Telecom Law Monitor : Washington D.C. Telecom Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

This post was drafted by Chip Yorkgitis and Josh Guyan.

On Friday, February 3, 2012, the FCC's Wireline Competition Bureau and Wireless Telecommunications Bureau jointly released an order revising and clarifying certain aspects of the sweeping universal service and intercarrier compensation reform order adopted last November. The clarifications address the rates applicable to VoIP-PSTN traffic, access stimulation and the CETC phase-down of high-cost support, among other things. 

The clarification order will be effective thirty days after it is published in the Federal Register, which is likely to occur quickly. However, as a practical matter, the clarifications are effective immediately in light of the rules being clarified already having taken effect.

For more information, see Kelley Drye's Advisory on the clarification order.

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Responding to complaints by rural LECs that call blocking has increased, the FCC yesterday issued a clarification and a stern warning to carriers not to block, choke or restrict calls to other carriers’ customers. While call completion issues can occur for a variety of reasons, allegations of “blocking” have arisen in a number of access charge disputes and other forms of telecommunications litigation that we track.

The FCC’s declaratory ruling serves as a warning that carriers involved in such disputes should not intentionally block or restrict the ability of callers to reach their intended destinations. It also appears to create affirmative obligations to correct call completion problems that are occurring.

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Last year, we posted a couple of items about outages in Verizon's 911 call completion systems, and investigations by the FCC and the Maryland PSC.  We thought now would be a good time for an update on those investigations.

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In 2011, the FCC was extremely active in the prepaid calling card area, proposing $25 million in fines and investigating several other prepaid card providers.  While the FCC has exclusive jurisdiction over prepaid cards when provided by common carriers, the Federal Trade Commission also has jurisdiction over non-carrier marketers of prepaid calling cards.  This case is a reminder of the shared jurisdiction between the agencies.   

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Back in November, we told you that the FCC was considering an order on reconsideration in the 2008 audio bridging classification appeal brought by InterCall, Inc.  It took over two months, but the FCC last week issued an order denying in full the petitions for reconsideration of the Classification Order.

The petitions were brought by two free conferencing providers, who argued that the FCC had misinterpreted the nature of audio bridging service (or at least their audio bridging services).  In the reconsideration order, the FCC denies the petitions.  While we had hoped that the reconsideration order would provide additional explanation of the rationale for classifying audio bridging as telecommunications, except for a discussion of bundled services, the order does not provide further guidance on the classification of bridging services.  As a result, audio conferencing providers will be left with the existing uncertainty for the foreseeable future when making classification decisions.   

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Changes to privacy regulations, such as proposed revisions to the Children's Online Privacy Protection Act (COPPA), and continuously evolving technologies, including mobile apps with location-based services, can make it difficult for businesses to ensure their privacy practices are up to par.

On February 16, Kelley Drye will gather government leaders from the FTC and FCC, and thought leaders in the industry, for a discussion about new regulations, enforcement trends, and best practices to avoid consumer privacy risks. Please join us for "Privacy in 2012: What to Watch Regarding COPPA, Mobile Apps, and Evolving Law Enforcement and Public Policy Trends."

Email dcevents@kelleydrye.com to register for the live seminar or teleconference.

KEYNOTE SPEAKER

Peter Swire, Professor of Law, Ohio State University; former Clinton Administration Chief Counselor for Privacy, U.S. Office of Management and Budget

PANEL 1:  COPING WITH COPPA: CHILDREN'S PRIVACY AND PROPOSED REVISIONS TO THE COPPA RULE

Ellen Blackler, Vice President - Global Public Policy, The Walt Disney Company

Mamie Kresses, Senior Attorney, Division of Advertising Practices, Federal Trade Commission

Saira Nayak, Director of Policy, TRUSTe

Moderated by partners Dana Rosenfeld and Alysa Hutnik of Kelley Drye & Warren LLP

PANEL 2:  MOBILE APPS: A PRIVACY AND CONSUMER PROTECTION HOT SPOT

Michael Altschul, Senior Vice President and General Counsel, CTIA

Jessica Rich, Associate Director, Division of Financial Practices, Federal Trade Commission

Jennifer Tatel, Associate General Counsel, Federal Communications Commission (invited)

Moderated by partners John Heitmann and Gonzalo Mon of Kelley Drye & Warren LLP

When:
February 16, 2012,  2:30 PM - 5:30 PM EST

Location:
Kelley Drye & Warren LLP
3050 K Street, NW, Suite 400
Washington, DC 20007-5108

And via audio webcast

RSVP:
Email dcevents@kelleydrye.com or contact Cassidy Russell at 202.342.8400.

This seminar is free of charge, but space is limited. Reserve your place today.

CLE and CPE credit may be available in certain jurisdictions.

