Source: saunderslog.com

Jeff ha. presented a case that the USF, about to be levied on VoIP providers, is a tax on internet applications.  He relentless pokes holes in the FCC position, showing how it is discriminatory, and fails to achieve the goals the commission should be focused on, namely the spread of broadband.  Then he observes that the rate being applied, because VoIP is primarily viewed to be interstate, is more than double the rate for cellular phone providers.

He’s on to something here:

1. Applying the USF in this manner biases the market toward cellular providers.  Either one of two things is true: the rate contemplated for VoIP is out of synch with reality, or the cellular provider rate is out of reality.  Most importantly, tarrifing traffic based on distance travelled, in a world where distance is irrelevant, is a broken model.  Many of my local calls are routed through one of Skype-Out, Gizmo Project, or NuFone, all of which route those calls through a primary proxy far from where I live. 
2. Similarly, since VoIP is fundamentally an application running on the broadband network, it makes little sense to tariff it on the basis of the class of bits transmitted.  VoIP transmits bits using RTP, a protocol also used for video, audio, and so on.  That is the magic of software.  One well designed protocol can be reused for many purposes.  So, if the USF is to be applied to internet applications, then the FCC should be applying it to email, search engines, blogs, etc etc etc.

The most sensible solution is to acknowledge the USF is about providing service to end users.  If it is desirable to tariff the network in order to ensure that underserved areas receive funding, then tariff the pipe carrying the bits, not the applications generating the bits.