Deregulating and Detariffing End-User Access Charges

The Commission’s proposal would eliminate ex ante price regulation of all five remaining access charges that incumbent local exchange carriers ("ILECs") can assess on end users and require both ILECs and competitive local exchange carriers ("CLECs") to detariff all such charges. (The FCC does not regulate CLECs access charges so long as they are just and reasonable.) The five end-user charges on the regulatory chopping block are:

• Subscriber Line Charge – A flat per-line fee, capped by the FCC, that ILECs can assess on customers to recover a portion of the costs associated with transporting calls on the ILEC’s local facilities. This charge, also referred to as the “SLC” (pronounced “slick”) or the End User Common Line Charge ("EUCL"), stemmed from the earliest access charge orders as a way to recover non-recurring charges associated with providing the ability to make interstate calls.
• Access Recovery Charge – An end-user charge created by the FCC in 2011 as a mechanism to mitigate reduced ILEC intercarrier compensation revenues from charges assessed on IXCs as a result of the transition to the intercarrier bill-and-keep regime. The ARC allowed ILECs to recoup some of the costs no longer collected from other carriers through per-minute access charges.
• Presubscribed Interexchange Carrier Charge – A fee that price cap ILECs can assess on multi-line business subscribers who do not presubscribe an IXC to recover a portion of the ILECs’ local transport costs. The PICC (pronounced “Pick-C”) was introduced shortly after the Telecommunications Act of 1996 with the advent of competitive local service.
• Line Port Charge – A monthly charge ILECs can assess to recover the cost associated with porting digital subscriber lines to the switch in the ILEC’s central office if it exceeds the cost for porting analog lines.
• Special Access Surcharge – A monthly charge to recover transit costs for calls that “leak” out of a private branch exchanges ("PBXs") onto the public network, such as when large business customers allow employees to use a PBX to make long-distance calls without incurring access charges. This charge has been in place since the early days of telephone access charges.

Notwithstanding the Commission’s proposed approach, the NPRM invites comments on “alternative approaches to determining where and under what circumstances [it] should eliminate” price and tariff controls. One such proposal it offers is a case-by-case assessment finding rate regulation is unnecessary if: (1) a competing voice provider serves 75% of the census blocks in the same area as the ILEC; (2) the Eligible Telecommunications Carrier in the area is subject to the reasonable comparability benchmark; or (3) the state has deregulated intrastate rates. The Commission also seeks comment on the whether it should mandatorily detariff other charges related to federal programs, such as pass-through fees for USF contributions.

USF Reporting Impact

The Commission’s proposed action may impact how carriers allocate revenues between interstate and intrastate jurisdictions for the purpose of determining USF contribution amounts. To prevent carriers from gaming the system to reduce their contributions, the FCC is seeking comment on two alternative proposals for allocating revenues: a 25% safe harbor, where 25% of revenues would be allocated to interstate services, or bright-line rules for how carriers allocate revenues.

Prohibiting Line Item Charges on Customer Bills

The second major piece of the NPRM is a proposal to prohibit all carriers (ILECs and competitive carriers) from assessing end-user access charges as separate line items on customer bills, which they are currently permitted to do. The FCC said that the carrier descriptions for these charges vary significantly and unnecessarily complicate customer bills. The Commission states that it has sought to reduce the ambiguity of carriers’ advertised rates and simplify customer bills using its Truth-In-Billing rules, and its proposed action here would be consistent with those goals. Prohibiting carriers from listing end-user access charges separately, the NPRM asserts, would result in advertised prices that are closer to the total prices that appear on customer bills. This would increase transparency for consumers by removing the inconsistent line item descriptions and enable consumers to more easily compare voice service offerings by different providers.

Comments on the proposed access charge reforms are due 30 days after the NPRM is published in the Federal Register, with reply comments due 15 days later.

Because this proposal would affect both incumbent and competitive carriers, and may impact federal USF reporting, telecommunications service providers should review the NPRM carefully. Now would be a good time to review the line item and surcharge structure of a carrier’s services to determine if any changes should be made.

