New Call Completion Rules –Application to Cloud Companies

This alert is targeted to CCA companies that provide VoIP service, chose the carriers and call path for long distance calls, and collectively serve more than 100,000 “subscriber lines.”  (What constitutes a subscriber line is tricky  - see below).  If you think your company meets these criteria, read on.

Background

For several years now the Federal Communications Commission and Congress have been dealing with the problem of calls to rural areas not being completed.  The problem largely revolves around the use of multiple intermediate carriers in a call chain, particularly least cost routers that may seek to avoid terminating calls to rural carriers with relatively high call completion charges.  To address the call completion problem, FCC rules require voice providers that make the initial decision on how to route the call – called “covered providers” – to monitor the performance of the intermediate providers in the call chain.  More recently, the FCC adopted additional rules to implement call completion legislation passed by Congress last year, including requiring intermediate providers to register with the FCC and barring use of unregistered providers.  The registration obligation applies to all calls, not just those going to rural areas.  Moreover, the regulatory scheme applies broadly to all forms of voice service, including VoIP, as long as standard telephone numbers are used and the calls touch the public switched telephone network (“PSTN”).

This alert first identifies entities to which these rules apply and then discusses the applicable regulatory obligations and penalties designed to ensure calls are completed.  The requirements outlined below reflect FCC orders issued in April and August of 2018 and can be found here and here.

Who and What Is Covered

The FCC’s rules apply to “covered providers” that contract with “intermediate providers” to terminate “covered voice communications.”  The FCC specifically defines each of these terms, but roughly they mean that entities that provide long distance voice service regardless of technology and contract with least cost routers or other carriers to terminate calls to and from the PSTN are covered, with one exception.  Smaller companies serving fewer than 100,000 lines are excluded from these obligations.

Are you a covered provider?

A covered provider is the voice provider that makes the initial decision on how to route a long distance call.  The technology or protocol used to provide the voice service to the customer does not matter.  An over-the-top VoIP provider can be a covered provider if it offers the capability to place calls to the PSTN.  There is an exemption for covered providers that service fewer than 100,000 domestic retail subscriber lines – more on what that means below.

What does it mean to make the initial routing decision, or, in the FCC’s legal parlance, making the “initial long distance call path choice?”  The FCC defines this as “the static or dynamic selection of the path for a long distance call based on the number of the individual call.”  A common example involves using a routing table to identify the least cost router for a particular destination.  Of course, the initial least cost router may in turn use additional intermediate providers to terminate the call.

Given that these rules only apply to a provider with more than 100,000 domestic retail subscriber lines, one question that naturally arises for cloud communications providers is - what’s a subscriber line?  I count customers by “seats.”  The FCC does not give a fully satisfactory answer to this question.  It does expressly say that a business that has 100 lines counts as 100 subscriber lines, not just one subscriber line.  A business is a subscriber, but it may have hundreds or even thousands of subscriber lines.  But that still doesn’t really answer the question of what’s a line in the VoIP/SIP cloud communications world.

One reasonable place to look for guidance is how the FCC instructs VoIP providers when filling out the agency’s Form 477 broadband deployment reports.  There the FCC instructs VoIP providers to count the maximum number of simultaneous voice calls that the business customer can make to the PSTN.  Thus, if you serve a business with 100 “seats” but only enable 25 simultaneous voice calls, you would be deemed to serve 25 subscriber lines.  At least that is theoretically how it should work – but the question has never been tested with the FCC.  If you feel you are close to the 100,000 level, you may want to dig deeper or discuss with your telecommunications lawyer.

What is an intermediate provider?

An intermediate provider is a carrier in the call chain, such as a least cost router.  An intermediate provider cannot by the provider that originates or terminates the call with its end user.  The FCC specific defines an intermediate provider as “any entity that – (a) enters into a business arrangement with a covered provider or other intermediate provider for the specific purpose of carrying, routing, or transmitting voice traffic that is generated from the placement of a call” where the call is (1) from an end user using a North American Numbering Plan resource or (2) to an end user connection using such a number” and this entity is not a covered provider with respect to the specific call.

