The Federal Communications Commission (“FCC”) has issued a Second Further Notice of Proposed Rulemaking that proposes new rural call completion rules. Specifically, the FCC recommends eliminating the existing data recording and reporting rules, and replacing them with rules that require covered long-distance carriers to hold their intermediate providers accountable for call failures. Comments are due 30 days after the date the FNPRM is published in the Federal Register. Reply comments are due 60 days after Federal Register publication.

The FCC’s Current Data Recording, Retention, And Reporting Rules

In 2013, the FCC established data recording, retention, and reporting rules that apply to providers of long-distance voice service that make the initial long-distance call path choice for more than 100,000 domestic retail subscriber lines, counting the total of all business and residential fixed subscriber lines and mobile phones and aggregated over all of the providers’ affiliates. These long-distance carriers are referred to as “covered providers,” and include wireline carriers, mobile wireless carriers, and VoIP providers.

Covered providers are generally required to record and retain information about call attempts to a rural operating company numbers (“OCNs”) from subscriber lines for which they make the initial long-distance call path choice. The information must be reported to the FCC quarterly. Providers that employ two or fewer intermediate providers in a call path qualify for less stringent safe harbor reporting requirements. Two providers – AT&T and CenturyLink – have certified that they qualify for the safe harbor.

Covered providers began recording the required data on April 1, 2015, and began submitting reports on August 1, 2015. Approximately 55 covered providers file reports each quarter. The rules have impacted the amount of rural call completion complaints received by the FCC. From 2015 to 2016, consumer complaints decreased by 57 percent and rural carrier complaints decreased by 45 percent.

The FCC’s June 2017 Rural Call Completion Report Provides An Unclear Picture

In June 2017, the FCC released a report on data collected over the first two years that the rural call completion rules were in effect (the first eight sets of quarterly reports). Unfortunately, the FCC describes its confidence in the reliability of the data that was collected as low. Due to a number of issues with the way service providers that are subject to the rules collected and reported their data, the FCC concluded that the information “provides a less than clear understanding of the overall state of rural call completion performance.” For example, some providers categorized may have categorized call attempts inaccurately; some providers included autodialer traffic while others did not; and some providers included intermediate provider traffic and wholesale traffic while others did not. Among other things, the FCC’s report includes the following findings:

• The aggregate call answer rate in rural areas (64.3 percent) was slightly lower than in nonrural areas (68.8 percent), and the difference in covered providers’ median call answer rates in rural and nonrural areas was approximately two percent.
• At the same time, however, there was wide variation in performance among covered providers in rural areas (as well as in nonrural areas), which suggests that rural call completion may be more a function of individual provider performance than a systemic problem.
• The aggregate call answer rate in rural areas did not increase over the course of the reporting period.  This finding suggests that the requirement to report data, in and of itself, has not caused providers in the aggregate to improve their performance in rural areas during the reporting period.
• The FCC recommends the existing recording, retention, and reporting rules be eliminated and replaced with new rules “that could more directly address rural call completion problems.”

FNPRM Proposes New Call Completion Rules: Oversight Of Intermediate Providers

The new call completion rules proposed by the FCC are focused entirely on requiring covered providers to hold their intermediate providers accountable for call failures. Under the proposal, covered providers will be required to actively monitor and address unacceptable performance by their intermediate providers on routes to individual rural destinations. Specifically, for each intermediate provider with which it contracts, a covered provider would be required to:

(1) monitor the intermediate provider’s performance in the completion of call attempts to rural incumbent LECs from subscriber lines for which the covered provider makes the initial long distance call path choice; and

(2) based on the results of such monitoring, hold the intermediate provider accountable for such performance, including by removing an intermediate provider from a particular route after sustained inadequate performance.