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Here's another VoIP item from our backlog.  On December 16, the FCC's Enforcement Bureau issued an "Enforcement Advisory" reminding providers of their obligation to submit an FCC Form 477 every six months.  The Form 477 collects information about broadband deployment on a Census Tract level.  All facilities-based broadband providers and all interconnected VoIP providers are required to submit the form.

The Advisory lists several "problems" the Enforcement Bureau has noticed with the filings, including:

1. failing to file the form in a timely fashion, if at all;
2. failing to properly certify the form (and provide contact information); and
3. filing incomplete or inaccurate data (including failing to update data from previous submissions

The FCC has not issued any forfeitures for failure to submit a Form 477, nor, to our knowledge, are any investigations into Form 477 compliance pending.  Nevertheless, as a reminder, below is a summary of the Form 477 filing obligations for broadband providers and VoIP service providers.

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A long time ago, we posted about a decision of the US District Court in DC declaring that VoIP traffic was not subject to access charges and the strange coalition that asked the Court of Appeals to review the case.  Now, after a nearly two year delay caused by one of the litigants' bankruptcy, the appeal is moving forward.  Since the FCC refuses to rule whether access charges applied to VoIP (even as it has recently applied interstate access rates to VoIP prospectively), this case could have an important impact on many current access charge disputes.

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With new access charge obligations for interconnected VoIP, new contribution obligations for non-interconnected VoIP, and possible outage reporting requirements, 2012 is shaping up as a year of changes for VoIP providers.  Another possible change may be in store for how VoIP providers obtain access to telephone numbers.

Since 2005, various petitions have been pending seeking a waiver of FCC rules to allow interconnected VoIP providers to obtain direct access to numbering resources through the North American Numbering Plan Administrator and the Pooling Administrator.  In March 2011, Vonage renewed its request for waiver and submitted supplemental information in support of its request.  Shortly after Christmas, the FCC released a Public Notice seeking comment on Vonage's filing and its supplemental materials.  With a brief extension granted, the comments are due on January 25. 

VoIP providers and CLECs serving VoIP providers should monitor this docket closely.

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We took a holiday break, and now we have a large backlog of entries for you.  To begin, we have an unusual item to cover.  This blog, of course, deals with telecom enforcement.  Usually, that means fines for failure to comply with various regulatory requirements and filing obligations.  This item is a reminder that some violations result in criminal penalties also.

The basis for this post is a recent report that a payphone service provider was sentenced to three months in jail for fraudulently collecting FCC-mandated per-call compensation for dial around calls.  The background, and the story are discussed below.

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Back in October, the FCC released an order implementing the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA).  Among other things, the order expanded the pool of contributors to the Telecommunications Relay Service Fund to include virtually all VoIP providers, including those that did not fit the FCC's definition of "interconnected" VoIP.

To implement this contribution requirement, non-interconnected VoIP providers are required to register with the FCC by filing FCC Form 499-A, which is better known as the form used for universal service fund contributions.  (The Form 499-A is used for other revenue-based support funds as well.)  Providers must file this form no later than December 31, 2011.  At this time, it appears that fewer than a dozen new providers have registered to date.  

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One of the trends in 2011 has been the rise in amicus filings by the FCC in litigation matters.  This trend is fueled, no doubt, by the Supreme Court's determination in Talk America v. Michigan Bell earlier this year that such interpretations by the agency are entitled to deference by the courts.

The latest example of this once again involves interpretation of the FCC's rules for the provision of unbundled network elements ("UNEs").  In the latest amicus brief, the FCC agrees with CLECs that a BOC is required to permit the commingling of section 271 elements with UNEs obtained via section 251(c)(3). 

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 As we warned over a week ago, the USF contribution factor is rising to a new record high of 17.9%.  The Commission made it official late today, releasing this Public Notice announcing the new contribution factor for the first quarter of 2012.  The nearly 18 percent factor is by far the highest contribution factor in the history of the universal service fund.

One aspect of the new factor deserves special mention.  For years, the FCC has employed a Limited Interstate Revenue Exemption (LIRE) for calculation of the contribution obligations of carriers with significant international revenues.  This rule, also known as the "88/12" rule, provides that if a carrier's interstate revenue is less than 12% of its total interstate + international revenue, then the carrier pays USF only on its interstate revenue (and no USF on its international revenue).  The rule was put in place in response to a court decision that found that USF assessments which exceed a carrier's gross domestic revenue are unlawful.  

The current LIRE threshold is set at 12% of total revenues.  Every quarter in which the USF contribution factor exceeded this 12% threshold, the FCC has included an invitation to carriers to petition for waiver of the LIRE threshold if their contributions would exceed their gross domestic revenues.   No carrier has yet taken the Commission up on this invitation.  However, with the spread between the LIRE and the USF contribution factor now nearly 6%, we expect that there may be a few carriers whose percentage of interstate revenue falls between the LIRE threshold and the USF contribution factor.  If so, we invite those carriers to contact us to discuss filing a petition for waiver with the FCC.

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