What is a covered voice communication?

            A covered voice communication is a voice communication (including related signaling information) that is generated from the placement of a call from a connection using a North American Numbering Plan resource or a call placed to a connection using such a numbering resource and made through “any service provided by a covered provider.”  A covered voice communication includes VoIP calls using standard telephone numbers.

What Do the Call Completion Rules Require?     

Obligations of Covered Providers

            The FCC places the onus on covered providers to ensure rural call completion.  Covered providers must prospectively and retroactively monitor the performance of all of the intermediate providers in the call chain.  This includes comparing intermediate providers’ performance in completing rural and non-rural calls.  Covered providers that adhere to all of the best practices set forth in the ATIS Intercarrier Call Completion/Call Termination Handbook, (here is the link) will be deemed to have complied with the monitoring obligation.  The retroactive monitoring obligation includes taking appropriate corrective action, including removing chronically underperforming intermediate providers from routes.  Failure to take remedial action can subject the covered provider to enforcement action.

To accomplish this monitoring, covered providers must directly monitor intermediate providers with which they have a contractual relationship.  The covered provider may monitor other providers in the call chain directly, or, alternatively, contractually obligate those intermediate providers with which it has a contract to, in turn, monitor other downstream intermediate providers.  (The FCC identifies a number of contractual provisions that providers are encouraged to use).  In this way, covered providers cannot escape accountability for problems caused by “unknown” providers in the call chain.

Under the FCC’s most recent rules, covered providers may only use registered intermediate providers to carry covered voice communications.   The FCC is setting up the registry.  Importantly, the requirement to use registered intermediate providers applies to all covered voice communications, not just calls made to rural areas.  To be clear, if possible, covered providers must monitor the performance of intermediate providers only for rural calls, but covered providers must use (but not monitor) registered intermediate providers for nonrual calls.  Covered providers should include a provision in their contracts with intermediate providers that the intermediate provider will only hand off calls to other registered intermediate providers.

Covered providers will have 90 days from the time that intermediate providers are required to register (the FCC will provide notice of this date) to ensure they are using only registered providers.  Thereafter, they will have 45 days to remove any provider that is removed from the registry.  Covered providers are also under an obligation to identify for the FCC, if asked, all of the intermediate providers in the call chain for a given call.  Covered providers need not know in real time each provider in a call chain, but must be able to obtain this information within 2 weeks of being asked.

Under previously established rules, covered providers must record and retain certain information on rural call attempts.  The information must go back six months, unless the covered provider qualifies for a safe harbor, in which case the retention period is only three months.  The safe harbor applies when three conditions ae met:  (1) no more than two intermediate providers are in the call chain; (2) contracts with the intermediate carrier enable certain disclosures; and (3)  the covered provider monitors the intermediate carrier.  Previous requirements to report call attempt data to the FCC have been eliminated.

Covered providers must also provide on their website contact information for addressing call completion issues.

Obligations of Intermediate Providers

In its August 15, 2018 order, the FCC established a registry for intermediate providers, as required by the Improving Rural Call Quality and Reliability Act of 2017 (“RCC Act”).  Intermediate providers must register with the FCC and provide specified information about the firm and where it provides service.  To further muddle matters, not all intermediate providers have to register.  Only those intermediate providers that charge for transmitting covered voice communications must register.  As a practical matter, this is probably a distinction without a difference because virtually any intermediate provider agreeing to carry traffic will charge a rate for using its transmission facilities.  Still to come are service quality standards for intermediate carriers as called for in the RCC Act.  The FCC has until February 26, 2019 to issue those standards.

Please feel free to contact me, Michael Pryor, at mpryor@bhfs.com or 202 383 4706 if you have questions or would like more information.