The FCC proposes that any new rules would apply to carriers that fall under the current definition of “covered providers.” To implement the proposed oversight rules, there are a number of issues that must be addressed. In general, the FCC has requested comments in response to the following questions:

• Performance Metrics. For the monitoring requirement, what performance metrics should be used? Should the required monitoring of intermediate providers be ongoing or periodic?
• Scope of Monitoring. How should the FCC clarify the scope of the required monitoring of intermediate providers? Should monitoring be conducted on a rural OCN-by-OCN basis; for all call attempts covered by the existing rules; for a sample of call attempts; for call attempts to rural incumbent LECs and rural competitive LECs; and for call attempts to nonrural incumbent LECs in the aggregate?
• Best Practice Monitoring. Should the performance monitoring requirement correspond to industry best practices, and if so which best practices? Should the performance monitoring requirement correspond to best practices in the ATIS Call Completion Handbook, which include (1) prohibiting “call looping,” a practice in which the intermediate provider hands off a call for completion to a provider that has previously handed off the call); (2) requiring intermediate providers to “crank back” or release a call back to the originating carrier, rather than simply dropping the call, upon failure to find a route; and (3) prohibiting intermediate providers from processing calls so as to “terminate and re-originate” them (e.g., fraudulently using “SIM boxes” or unlimited VoIP plans to re-originate large amounts of traffic in an attempt to shift the cost of terminating these calls from the originating provider to the wireless or wireline provider).
• Inadequate Performance. In which circumstances should a covered provider be required to hold one of its intermediate providers accountable for its rural call completion performance? How should the FCC define what constitutes “sustained inadequate performance” by an intermediate provider?
• Contracts. Are there any contractual issues raised by the proposed monitoring requirement?
• Certifications and Audit. Is a certification or audit requirement needed to ensure compliance with the proposed performance monitoring requirements?
• Alternatives. Are there any additional or alternative proposals for new rural call completion requirements for covered providers that should be considered?
• Definition of Rural. How should “rural” areas be defined for purposes of any new covered provider requirements.
• Safe Harbor. Should the existing Safe Harbor rule be retained, or alternatively, should the Safe Harbor regime be structured going forward?
• Small Provider Exemption. Should smaller providers be exempted from any new call completion requirements applicable to covered providers?

Stricter Oversight Of Intermediary Providers - Finally

Finally the FCC has proposed rules that impose stricter oversight of intermediate providers – those providers that carry traffic but neither originate or terminate calls. Many intermediate providers can be categorized as least-cost routers because they send traffic along convoluted routes in an effort to minimize access charges. They send traffic along different routes depending on the month, week, or even time of day, which causes calls to traverse numerous networks and carriers, regardless of where the call originates and terminates.

Rural local exchange carriers that have experienced call completion problems have long known that the primary cause of failed calls to rural America is the use of multiple intermediate providers in a call path. As the number of intermediate providers in a call path increases, the likelihood that a call will fail also increases. An individual call’s level of quality decreases as the number of intermediate providers increases. Rural carriers have explained this trend to the FCC many times, and it is backed up by extensive data in the call completion docket. While the FCC has acknowledged the intermediate provider problem, it failed to adopt rules directly addressing it. Other carriers are aware of the issues that arise through the use of multiple intermediate providers.

In 2015, Verizon was dinged with a $5 million FCC consent decree for failing to investigate failed calls to rural areas. Of course, the terms of settlement required Verizon to fix its rural call completion problems. How did it do this? Verizon implemented changes in the way it routes calls to rural LECs. Specifically, Verizon requires its intermediate providers to contractually agree to utilize no more than one additional carrier in routing before the call is delivered to a rural LEC or the serving tandem for termination. Verizon explained how limiting the number of intermediate providers in a call path has improved call completion rates at a recent industry workshop it was required to conduct as part of the consent decree.

The FCC is on the right track with its proposal to impose stricter oversight of intermediate providers. Nevertheless, some may question the tentative decision to eliminate the existing data recording, retention, and reporting rules entirely. Comments supporting a modified version of the existing call completion rules are to be expected. But, even if the FCC removes its current rules, this does not necessarily mean that covered providers will no longer be required to record and report data. Under the proposed rule, covered providers will likely have to record certain data in order to sufficiently monitor their intermediate providers. As the proceeding plays out, the method and scope of the monitoring, as well as any data recording and reporting requirements that are needed to facilitate such monitoring will take shape.

*Disclaimer* – This blog post is intended to inform the reader of a recent development related to communications law. It is not, and should not be considered as, specific legal advice.