Although the March agenda is relatively light, the STIR/SHAKEN and access charge items could significantly impact provider costs, tariffing practices, and billing procedures. As a result, providers should closely examine the FCC’s proposals and get their input in early in light of the agency’s recent decision to restrict in-person meetings and expand telework in response to the coronavirus pandemic. You will find more information on the key March meeting items after the break:

Mandating STIR/SHAKEN Framework: The TRACED Act mandates a number of measures designed to combat unlawful robocalls. One of the key measures in the Act is a requirement that all voice providers implement SHAKEN/STIR in IP networks and an alternative call authentication framework in non-IP networks. The draft Report and Order and Further Notice of Proposed Rulemaking responds to these mandates in the Commission’s existing call authentication docket. The draft order would mandate that originating and terminating voice service providers implement the STIR/SHAKEN framework in the IP portions of their networks by June 30, 2021. A carrier’s obligations under the proposal would vary depending on where it is in the call chain. First, a voice service provider that originates a call that exclusively transits its own network would be required to authenticate and verify the caller ID information in accordance with the STIR/SHAKEN framework. Second, a voice service provider originating a call that it will exchange with another provider would be required to authenticate the caller ID information in accordance with the STIR/SHAKEN framework and (unless technically impossible) transmit that information to the next provider in the call path. Finally, a voice service provider terminating a call with caller ID information it receives from another provider would be required to verify that information in accordance with the STIR/SHAKEN framework before delivering the call to an end user. The FCC would estimate carrier STIR/SHAKEN implementation costs to range from $15,000 to $300,000.

In the FNPRM portion of the order, the FCC plans to seek comment on whether it should extend the STIR/SHAKEN implementation deadline for smaller voice service providers (i.e., those with 100,000 or fewer subscriber lines), as well as those operating in rural areas, so long as they adopt a robocall mitigation program. The FCC also plans to ask whether it should expand the STIR/SHAKEN mandate to cover intermediate voice service providers that neither originate nor terminate calls, and require them to pass along any verified caller ID information they receive. In addition, the FCC would request input on requiring voice service providers using legacy time-division multiplexing and other non-IP technologies to either (1) upgrade their networks to IP to enable the implementation of the STIR/SHAKEN framework or (2) develop a non-IP caller ID authentication technology and adopt a robocall mitigation program in the interim. The FCC anticipates adopting procedures to exempt providers from the full STIR/SHAKEN implementation process in exchange for meeting aggressive call authentication deployment milestones. The Commission also would seek comment on implementing the TRACED Act’s prohibition on voice carriers imposing additional line item charges on consumers and small businesses for the costs of implementing caller ID authentication services.

The FNPRM also would address a topic identified in the TRACED Act for further Commission inquiry. The Act requires the Commission to examine measures to bar access to numbering resources by service providers allegedly assisting unlawful spoofing or robocalling operations. The Commission would examine a number of options for doing so, including imposing “know your customer” obligations on RespOrgs and carriers receiving numbering resources and/or imposing U.S. residency requirements for telephone numbers.

The draft order would include an expedited comment period for these questions. Comments on the proposed STIR/SHAKEN reforms would be due by May 15, 2020, with reply comments due by May 29, 2020.

Deregulating End-User Access Charges: The draft Notice of Proposed Rulemaking would eliminate FCC pricing regulation for five access charges currently included in some carrier tariffs: the Subscriber Line Charge, the Access Recovery Charge, the Presubscribed Interexchange Carrier Charge, the Line Port Charge, and the Special Access Surcharge. These charges represent the last handful of interstate end-user charges subject to ex ante price regulation by the agency. The FCC would find that increased competition in the voice service market, including by interconnected VoIP, wireless, and over-the-top providers, ameliorates the need for strict pricing controls for these charges. The Commission would seek comment on completely prohibiting carriers from tariffing the charges or whether alternative approaches are necessary to address areas where competition may be lacking. The FCC also would request input on barring carriers from assessing the charges through separate line items on customer bills. The FCC would find that the current descriptions of the charges vary significantly among carriers and unnecessary complicate customer bills. As many of the charges currently are used in the calculation of high-cost support and universal service contributions, the FCC would ask how it can ease the deregulation transition for carriers to ensure they receive sufficient support without increasing the contribution burden.

Comments on the proposed access charge reforms would be due 30 days after Federal Register publication of the item, with reply comments due 15 days later.

