Appeals Court Upholds FCC VoIP Policy

WASHINGTON — In a ruling issued late last week, a U.S. appeals court upheld a Federal Communications Commission ruling that requires VoIP providers to contribute a portion of their earnings into the Universal Service Fund.

The U.S. Court of Appeals for the District of Columbia held that the FCC acted within its authority last year when it issued an order requiring VoIP providers like Vonage to pay into the fund.

In its challenge of the FCC order, Vonage argued that the FCC had exceeded its authority under the Telecommunications Act of 1996 and “acted arbitrarily and capriciously” by analogizing VoIP to traditional phone services when calculating revenues generated through interstate and international service, requiring pre-approval for traffic studies submitted by VoIP providers but not those submitted by wireless providers and suspending the “carrier’s carrier rule” where VoIP is concerned.

On the first two points, the court disagreed with Vonage.

“We conclude that the Commission has statutory authority to require VoIP providers to make USF contributions and that it acted reasonably in analogizing VoIP to wireline toll service for purposes of setting the presumptive percentage of VoIP revenues generated interstate and internationally,” the court stated in its decision.

The ruling wasn’t a complete loss for Vonage, however.

In its decision, the appeals court stated that it found the FCC’s explanation “wanting as to the pre-approval of traffic studies and the suspension of the carrier’s carrier rule,” and vacated those portions of the FCC order accordingly.

Representatives of both the FCC and Vonage were quick to declare victory, albeit a partial triumph.

“I am pleased that the court has affirmed the commission’s action, which ensures that Universal Service Fund contribution obligations are administered in a competitively and technologically neutral manner on all phone providers, including interconnected VoIP providers,” FCC Chairman Kevin Martin said in a written statement issued by the FCC.

A spokesperson for Vonage said that the company got what it wanted all along, despite the court’s ruling that the FCC acted within its authority.

“We are pleased that the court vacated portions of the FCC’s USF order that treated VoIP providers in an inequitable manner, as that was our goal: fair and equitable treatment for all VoIP providers under this interim USF funding regime,” Vonage spokeswoman Brooke Schulz said.

Companies offering long-distance and/or international phone service, as well as companies that offer digital subscriber line (DSL) technology currently must contribute 10.9 percent of revenue generated from those services to the USF.

According to the Universal Service Administrative Company (USAC), estimated contributions to the USF in 2006 totaled $7.3 billion. Since the fund was established in 1997, more than $16.4 billion in funding commitments have been disbursed from the fund to schools and libraries nationwide.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

XMA Nominations Party Set for Nov. 17 at Avalon Hollywood

A night that sets the stage for the flagship XMAs, this year’s nominations reveal party will take place at Avalon Hollywood on Tuesday, Nov. 17, with red-carpet arrivals starting at 8 p.m.

BrattyGirls.com Launches Through PAYSITE

Producer Robert Peru has launched his newest membership site, BrattyGirls, through PAYSITE.

Arcom Issues Warnings to 3 Adult Sites Over Age Verification

French media regulator Arcom has issued formal notices to the providers of three adult websites that the agency says have failed to implement age verification as required under French law.

AEBN Reveals Ariel Demure as Top Trans Star for Q3 of 2026

AEBN has named its top trans stars for the third quarter of 2026, with Ariel Demure landing atop the leaderboard.

Porn Piracy: How AI Is Transforming Content Theft and Protection

Gone are the days when the word “pirate” primarily conjured images of clever scoundrels like Captain Jack Sparrow, swaggering across the high seas in search of gold and jewels. Today’s most prolific pirates operate in the darkest corners of the internet, armed with bots, scrapers and generative AI.

Playhaus Network Launches Official Website Through PAYSITE

Podcast platform The Playhaus Network has partnered with PAYSITE to launch a new home for its original programming, featuring comedy, uncensored discussions and appearances by adult performers.

Sportsheets Wins Trademark Infringement Case Against Copycat Website

The World Intellectual Property Organization (WIPO) has ruled in favor of Sportsheets in a case against a copycat website using an infringing domain.

Kylie Rocket, Derek Kage Cap AEBN's Top Stars for 3rd Quarter of 2026

AEBN has revealed its most popular performers in straight and gay theaters for the third quarter of 2026.

JustFor.fans Launches Android Version of 'JFF Create' Mobile App

JustFor.fans (JFF) has rolled out an Android-compatible version of its creator management mobile app, JFF Create.

Kink.com Wins Trademark Infringement Case Against Copycat Website

The World Intellectual Property Organization (WIPO) has ruled in favor of Kink.com in a case against a copycat website using an infringing domain.

Show More