Check Bill - Federal Universal Service Fee Monthly Increase

Posts: 1 · New Forum Member Joined: May 12, 2008 Posts: 1

ejm604 wrote:

The charge assists the poor to maintain service. I guess they use their cellphone for long distance.

I know a little bit about because I had it at one time.

There were two options on the Lifeline program.
1 No long distance or no extra features allowed
2 long distance and call feature allowed. (less amount deducted)

eitherway. you can not have a second landline phone in the same household.

Indiana change all to number 2 option. Other states could be different.

The lifeline works on your main phone line. Vonage, Wireless, Cable, Landline, etc.

For the time being it does not work with prepaid yet.

Posts: 1 · New Forum Member Joined: Aug 05, 2008 Posts: 1

HI all,

disclaimer: i work at Vonage.

a clarification on how/why Vonage charges FUSF fee.

The fcc mandates that every telco collect this "fee". Voange does not profit from this collection at all - in fact if it did it would be illegal. Vonage is supposed to collect this fee over the financial year and then pay the government the entire sum of money we collected, just like any other tax. And that is the key thing to realize, even though the fcc mandates that fusf be referred to as a fee, its actually a tax - Vonage must pass on everything it collects from its customers under this heading to the government.

As for the rate changes to FUSF- the rate at which Vonage collects is an estimate of the amount that we must pay into the fund. This rate is actually monitored by people in finance and adjusted according to the current level of collection. If we've been over collecting it goes down, if we've been under-collecting it goes up. In fact as a specific example the FUSF rate changed from 7.5 to 7.01 in May of 2008 (check you monthly invoices from back then.) In July 2008, we started collecting FUSF at a rate of 6.3% - so it does actually decrease sometimes Smile

In general, regarding taxes/fees, Vonage must pass on any taxes/fees that it collects except for the Regulatory Recovery Fee and the E911 cost recovery. Voange is allowed to collect these fee's for recouping its cost of making its systems work with 911 and other government/fcc mandated systems. Even on these we don't make any profit, since it actually costs as much to make our systems inter-operate with the 911 system and other telecos.
One thing to note is that E911 cost recovery is different from any state or county 911 taxes you might see on your invoice (based on your location) - those are taxes that Vonage must pass on to the respective government.

Hope this helps in understanding you bill better.

Posts: 227 · Posted: Tue Aug 05, 2008 5:50 pm Post subject: Cost pass-along practices

All providers of telephone service are required by law to make certain payments. Some of these apply to all common carriers; others apply only to interstate carriers. Many of these expenses date back to the earliest days of regulated common carriers. Traditionally, these costs were considered operating expenses, just like payroll, overhead, and Federal Income Tax. Companies charged their customers enough to cover their expenses, including these mandated fees, plus their allowed or chosen profits. In the last 20 years or so, many telecom companies have advertised lower prices, and then added on fees earmarked to recover some of these mandated expenses. The expense, itself, is not new. The practice of itemizing it and separating it from the advertised price of their service is what has changed. That is a business decision. They can advertise a price and then add wording like "plus applicable fees" and bill more than the advertised price. This might well be considered false advertising. It is, however, common practice in the telecom industry and some others.

By comparison, Cablevision, in NJ, does not do this. Their bill for residential Optimum Voice telephone service is for the exact amount advertised. They are still paying the mandated fees, and charging enough to recover the expense, but not explicitly passing them through. Their residential voice service in NJ is priced at $29.95. Their bill adds nothing to this price. Vonage residential service is advertised at $24.95 but they add $6.59 in fees, including NJ sales tax, for a total of $31.54. So Vonage actually costs $1.59 more, but is advertised at a lower price. (The services are not directly comparable; Vonage has a richer feature set.)

The company contribution to Universal Service is determined by computing a quarterly-adjusted fraction of their interstate revenue. For a company which flat-rates their intrastate and interstate calling services, they probably have to prorate their total revenue according to their overall minutes of use of each category. I doubt that they bother doing this individually for each account. They probably divide the total contribution by the number of subscriber lines and arrive at a single per-line amount to pass through to each subscriber. Their contribution varies according to variations in their revenue. Their contribution rate (the fraction of their revenue) is set periodically by the Universal Service Fund Administrator, and varies according to the total revenue of all interstate carriers and the total expenses of the Universal Service Fund. Their subscriber count varies as customers come and go. Their revenue also varies as subscribers come and go and choose one or another billing plan. It is, therefore, not surprising that the itemized amounts change from time to time.