As written, the FCC’s registration and service quality standards rules apply to all intermediate providers handling calls originating from, or terminating to, a connection using a North American Numbering Plan (“NANP”) number. Not only must intermediate providers register with the FCC but they also are required to ensure that any other intermediate provider to which they hand off traffic is registered. Because the FCC’s rural call completion rules apply to calls that terminate outside of the United States, the last U.S. intermediate provider in a call path would be required to ensure that the foreign carrier intermediate provider to which the call was handed off also is a registered intermediate provider. In response to industry concerns about this result, the Commission clarified that the intermediate service provider service quality rules and registration requirement do not apply to those non-U.S. intermediate providers handling foreign-terminating calls. The clarification, tucked away in a footnote, emphasized the Rural Call Completion Act’s (“RCCA’s”) focus on U.S. customers, noting the RCCA’s goal of ensuring integrity of call completion to “customers in the United States” and of preventing “discrimination among areas of the United States.”

As we noted previously, the Order will be effective 30 days after publication in the Federal Register although it remains to be seen if the FCC’s intermediate provider registration rule will have received OMB approval and be in effect by that time. Be sure to check back for updates.

The proposed new service quality standards for intermediate providers include three broad prongs: (i) a duty to complete calls; (ii) monitoring of rural call completion performance; and (iii) ensuring other intermediate providers in a call delivery path register with the FCC. An intermediate provider is defined generally as any entity that holds itself out as able to transmit voice traffic to/from end users using North American Numbering Plan numbers and charges a fee to another entity, including an affiliate, for the transmission.

The first proposed prong would require intermediate providers to take steps reasonably calculated to ensure that calls are completed and the FCC may find violations if the provider knows, or should have known, that calls were not being completed and yet failed to take corrective action. Carriers should note that the broad definition of an intermediate provider is consistent with the call completion standard’s broad application. Specifically, although the draft Order and proposed standards arise in the context of the Commission’s rural call completion proceeding, the Order puts intermediate providers on notice that the FCC reads the RCC Act broadly to apply the call completion standard “to all covered voice communications, regardless of their destination.” Consequently, the proposed new standard potentially could result in significant compliance obligations as intermediate providers must pay attention to all covered communications, not only those destined for rural locations.

In a requirement parallel to that currently applied to the covered providers that make the initial long-distance call path choice, the second prong would require intermediate providers to actively monitor, both prospectively and retrospectively, call completion performance of any directly-contracted downstream intermediate providers for calls destined to rural areas. An intermediate provider’s failure to take corrective action, potentially including removing a contracted downstream intermediate provider after detecting “persistent problems” in routing covered voice traffic to rural areas, could result in significant penalties.

Not only must intermediate providers register with the FCC, but the third proposed prong requires providers to ensure that other intermediate providers to which they hand off calls also comply with the FCC registration requirement. This standard would appear to create a compliance “daisy chain” effect, with each intermediate provider obligated to ensure other intermediate providers are registered. This requirement dovetails neatly with the existing requirement that covered providers conduct business only with registered intermediate providers. However, it remains to be seen when intermediate providers actually will be able to register, as the FCC’s registration requirement is still awaiting Office of Management and Budget approval.

The draft Order would offer some limited compliance relief, such as an immediate exception for intermediate providers that also qualify for a covered provider safe harbor and the eventual sunset of rural call completion data recording and retention rules for covered providers. The covered provider call data recording and retention rules would sunset one year after the service quality standards take effect. But even with this limited compliance relief, most providers face potentially significant regulatory obligations. Consequently, carriers should be sure to prepare accordingly before the rules take effect.

Finally, the draft Order would deny pending petitions for reconsideration filed by NTCA and USTelecom. The Order proposes to deny NTCA’s request that the Commission reconsider a decision to not require covered providers to file with the FCC their rural call completion monitoring procedures on the grounds that NTCA’s petition presented no new support for the reconsideration request. The Commission noted its previous conclusion that such a filing requirement would be burdensome with “no ‘countervailing benefit’” and that the information could be obtained pursuant to the Commission’s investigatory authority. USTelecom had sought reconsideration of the requirement making covered providers responsible for call completion by downstream intermediate providers with which the covered provider does not have a contractual relationship. Among other reasons, the Order would deny USTelecom’s request on the grounds that USTelecom did not raise new arguments on reconsideration and that the record shows that covered providers can “utilize contractual restrictions to ensure call completion by downstream intermediate providers, including those with which there is no direct contractual relationship.”

Assuming the draft Order is adopted at the March 15 Open Meeting, it will be effective 30 days after publication in the Federal Register. We will continue to monitor the rural call completion proceeding and will provide updates on the blog when new information becomes available.