I was reading this morning's Wall Street Journal and the article, FCC Weighs Internet Phone Charge caught my attention for the article I posted yesterday regarding going back and reading Vonage's SEC filing if you own that stock. According to the article, the FCC is looking at requiring internet phone companies (ie Vonage among others) to pay into the Universal Services Fund. As you know, most phone companies pass this fee directly to customers and for now, internet phone companies have not had to participate. Based on the rates that I pay, it would probably pass on about $2 to the average Vonage customer.
So, I started thinking, what did their SEC filing say about that, if anything? Guess what true believers there is a section regarding this tax. In case you are too busy to read it, here's what it says:
We may be required
to contribute to the Universal Service Fund, increasing our cost of providing
services. If we collect those contributions from our customers, the cost
advantage we offer customers would be reduced.
........We intend to collect from our customers any additional USF contributions we are required, directly or indirectly, to make. Many of our competitors are required to contribute directly to the USF and already collect those USF contributions from their customers
So, Vonage believes that if the FCC requires them to collect the USF their cost advantage would be reduced and for a company that is all about price, that is BAD news; certainly not the kind of news you would want to hear if you bought into this IPO.
PardonMyFrench,
Eric
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