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Federal Internet Law & Policy
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VoIP: Access Charges Dont be a FOOL; The Law is Not DIY


Access Charges

Impact of IP Telephony on Access Charges: Access charge payments represent 30 percent to 50 percent of intrastate revenue for small, rural local exchange carriers in California. Further, access charge payments represent about 30 percent of revenues of large telephone companies in California, which are used to offset a portion of the cost of basic telephone services offered by those companies. Revenue from access charges helps maintain affordable rates for telephone service in high-cost rural areas of the state. Because VoIP providers do not currently contribute to the payment of access charges, and if the current regulatory access charge scheme remains unchanged, sharp increases in VoIP growth could result in:

1. an accelerated consumer transition from services subject to access charges, such as toll services, to VoIP services.
2. a diminution of access and toll revenues, thereby reducing regulated revenues.
3. increases in regulated service prices, such as basic service, to offset regulated revenue reductions.
4. steep increases in public program surcharges to ensure basic telephone service is affordable in rural, high-cost areas of the state, because these customers cannot afford broadband connectivity or are currently beyond the reach of broadband networks.

- Order instituting investigation on the Commission's own motion to determine the extent to which the public utility telephone service known as Voice over Internet Protocol should be exempted from regulatory requirements, CA PUC February 11, 2004 http://www.cpuc.ca.gov/published/agenda_decision/33960.htm

10. One final word on this subject: now that this commission has backed off on regulating VoIP - at least until the FCC acts - VoIP providers should seek free market solutions to intercarrier compensation and 911 service issues.  When a VoIP call touches the Publicly Switched Telephone Network, there should be compensation to the network owner - at a rate agreed to by willing market participants.  Resolving the 911-service issue is even more important.  VoIP providers should not have to worry that agreeing to contract with a Basic Emergency Service Provider (in Colorado, Qwest) to offer customary 911 services will somehow suck it into regulation, at least in this state.  I strongly encourage VoIP providers to work out 911-service and intercarrier compensation agreements, to show that they are good corporate citizens.  And to show that traditional regulation is not necessary.
--In The Matter Of The Investigation Into Voice Over Internet Protocol (Voip) Services, Docket No. 03M-220T, Order Closing Docket ¶ 8 ( Colorado PUC Dec. 17, 2003) (Chairman Gregory E. Sopkin Specially Concurring)


In order to formulate an informed, consistent regulatory policy, the Commission would like to obtain information about VOIP activity in Michigan . The Commission, therefore, requests comments on VOIP activity in Michigan on the following topics that may be affected by both state and federal law:
...
f. VOIP services' effect on the current access charge structure.
-- -- U-14073 - Commission's Own Motion (investigation of VOIP) - (MI PUC 3/16/2004 ) HTML | PDF



    "Our approval of Time Warner's application to provide interexchange service in Maine is conditioned on the payment of access charges to local exchange carriers (LECs) who have on file with the Commission approved access charge rate schedules.
            "Time Warner states that at present it will be offering service as a switchless reseller.[1] If Time Warner provides facilities-based interexchange service in the future, it must pay access charges directly to local exchange carriers.  However, switchless resellers do not pay access charges to local exchange carriers.  Instead, access charges are paid by an underlying facilities-based interexchange carrier.  As a condition of granting authority to a switchless reseller to provide intrastate service in Maine, its underlying facilities-based carrier must also have authority to provide intrastate service in Maine.  Time Warner has stated that MCI will be the underlying carrier from which it purchases interexchange services that it resells.  MCI is authorized by the Commission to provide intrastate interexchange service and does pay access charges for the intrastate interexchange services it sells to switchless resellers providing interexchange service in Maine.  If Time Warner begins to use another authorized underlying carrier, it shall notify the Commission as required by the ordering paragraphs."
--- Time Warner Cable Information Services Maine, Petition for Finding of Public Convenience and Necessity to Provide Resold Interexchange and Facilities Based Local Exchange Telecommunication Service, Docket No. 2002-792, Order Granting Authority to Provide Facilities Based Local Exchange Service and Competitive Interexchange Service and Approving Schedule of Rates and Terms and Conditions (Maine PUC February 11, 2003)

Proceedings

Proceeding List

Connect America, A National Broadband Plan

Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing an Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service Reform – Mobility Fund, WC Docket Nos. 10-90, 07-135, 05-337, 03-109, GN Docket No. 09-51, CC Docket Nos. 01-92, 96-45, WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17890-17898, paras. 702-720, 18002-18003, paras. 933-975 (2011)

Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support; Developing an Unified Intercarrier Compensation Regime; Federal-State Joint Board on Universal Service’ Lifeline and Link-Up, Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking, 26 FCC Rcd 4554, 4710, para. 507, 4745-746, para. 610 (2011)

pets. for review pending sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. filed Dec. 8, 2011)

CONNECT AMERICA FUND, A NATIONAL BROADBAND PLAN FOR OUR FUTURE, ET AL.. The FCC proposed to modernize and streamline its universal service and intercarrier compensation policies to bring affordable wired and wireless broadband - and the jobs and investment they spur - to all Americans while combating waste and inefficiency. (Dkt No. 10-90 05-337 07-135 09-51 ). Action by: the Commission. Adopted: 02/08/2011 by NPRM. (FCC No. 11-13). WCB    FCC-11-13A1.doc FCC-11-13A2.doc FCC-11-13A3.doc FCC-11-13A4.doc FCC-11-13A5.doc FCC-11-13A6.doc FCC-11-13A1.pdf FCC-11-13A2.pdf FCC-11-13A3.pdf FCC-11-13A4.pdf FCC-11-13A5.pdf FCC-11-13A6.pdf FCC-11-13A1.txt FCC-11-13A2.txt FCC-11-13A3.txt FCC-11-13A4.txt FCC-11-13A5.txt FCC-11-13A6.txt

Comment Date on Section XV: [30 days after date of publication in the Federal Register]

Reply Comment Date on Section XV: [45 days after date of publication in the Federal Register]

Intercarrier Compensation Obligations for VoIP Traffic

608. In this section, we seek comment on the appropriate intercarrier compensation framework for voice over Internet protocol (VoIP) traffic. The Commission has never addressed whether interconnected VoIP is subject to intercarrier compensation rules and, if so, the applicable rate for such traffic. There is mounting evidence that this lack of clarity has not only led to billing disputes and litigation, but may also be deterring innovation and introduction of new IP services to consumers.

609. Consistent with the National Broadband Plan recommendation to specify the treatment of VoIP for purposes of intercarrier compensation, we seek comment on the appropriate treatment of interconnected VoIP traffic for purposes of intercarrier compensation. In particular, as we are undertaking intercarrier compensation and universal service reform and as the market is evolving toward broadband, all-IP networks, we need a framework for VoIP traffic that is consistent with those overarching changes. We therefore seek comment below on a range of approaches, including how to define the precise nature and timing of particular intercarrier compensation payment obligations.

Background

610. Since 2001, the Commission has sought comment in various proceedings on the appropriate intercarrier compensation obligations associated with telecommunications traffic that originate or terminate on IP networks. Even so, the Commission has declined to explicitly address the intercarrier compensation obligations associated with VoIP traffic. Given this lack of clear resolution, particularly as consumer demand for VoIP services continues to increase, disputes increasingly have arisen among carriers and VoIP providers regarding intercarrier compensation for VoIP traffic. As AT&T observes, for example, various parties have taken "extreme all-or-nothing positions" regarding the compensation obligations associated with VoIP traffic. Thus, although some LECs contend that this traffic is subject to the same intercarrier compensation obligations as any other voice traffic, other carriers contend no compensation is required. In addition, there is some evidence of asymmetrical revenue flows for traffic exchanged between a traditional wireline LEC and a VoIP provider, with the VoIP provider (or its LEC partner) collecting access charges, for example, but refusing to pay them.

611.  There is also evidence that the uncertainty may be affecting IP innovation and investment, in particular. For example, some commenters observe that "[b]oth new entrants and established incumbents seeking to offer VoIP products and services are hampered by continued regulatory uncertainty. As the VoIP industry has shown over the past few years, the impact of regulation affects whether consumers will have access to innovative features and functionalities offered by VoIP providers at the edge or if they will have access only to very limited VoIP products that merely mimic the circuit-switched offerings of the past." Likewise, Verizon notes "that the uncertainty and complexity endemic to the existing intercarrier compensation system may well deter providers from rolling out advanced services."

