Court says Internet phones must pay into fund

WASHINGTON (Reuters) - A U.S. appeals court on Friday upheld an order by U.S. regulators requiring Internet telephone services like Vonage Holdings Corp. to contribute part of their revenues into a federal subsidy fund.

The U.S. Court of Appeals for the District of Columbia said the Federal Communications Commission was within its authority last year when it issued an order requiring providers of voice-over-Internet protocol, or VOIP, service to pay into the Universal Service Fund.

The fund subsidizes phone service to rural and low-income areas as well as communications services and Internet access for schools, hospitals and libraries.

Vonage had appealed the decision, arguing that the FCC had exceeded its authority and made mistakes in determining how much the company should pay.

The appeals court struck down two minor parts of the order, but overall it said the FCC had statutory authority to require VOIP providers to make contributions to the fund.

Companies offering long-distance and international telephone services as well as high-speed Internet service via digital subscriber lines must currently contribute 10.9 percent of that revenue into the $7.3 billion fund.