion over how to regulate communications in the internet age.

The FCC predicts the change will fund broadband projects that reach 7 million of the estimated 18 million rural Americans who cannot subscribe to high-speed broadband now if they wanted to. What is more, the FCC started a US$500,000 “mobility fund” to help expand mobile broadband service in rural areas.

The FCC stated the six-year spending plan could cost consumers an average of 10 cents to 15 cents per month more in new levies, but create as many as 500,000 jobs over the next six years.

While the plan is being criticized by the wireless industry for lack of funding, it also fails to address the increasing popularity of internet telephony, which is expected to expand even further under the program. That misstep threatens the future of online phone calling services.

Given that the FCC is changing subsidies from traditional phone carriers to high-speed broadband providers, the agency asked for public comments about its authority to regulate VoIP calls, such as Comcast’s broadband-based phone service. That is because it is legally unclear whether the FCC has the authority to regulate VoIP calls. That puts into doubt a complicated system of FCC-required payments between phone carriers, who reimburse each other via the so-called access charges as calls move to and from one another’s lines.

The FCC re-classified broadband access as a Title I service in during the Bush administration as a deregulation move, even though it has tried to retain right to regulate DSL and cable companies. Most recently, Comcast won a ruling from a federal appeals court that the FCC has no right to regulate Title I or information services as it fought off an FCC edict that Comcast abide by so-called net-neutrality principles that forbid ISPs from unfairly blocking certain kinds of internet traffic.

The FCC on Wednesday, however, announced that both VOIP and traditional telephone services will be treated as if it was under Title II telecommunications service, although it did not resolve the legal conundrum. “All carriers originating and terminating VOIP calls will be on equal terms in their ability to obtain compensation for this traffic,” the FCC announced.