Discussion

612. Scope of VoIP Traffic . In addressing these compensation issues, we propose to focus specifically on the intercarrier compensation rules governing interconnected VoIP traffic. Interconnected VoIP services, among other things, allow customers to make real-time voice calls to, and receive calls from, the public switched telephone network (PSTN), and increasingly appear to be viewed by consumers as substitutes for traditional voice telephone services. We seek comment on whether the proposed focus on interconnected VoIP is too narrow or whether the Commission should consider intercarrier compensation obligations associated with other forms of VoIP traffic, as well. We also seek comment on whether the Commission should distinguish between facilities-based "fixed" and "nomadic" interconnected VoIP.

613.  Defining the Appropriate Intercarrier Compensation Regime . There is considerable dispute about whether, and to what extent, interconnected VoIP traffic is subject to existing intercarrier compensation rules. These disputes have been costly and resulted in uncertain or unexpectedly reduced revenue streams for some carriers that may rely on those revenues for network investments. We also note that the Commission has recognized the need to move away from today's intercarrier compensation system. Balancing these concerns suggests a spectrum of possible outcomes. The alternative approaches discussed below vary along two main dimensions: (1) the appropriate timing for specifying the intercarrier compensation obligations applicable to interconnected VoIP traffic; and (2) the appropriate magnitude of intercarrier compensation charges that should apply to interconnected VoIP traffic. As noted in our discussions of each alternative below, we also seek comment on any aspects of existing law that would need to be addressed to define an appropriate intercarrier compensation regime for interconnected VoIP traffic. In addition, we seek comment on how the various options below would be administered. For example, could terminating carriers identify interconnected VoIP traffic - as distinct from other traffic - for purposes of intercarrier compensation? Are there technical issues that would need to be resolved to enable a terminating carrier to identify whether traffic originated as VoIP? We seek comment on these issues.

614.  We recognize the need for the Commission to move forward expeditiously with reform and understand that disputes regarding compensation for interconnected VoIP traffic have increased during the time these issues have been pending. We recognize that such disputes could impede the industry's ability to make an orderly transition to a reformed intercarrier compensation system.  Accordingly, nothing in the instant Notice should be read to encourage, during the pendency of this proceeding, unilateral action to disrupt existing commercial arrangements regarding compensation for interconnected VoIP traffic.  Such actions could create additional uncertainty for investments in broadband-capable networks and fuel further disputes, which is counter to our goal of developing a predictable framework for reform, and we strongly discourage such actions. Given that some parties have negotiated different rates to resolve the treatment of VoIP traffic, we seek comment on how the different options we seek comment on here may impact these existing commercial arrangements.  We also seek comment on whether particular reform options would have retroactive effect, and whether such retroactivity would be counterproductive. 

615  Immediate Adoption of Bill-and-Keep for VoIP . Under one alternative, the Commission could adopt bill-and-keep for interconnected VoIP traffic. We note that section 251(b)(5) requires LECs "to establish reciprocal compensation arrangements for the transport and termination of telecommunications," and that interconnected VoIP traffic is "telecommunications" traffic, regardless of whether interconnected VoIP service were to be classified as a telecommunications service or information service. Moreover, the Commission can specify that VoIP traffic is within the section 251(b)(5) framework even if one of the parties is not a LEC. Could and should the Commission bring interconnected VoIP traffic within the section 251(b)(5) framework and immediately apply the bill-and-keep methodology? Is there other legal authority by which to adopt such an approach? What factual and policy basis would justify this approach for interconnected VoIP traffic? How would such a regime be administered? Are there technical issues associated with a bill-and-keep methodology that would need to be resolved to implement such an approach?

616.  Immediate Obligation to Pay VoIP-Specific Intercarrier Compensation Rates . Alternatively, the Commission could determine that interconnected VoIP traffic is subject to intercarrier compensation charges under a regime unique to interconnected VoIP traffic. For example, should all interconnected VoIP traffic be subject to intercarrier compensation rates equal to interstate access charges; reciprocal compensation rates; or some other defined rate, such as $0.0007 per minute? If rates equal to interstate access charges are applied to VoIP traffic, would that create an incentive to originate all voice traffic as VoIP-or simply declare it to be originated as VoIP-such that little traffic ultimately would be billed at the higher rates? What impact would a VoIP-specific intercarrier compensation rate have on investment in and deployment of broadband facilities? How should those interconnected VoIP-specific rates decline as intercarrier compensation rates decline more generally as part of comprehensive reform? Could the Commission rely on section 251(b)(5) for its legal authority in this context, given questions about the extent to which the Commission can set particular rates rather than a methodology under that legal framework? We recognize that, even for traffic subject to section 251(b)(5), the Commission retains its authority to set rates for certain forms of traffic. Are there other sources of legal authority to adopt such an approach for all interconnected VoIP traffic, consistent with relevant precedent? Alternatively, is there legal authority for the Commission to adopt such an approach for a subset of interconnected VoIP traffic? What factual and policy basis would justify any such approach specifically for interconnected VoIP traffic, and how would such a regime be administered?

