Perhaps the main attraction of VOIP services is the fact that making calls cost much less than traditional phone calls. Anyone who has tried calling overseas both using the traditional phone line and a VOIP line would know the considerable difference between the two and, in all probability, would stick to making VOIP calls. What some people might not know is the fact that there is a clear reason as to why VOIP calls are way cheaper than traditional telephone calls.

The fact is that the traditional telephone companies have to pay various fees and taxes to provide their service. Of course, these charges are carried over to the customers, who, in turn, have to pay higher rates on traditional phone calls. The great thing about VOIP is that, as of now, VOIP companies are not being charged these fees. This is the reason behind the fact that they can offer phone calls to anywhere in the world dirt cheap. The rationale behind this – not paying the fees that traditional phone companies have to pay – is the way that VOIP operates technically.

With VOIP, voice is converted to into packets of data, which are transmitted through the Internet. At the receiving end of the call, the packets of data are re-converted into voice. Technically, then, VOIP service providers cannot be classified in the same way that telecommunications companies are classified as of now.

This is the main argument that Vonage presented in their case in Nebraska. They were being hounded by the Nebraska Public Service Commission to pay into state Universal Service Funds. All phone companies which are labeled as “traditional” have to pay into the Universal Service Funds – no ifs and buts about it. When it comes to VOIP service providers, however, there remains a question. In Nebraska, a couple of VOIP service providers are reportedly paying into these funds. Vonage, however, has remained strong in its position that they cannot be classified as a traditional telco and as such will not pay into such funds.

Lucky for them, the judge overseeing the case agreed with their stand. Even more so, luckier for VOIP users in Nebraska, this means that Vonage and other VOIP companies servicing the area cannot use state fees as an excuse to increase their rates. Let us hope that this remains to be the case in most other parts of the world where VOIP companies are making it big.

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