Q. How did LinkLINE challenge the FUSF charges and what was the outcome?

LinkLINE challenged the FUSF imposed DSL on several fronts.

First, as a member of California Internet Service Provider Association (CISPA), we challenge the ruling that DSL circuits are classified as Interstate service or “long Distance”. The DSL circuits interconnect between Verizon and linkLINE within California only in specific local LATA boundaries, and inherently provide local transport even though the internet connectivity the ISP provides is national/global in nature, therefore “long distance”. The FCC assesses FUSF charges on DSL because the ILECS filed their tariffs with the FCC, rather than individual state agencies.

Secondly, line-shared DSL presents a unique challenge since there is no unique circuit connected to the customer’s home; the DSL signal is superimposed on the same cable pair with local telephone service. State taxes are charged on the voice circuit, which is regulated by the California Public Utility Commission. We assert that there may be double taxation involved when DSL service rides an existing voice line.

A third challenge was launched by a number of companies asserting the FUSF violates Congress’ moratorium on internet taxes when applied to broadband services (as opposed to voice service). The response is that this was a legislated fee for a specific fund and purpose, rather than a tax imposed that would feed into general tax funds or government coffers.

It is still possible that ongoing jurisdictional challenges and definition of Internet Broadband may change, affecting the FUSF tax applied to DSL. However, it appears that any changes in law or jurisdiction will result in substantial changes since the Universal Fund has widespread support in Congress.

HR 1542, or the Tauzin-Dingell bill, which linkLINE opposes, is expected to be considered in March. This bill, among other things, would classify all data and internet circuits and services as interstate, placing them under federal jurisdiction regardless of existing state or local policy or involvement.

Q: Why do I get charged for the FUSF?

Section 254(d) of the Telecommunications Act of 1996 states:

"Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal
service."

Companies such as long distance providers, wireless service providers, payphone operators, and data communications providers are included under this heading. LinkLINE’s Digital Subscriber Line service is provided in conjunction with Verizon, an Incumbent Local Exchange Carrier.

Since broadband data communications traffic (Internet) travels across state lines, and Verizon has filed their DSL product tariffs with the FCC, they are required to participate in the collection of the Federal Universal Service Fee. This fee is passed on to linkLINE, which is then passed on to our customers.

Q: How does the FUSF get calculated?

The FUSF is calculated based on the yearly revenues of the company that is required to pay it, in this case Verizon. Therefore, fees charged may differ according to carrier used on your particular line, as well as the exact service you have ordered. The current rate being charged Verizon as of April 2006 is 10.9%.

Q. What about other services on my bill?

FUSF charges only apply to the amount linkLINE pays Verizon for the actual DSL circuit. The FUSF charges don’t apply to what we charge for bandwidth, email, and other services. FUSF doesn’t apply to any additional services, such as dialup access, additional IP addresses, or professional web hosting.

If you are billed for your DSL circuit by Verizon directly, no taxes will appear on your linkLINE bill.

Q: How can I find out more information?

The best place to find information on the FUSF or the Telecommunications Act of 1996 is the FCC's website, www.fcc.gov. A consumer information page on Universal Service is available at www.fcc.gov/Bureaus/Common_Carrier/Factsheets/univers.html.