617.  Obligation to Pay Intercarrier Compensation As Part of Future Glide Path . The Commission could determine that interconnected VoIP traffic is subject to intercarrier compensation-whether standard rates or VoIP-specific rates-but only as of some future date. In particular, we note that, as discussed above, this Notice proposes a gradual transition away from the current intercarrier compensation system to help ensure predictability for providers and investors. What flexibility, if any, does the Commission have to adopt the intercarrier compensation obligations for interconnected VoIP traffic specific to some future point in that glide path? What legal authority would enable the Commission to adopt this alternative?

618. The Commission could determine that interconnected VoIP traffic is subject to the same intercarrier compensation charges-intrastate access, interstate access, and reciprocal compensation-as other voice telephone service traffic both today, and during any intercarrier compensation reform transition. Although this outcome potentially could result if interconnected VoIP services were classified as telecommunications services, we recognize that the Commission thus far has not addressed the classification of interconnected VoIP services. Given that, we seek comment on whether the Commission could achieve this outcome without classifying interconnected VoIP. For example, would this alternative result if the Commission held that the "ESP exemption" did not encompass interconnected VoIP traffic? Could the Commission rely on section 251(b)(5), or some other legal authority, to adopt such an approach? Depending upon the approach used by the Commission, would it need to clarify jurisdictional issues associated with interconnected VoIP traffic?

619. Alternative Approaches . We also seek comment on other approaches that have been proposed for addressing the intercarrier compensation obligations associated with VoIP traffic. For example, AT&T has proposed that, in the absence of comprehensive intercarrier compensation reform, the Commission should adopt a regime under which terminating LECs charge interstate access and reciprocal compensation for VoIP traffic, as well as intrastate access for such traffic if those charges are at or below the level of the carrier's interstate access rates. By comparison, PAETEC has proposed that, if a carrier adopts a unified intercarrier compensation rate, it should have the clear right to charge that rate for all traffic it terminates, including IP-originated traffic. XO has proposed that all carriers be required to transition to IP-based interconnection within five years, with a unified default compensation rate for all carriers and all traffic. We seek comment on these and other alternatives for addressing intercarrier compensation for interconnected VoIP traffic.

Rural Call Completion

Rural Call Completion, WC Docket No. 13-39, Report and Order and Further Notice of Proposed Rulemaking, FCC 13-135, pp. 10-51, paras. 18-119 (rel. Nov. 8, 2013).

AT&T v. YMax CorporationPDF, Memorandum Opinion and Order File No. EB-10-MD-005 (April 8, 2011)  (case involving Magicjack)

"This Memorandum Opinion and Order ("Order") grants in part and otherwise dismisses without prejudice the claims alleged in the formal complaint that AT&T Corp. ("AT&T") filed against YMax Communications Corp. ("YMax") under section 208 of the Communications Act of 1934, as amended ("Act"). AT&T alleges, inter alia, that YMax has violated sections 203(c) and 201(b) of the Act by assessing AT&T interstate switched access charges that are not authorized by YMax's federal tariff. For the reasons discussed below, we find that AT&T's allegation has merit. Based on this finding, we grant Counts III and IV of the Complaint. Because our grant of these Counts will afford AT&T all the relief to which it is entitled, we find it unnecessary to address the remaining unsevered Counts in the Complaint and dismiss them without prejudice."

AT&T CORP. V. YMAX COMMUNICATIONS CORP. Granted in part and otherwise dismissed without prejudice the claims alleged in the formal complaint that AT&T filed against YMAX under Section 208 of the Communications Act of 1934, as amended. Action by: the Commission. Adopted: 04/08/2011 by MO&O. (FCC No. 11-59). EB    FCC-11-59A1.doc : FCC-11-59A1.pdf : FCC-11-59A1.txt

WC Dckt No. 07-256

Feature Group Ip Petition For Forbearance From Section 251(G) Of The Communications Act And Sections 51.701(B)(1) And 69.5(B) Of The Commission's Rules

Comments Due Feb. 19, 2008
Replies Due Mar. 14, 2008
How to file comments :: File Comments with FCC Electronic Comment File System