First, the Order would amend the FCC rules to allow carriers to cross-reference their own or their affiliate’s tariff filings. The Order states that the rules, put in place long before the advent of electronic tariff filing, prohibited tariff cross-references to prevent difficulties in following cross-references within the hard copies of tariff filings. Now, electronic tariff filings make such references simple to find and thus eliminate the need for a prohibition on cross- references, according to the Order. These changes should be particularly beneficial to incumbent local exchange carriers that often are managing multiple federal tariffs and might want to cross-reference to their own or their affiliate’s tariffs. Competitive local exchange carriers are less likely to be managing multiple federal tariffs but still may find the rule change useful for cross-referencing an affiliate’s tariffs.

Second, the Order eliminates the FCC requirement that price cap local exchange carriers ("Price Cap LECs") file short form TRPs 90 days before their annual interstate access tariff filings are effective. These tariff review plans provided material such as exogenous cost adjustments related to Telecommunications Relay Service and North American Numbering Plan Administration expenses among others but, as the FCC explained in the Notice, the necessary information was not always available or could change, thereby potentially rendering the plans of little value. According to the Order, electronic filing and the general decrease in the complexity of the annual access charge filings have diminished the usefulness of the short form TRPs and support eliminating the filing requirement. Recognizing that the data necessary to prepare the short term TRPs would not be available in time for the filing deadline, the filing requirement has been waived for each of the past three years.

Because the short form TRP filing requirement and tariff cross-reference prohibition are subject to waivers, the requirements are not currently in effect. Therefore, the FCC’s Order would simply codify the current tariff filing practices. To ensure that carriers can continue to benefit from the waiver of the tariff cross-reference prohibition, that waiver will remain in effect until 30 days after the Order is published in the Federal Register and the Order takes effect.

You will find more details on some of the most significant October meeting items after the break:

Measuring CAF Recipients’ Broadband Performance: The draft Order on Reconsideration would modify the uniform testing methodologies for all carriers receiving Connect America Fund (“CAF”) support to use for speed and latency testing established by the Wireline Competition Bureau, Wireless Telecommunications Bureau and Office of Engineering and Technology last year, and provide flexibility based on carrier sizes, networks and technical abilities. The modifications would, for example, align testing dates more closely with build-out obligations and establish a pre-testing period so that carriers can address any issues without penalty before formal testing and reporting begins.

911 Fee Parity: The draft Declaratory Ruling responds to a primary jurisdiction referral from a dispute between 911 districts in Alabama and BellSouth and other telecommunications carriers. The federal NET 911 Act prohibits states from discriminating against interconnected VoIP services by assessing a higher 911 fee than is assessed on traditional telecommunications services. Under Alabama law, local telephone services were assessed per “line” to the network while VoIP services were assessed per telephone number (not per line). The Declaratory Ruling is intended to ensure parity between VoIP services and traditional telecommunications services by clarifying that the NET 911 Act provision applies to the total amount of 911 fees that a subscriber pays for the same 911 outbound calling capability. Thus, even if the per-unit assessment is the same, the state may not impose a larger total fee on VoIP providers.

Tariff Rules Modernization: The draft Report and Order would adopt two uncontroversial changes to the FCC's tariff filing requirements that were the subject of a 2018 Notice of Proposed Rulemaking and Interim Waiver Order released nearly a year ago. Specifically, the Order would allow carriers to cross-reference their tariffs and those of their affiliates, and would remove the requirement that certain carriers file short form tariff review plans 90 days before their annual interstate access charge tariff filings are effective. The requirements have become outdated now that tariffs are submitted and reviewed electronically, and annual access charge filings have diminished in complexity.

The FCC released two public notices on the tariff filing procedures earlier this week. (One notice addressed the effective date, the other the filing procedures.)

All competitive carriers must file their existing base tariff within the next 60 days. (It's probably not a good idea to file in the first few days or the last few days of this window). Thereafter, changes to the tariffs must be filed electronically. Operator service providers, if there are any still out there, also must file the base tariff electronically.

For carriers with FCC tariffs, you must file your base tariff within 60 days after November 17th. Anticipating potential server issues, the FCC encouraged carriers not to wait until the 60th day to make these filings.

For Operator Service Providers -- if there are any of you still out there -- informational tariffs must also be filed within this 60 day window.