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

A diverse group of telecom companies and trade groups have jointly submitted a supporting brief to the U.S. Court of Appeals in the Paetec v. CommPartners appeal.  The Joint Brief includes ILECS like AT&T and Verizon, CLECs like Neutral Tandem, and normally contrary trade associations like USTA and the VON Coalition. Although these parties have wildly divergent views on how the VoIP access charge dispute should be resolved, they all agree that the Court of Appeals should decide the issue now.  The Joint Brief states that the parties submitting  "have differing views about the merits" of the district court ruling, "but all agree that a decision from" the Court of Appeals is desirable to clarify the situation for all concerned.  

No one knows for sure, but the many pending cases and disputes on VoIP access charges collectively probably have hundreds of millions of dollars at stake.   The FCC has exerted much effort to avoid making a decision on the court referrals and various petitions that it has received on the subject since 2005. 

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The FCC took a flurry of actions at yesterday's monthly open meeting.  Fulfilling this blog's role as your resource for news and helpful links, below is your guide to yesterday's actions.

Wireless Market Report:  The  Commission adopted its 14th Annual Report on the state of the wireless market.  Among other things, this report was controversial because it refused to make an "effective competition" judgment on the wireless market.  The report also expands coverage beyond CMRS to address the broader mobile marketplace. 

Number Porting:  The Commission released a Report and Order shortening the time interval for "simple" ports.  This action will particularly affect wireline-to-wireless ports, and might accelerate the trend of "cut the cord" conversions.

Pole Attachments:  The Commission made a number of changes to its rules governing the rights of cable and competitive telecommunications providers to hang facilities on utility poles.  The order also proposes a number of changes to the pole attachment complaint rules.

Universal Service:  The Commission issued a Notice of Proposed Rulemaking to modify its "e-rate" rules, which support discounts for schools and libraries for internet access and other services. 

Broadband Spectrum:  The Commission adopted rules to make available another 25 MHz of spectrum for mobile braodband use. 

REMINDER:  For more information on many of these topics, peruse our links on the right hand side of this page. 

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In a story with a decidedly 1990’s feel, long distance reseller Silv Communication faces a Notice of Apparent Liability proposing a $1.48 million fine for switching customers’ long distance services without authorization (a/k/a “slamming”).  After an investigation, the FCC alleges that Silv Communication submitted 25 switches without obtaining the customers’ authorization pursuant to the FCC’s rules.  The FCC alleges that Silv’s third-party verification (TPV) of the calls failed to satisfy the rule’s requirements.   Specifically, the Commission found that the TPV provider incorrectly stated that the purpose of the verification was for “quality control and … data entry purposes,” rather than to confirm the decision to switch carriers.  

The FCC classified 12 of the switches as “egregious” because Silv’s telemarketer allegedly told customers that they were changing from one plan offered by their current carrier to another plan from the same carrier or that the call was simply to verify information regarding their current account.  The Commission classified these misleading marketing statements as “unjust and unreasonable” practices under Section 201. 

Per the forfeiture guidelines, the FCC proposes a fine of $40,000 per customer switched without authorization, plus a fine of $80,000 for each “egregious” violation.

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If you were planning to disregard a Form 499-A instruction, would you report yourself to the FCC?  That is exactly what AT&T and Verizon have now done with regard to their reporting of prepaid card revenues.  Both AT&T and Verizon have told the FCC that retroactive to January 1, 2010, they will report the revenues actually received from selling prepaid cards to distributors or other carriers, rather than the face value of the cards.  Since prepaid cards often are sold into the distribution chain at a 30-40% discount off the face value, this move will significantly reduce AT&T and Verizon's USF obligations from the sale of prepaid calling cards.

Click the link for more background on the change.

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On May 6, 2010, the FCC issued a Notice of Apparent Liability to NTS Communications, Inc. for failure to pay universal service contributions.  The NAL is the second large fine for failure to pay USF proposed in a little over a month.

The NAL follows the Commissions prior practice of assessing USF fines at $20,000 per month for failures to pay USF invoices and $10,000 per month for partial payments of USF invoices.  Both fines are subject to an upward adjustment equal to one-half of the amount of USF that was unpaid. 

For example, in the NTS case, the Commission concludes that NTS failed to pay two invoices ($40,000 total), made only partial payments on twelve occasions ($120,000) and assessed an upward adjustment of $124,250 representing approximately one-half of the highest amount of unpaid USF.

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A month after the Court of Appeals reversed the FCC's Comcast decision, FCC Chairman Genachowski announced a "third way" to regulate broadband transmission lawfully.  The Chairman released a statement describing his "third way" along with a memo from the General Counsel asserting its legality.  Commissioner Copps, who publicly advocated reclassification of braodband internet access services to Title II, praised Genachowski's solution (though he still prefers reclassification).  Meanwhile, Commissioners McDowell and Baker, the two Republicans on the Commission, declared the proposal "disappointing" and "deeply concern[ing]." 

The battle has only begun.

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The Wireline Competition Bureau of the FCC has overruled a USAC finding that an internet services provider should pay universal service fund assessments on T-1s that the company uses to provide internet access and voice services.  The order is available here.  In U.S. TelePacific Corp. the Universal Service Adminstrative Company concluded that revenues received by TelePacific Corp from its sale of internet access services, sometimes coupled with voice service, should be subject to assessment for universal service fund contributions.  According to the Bureau, USAC had reached its finding "solely because the facilities (T-1 lines) ... are typically used for basic transmission service."  The Bureau reversed this conclusion, stating that even though TelePacific was utilizing T-1 lines it "is not required to make contribution based on revenues from sales of [internet access] service." 

Notably, the Bureau did not decide an ancillary question raised in the proceeding -- whether TelePacific should have contributed indirectly to the federal universal service fund on T1 wholesale inputs purchased from incumbent LECs.  Instead, the FCC instructed TelePacific to take two further actions within 60 days.  First, it requested a "detailed explanation of the methodology by which TelePacific apportions revenues derived from its sale to end users of voice telephony...and how it reports such revenues" on its USF forms.  TelePacific represented in the inquiry that it allocates its revenue among the services it sells and pays into the universal service fund on the amounts attributed to voice services.  Second, TelePacific was told to "provide USAC with the names and contact information of its wholesale providers of transmission services within 60 days .., so that USAC can assure that all contributions to universal service are promptly paid."   In a footnote, the Order explains that TelePacific may have erroneously certified itself as a resale carrier to its wholesale vendors which, in turn, "may have impacted the amount of revenues that TelePacific's wholesale provider reported."

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