WC Docket No. 07-256 DA 07-5029 Released: December 18, 2007: By this Public Notice, we seek comment on a petition filed October 23, 2007 by Feature Group IP West LLC, Feature Group IP Southwest LLC, UTEX Communications Corp., Feature Group IP North LLC, and Feature Group IP Southeast LLC (Feature Group IP) asking the Commission to forbear pursuant to section 160(c) of the Communications Act (Act), as amended, from applying access charges to voice-embedded Internet communications pursuant to section 251(g) of the Act. Specifically, Feature Group IP requests that the Commission forbear from section 251(g) "insofar as it applies to the receipt of compensation for switched 'exchange access, information access, and exchange services for such access to interexchange carriers and information service providers' pursuant to state and federal access charge rules." In addition, Feature Group IP seeks forbearance from "the clause of rule 51.701(b)(1) that excludes from the definition of telecommunications traffic subject to subpart H of Part 51 of the Commission's rules 'telecommunications traffic that is interstate or intrastate exchange access, information access, or exchange services for such access . . .' ." Feature Group IP also seeks forbearance from rule 69.5(b) "to the extent applicable" and from any numbering representation rule or signaling standard as applicable.

Released: 12/18/2007. PLEADING CYCLE ESTABLISHED FOR FEATURE GROUP IP PETITION FOR FORBEARANCE FROM SECTION 251(G) OF THE COMMUNICATIONS ACT AND SECTIONS 51.701(B)(1) AND 69.5(B) OF THE COMMISSION'S RULES. (DA No. 07-5029). (Dkt No 07-256). Comments Due: 01/17/2008. Reply Comments Due: 02/06/2008. WCB. Contact: Lynne Hewitt Engledow at 1520, email: Lynne.Engledow  DA-07-5029A1.doc   DA-07-5029A1.pdf   DA-07-5029A1.txt

FEATURE GROUP IP PETITION FOR FORBEARANCE FROM SECTION 251(G) OF THE COMMUNICATIONS ACT AND SECTIONS 51.701(B)(1) AND 69.5(B) OF THE COMMISSION'S RULES. Revised the Comment Date and Reply Comment Date in this proceeding. (Dkt No. 07-256). Action by: Associate Chief, Wireline Competition Bureau. Comments Due: 02/19/2008. Reply Comments Due: 03/14/2008. Adopted: 01/14/2008 by ORDER. (DA No. 08-93). WCB

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WC Dkt No. 08-08

Petition Of The Embarq Local Operating Companies For Forbearance From Enforcement Of Section 69.5(A) Of The Commission's Rules, Section 251(B) Of The Communications Act And Commission Orders On The Esp Exemption

Comments Due Feb 19 2008
Replies Due Mar 14 2008
How to file comments :: File Comments with FCC Electronic Comment File System

DA 08-94 Released: January 14, 2008 By this Public Notice, we seek comment on a petition filed January 11, 2008 by the Embarq Local Operating Companies (Embarq) asking the Commission to forbear pursuant to section 160(c) of the Communications Act (Act), as amended, from "enforcing the ESP exemption , as adopted by Commission orders" and from "applying section 69.5(a) of its rules to IP-originated voice traffic that terminates on the PSTN." In addition, Embarq requests that the Commission "forbear from enforcing 47 U.S.C. section 251(b)(5) of the Act" on "non-local traffic terminated as voice traffic on the PSTN."

Petition of the Embarq Local Operating Companies for Limited Forbearance Under 47 U.S.C. § 160(c) from Enforcement of Rule 69.5(a), 47 U.S.C. § 251(b), and Commission Orders on the ESP Exemption at 17 (filed Jan. 11, 2008) (Embarq Forbearance Petition); see also 47 U.S.C. § 160(c).

Released: 01/14/2008. PLEADING CYCLE ESTABLISHED FOR PETITION OF THE EMBARQ LOCAL OPERATING COMPANIES FOR FORBEARANCE FROM ENFORCEMENT OF SECTION 69.5(A) OF THE COMMISION'S RULES, SECTION 251(B) OF THE COMMUNICATIONS ACT AND COMMISSION ORDERS ON THE ESP EXEMPTION. (DA No. 08-94). (Dkt No 08-08). Comments Due: 02/19/2008. Reply Comments Due: 03/14/2008. WCB. Contact: Lynne Hewitt Engledow at 1520 , email: Lynne.Engledow

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