The Regulatory Recovery Fee, or RRF, is a fee instituted by VoIP providers to reduce overhead costs involved in including certain services provided across the board for communication and safety.
Although there is much controversy about the involvement of the FCC in VoIP communications, regulatory fees are at the most basic level, attributed to supporting mostly state or local universal services like disability access.
Regulatory Recovery Fees apply to both residential and business VoIP customers.
Find out more about what regulatory fees are, why they exist, how they affect consumers, and how they can be minimized below.
- Overview
- Why It Exists
- RRF in Telecommunications
- How It Affects Consumers
- How to Minimize or Avoid
- FAQs
What is a Regulatory Recovery Fee?
A regulatory recovery fee is a catchall name which applies to several fees that are charged to both VoIP networks and consumers. These fees include:
- Federal Universal Service Fund (FUSF) contributions: This fund helps make phone service affordable to all Americans. VoIP networks are required to pay into it per the Telecommunications Act of 1996.[*]
- Administration Recovery Fees (ARF): This fee is a percentage of the consumer’s invoice that is paid to help cover VoIP network costs of compliance, such as providing service to the hearing/sight impaired and number porting
- State and local surcharges and taxes: VoIP providers may be required to contribute to a service fund at the state or local level, and many states and cities also charge a utility or license tax
- E911 fees: This is a fee charged to fund 911 emergency telephone services
Why Do Regulatory Recovery Fees Exist?
Regulatory recovery fees exist to ensure that VoIP providers remain in compliance with state, local, and federal laws and regulations. Regulatory recovery fees also ensure that service accounts remain funded.
These funds are used to provide telecommunications services to the hearing and sight impaired. The funds also ensure that consumers can switch to a different provider without losing their phone number (number porting) and assist with fraud prevention.
Regulatory Recovery Fees in Telecommunications
All VoIP service providers are required to contribute a certain percentage of each invoice to the Universal Service Fund (USF). This money funds the Federal Communications Commission (FCC) as well as other telecommunications services that are available to U.S. citizens.
The percentage owed changes each quarter based on the needs of the USF. For the fourth quarter of 2024, VoIP providers are required to submit 35.8% of their interstate end-user revenues to the USF.[*]
How Regulatory Recovery Fees Affect Consumers
Regulatory recovery fees affect consumers because they are charged to users either directly or indirectly on VoIP phone bills. The cost of VoIP is still a fraction of the cost of traditional landline telephony, but it can become expensive when there are a lot of hidden fees and taxes.
Some RRFs such as FUSF and local/state taxes are government mandated fees that must be paid by consumers. However, some fees such as administrative cost recovery fees and E911 fees are not government mandated. On average, between 20-30% of VoIP phone bills are going to taxes and fees in some form.[*]
How to Minimize or Avoid Regulatory Recovery Fees
The best way to minimize regulatory recovery fees is to be aware of them. Different VoIP providers will charge different fees–and the amounts and percentages can vary greatly. Therefore, it’s important to review your phone bill carefully to determine what you are paying in fees. Before signing a contract with a VoIP or UCaaS provider, review the fine print so you know exactly what you’ll be paying each month.
It is difficult to get out of regulatory recovery fees because they are often government mandated, however, nonprofits and government entities may be exempt from some fees.
