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October 2009 | Volume 12 / Number 10
Regulation Watch

State VoIP Universal Service Fees - Here We Go Again

The saga continues over whether states can impose universal service fund charges on VoIP. On May 1, 2009, the Eighth Circuit Court of Appeals enjoined the Nebraska PSC from imposing state USF contribution requirements on interconnected VoIP providers.

The court relied on its 2007 interpretation of the FCC’s Vonage (News - Alert) Order in Minn. Pub. Utils. Comm'n v. FCC, where it found that VoIP services “cannot be separated into interstate and intrastate usage,” and that the FCC (News - Alert) had retained primary jurisdiction over such services. The Court noted that the FCC, not state commissions, has the responsibility to decide if a state USF fee should be applied to intrastate VoIP services. And it stated that the Nebraska PSC failed to address the potential conflict that would arise if states adopted different methods for determining which VoIP customers are subject to their respective intrastate USF surcharges, and that “[t]his potential for conflict between state regulations militates in favor of finding preemption.” On June 5, 2009, the Court denied the Nebraska PSC's request for rehearing, largely foreclosing judicial review of the issue.

Using the Eighth Circuit’s decision as a guidepost, on July 16, 2009 the Nebraska PSC and the Kansas Corporation Commission filed a joint petition with the FCC seeking a declaratory ruling that states are not preempted from assessing USF on the nomadic VoIP intrastate revenues. The petitioners also requested a determination that states have discretion to adopt any and differing mechanisms to assess state USF contributions so long as the methodology does not assess interstate revenues and contains procedures designed to ensure that no provider pays assessments to more than one state on the same intrastate revenues. The petition remains pending at the FCC. IT

William B. Wilhelm (News - Alert) is a partner in the law firm of Bingham McCutchen LLP ( The preceding represents the views of the author and does not necessarily represent the views of Bingham McCutchen LLP or its clients.

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