Rule2023-10661
Updating the Intercarrier Compensation Regime To Eliminate Access Arbitrage
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 1, 2023
Effective
July 3, 2023
Issuing agencies
Federal Communications Commission
Abstract
The Federal Communications Commission (Commission) adopts rules to eliminate further exploitation of the access charge system by access-stimulating entities, which ultimately causes IXCs and end-user customers to bear costs for services they don't use.
Full Text
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[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Rules and Regulations]
[Pages 35743-35764]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10661]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 51, 61, and 69
[WC Docket No. 18-155; FCC 23-31; FRS 138334]
Updating the Intercarrier Compensation Regime To Eliminate Access
Arbitrage
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Federal Communications Commission (Commission) adopts
rules to eliminate further exploitation of the access charge system by
access-stimulating entities, which ultimately causes IXCs and end-user
customers to bear costs for services they don't use.
DATES: The amendments adopted in this document are effective July 3,
2023, except for the additions of Sec. 51.914(d) and (g) at
instruction number 3, which are delayed indefinitely. The Commission
will publish a document announcing the effective date for Sec.
51.914(d) and (g).
ADDRESSES: Federal Communications Commission, 45 L Street NE,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Lynne Engledow, Wireline Competition
Bureau, Pricing Policy Division via email at <a href="/cdn-cgi/l/email-protection#cf83b6a1a1aae18aa1a8a3aaaba0b88fa9acace1a8a0b9"><span class="__cf_email__" data-cfemail="a7ebdec9c9c289e2c9c0cbc2c3c8d0e7c1c4c489c0c8d1">[email protected]</span></a> or
via phone at (202) 418-1540. For additional information concerning the
proposed Paperwork Reduction Act information collection requirements
contained in this document, send an email to <a href="/cdn-cgi/l/email-protection#82d2d0c3c2e4e1e1ace5edf4"><span class="__cf_email__" data-cfemail="55050714153336367b323a23">[email protected]</span></a> or contact
Nicole Ongele at 202-418-2991.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second
Report and Order adopted on April 20, 2023, and released on April 21,
2023. A full-text copy of this document may be obtained at the
following internet address: <a href="https://www.fcc.gov/document/fcc-adopts-rules-prevent-gaming-its-access-stimulation-rules">https://www.fcc.gov/document/fcc-adopts-rules-prevent-gaming-its-access-stimulation-rules</a>.
Synopsis
1. For over a decade, the Commission has combated abuse of its
access charge regime. Such regulatory arbitrage has taken several forms
over the years, all of which center around the artificial inflation of
the number of telephone calls for which long-distance carriers
(interexchange carriers or IXCs) must pay tariffed access charges to
the local telephone companies (local exchange carriers or LECs) that
terminate the telephone calls to their end users. Some local telephone
companies, often in areas of the country with high access charges,
partner with high-volume calling service providers, such as ``free''
conference calling or chat line services, to inflate the number of
calls terminating to the LEC and, in turn, inflate the amount of access
charges the LEC can bill IXCs. This practice is inefficient because it
often introduces unnecessary entities or charges into a call flow,
perverts the intended purpose of access charges (i.e., to cover the
LECs' cost of providing the service), and raises costs for IXCs, and
ultimately their customers, whether they use the high-volume calling
service or not.
2. Despite multiple orders and investigations making clear the
Commission will not tolerate access
[[Page 35744]]
arbitrage, some providers continue to manipulate their call traffic or
call flows in attempts to evade our rules. Recently, LECs have inserted
Internet Protocol Enabled Service (IPES) Providers into call paths as
part of an ongoing effort to evade our rules and to continue to engage
in access stimulation. After inserting an IPES Provider into the call
flow, the LEC then claims that it is not engaged in access stimulation
as currently defined in our rules. The insertion of an additional
provider (or providers) into the call flow is inefficient and is aimed
at preserving the LEC's ability to charge IXCs terminating switched
access charges on access-stimulation traffic--the very practice the
Commission found unlawful in 2019.
3. Today, we take additional steps to deter arbitrage of our access
charge system. In this Order, we adopt rule revisions to close
perceived loopholes in our Access Stimulation Rules that are being
exploited by opportunistic access-stimulating entities whose actions
ultimately cause IXCs' end-user customers to continue to bear costs for
services they do not use.
Background
4. The access charge regime was designed to compensate carriers for
use of their networks by other carriers. Interexchange carriers are
required to pay LECs for access to their networks, and in the case of
calls to customers located in rural areas, IXCs historically had to pay
particularly high access charges to rural LECs to terminate those
calls. These higher access charges implicitly subsidized rural LECs'
networks to help defray the higher costs those LECs incurred in serving
less densely populated areas. In 1996, Congress directed the Commission
to eliminate implicit subsidies--a process the Commission has pursued
by establishing the Universal Service Fund and by steadily moving
access charges to a bill-and-keep framework.
5. Some LECs took advantage of technological advances to undermine
the Commission's access charge regime by engaging in ``access
arbitrage.'' These LECs exploited high access charges in rural areas by
artificially stimulating terminating ``call volumes through
arrangements with entities that offer high-volume calling services.''
The resulting high call volumes with no requirement that such LECs
reduce their tariffed switched access rates ``almost uniformly ma[d]e
the LEC's interstate switched access rates unjust and unreasonable
under section 201(b) of the Act.''
6. In the 2011 USF/ICC Transformation Order, the Commission adopted
rules to identify rate-of-return LECs and competitive LECs engaged in
access stimulation and required that such LECs lower their tariffed
access charges. The rules adopted in 2011 defined ``Access
Stimulation'' as occurring when two conditions were satisfied: (1) a
rate-of-return LEC or competitive LEC had entered into an access
revenue sharing agreement that, ``over the course of the agreement,
would directly or indirectly result in a net payment to the other
party''; and (2) one of two traffic triggers was met: either ``an
interstate terminating-to-originating traffic ratio of at least 3:1 in
a calendar month'' or ``more than a 100 percent growth in interstate
originating and/or terminating switched access minutes of use in a
month compared to the same month in the preceding year.'' At the same
time, the Commission began moving many terminating end-office switched
access charges to bill-and-keep.
7. Parties that wanted to continue to engage in access stimulation
adapted to these rules by interposing Intermediate Access Providers,
that arguably were not subject to the access stimulation rules adopted
in 2011, into the call flow because many of these providers were still
able to charge tariffed tandem switching and transport charges.
Interexchange carriers still had to send traffic to LECs serving high-
volume calling service providers and pay tariffed tandem switching and
transport access charges, that were not transitioning to bill-and-keep,
to the terminating LECs or the Intermediate Access Providers the LECs
chose. As a result, IXCs and their customers were subsidizing the
``free'' services offered by high-volume calling service providers,
whether IXC customers used those services or not.
8. In response to this ongoing arbitrage, the Commission adopted a
Notice of Proposed Rulemaking on the subject. The record received in
response to the Access Arbitrage Notice confirmed that access arbitrage
continued even after adoption of the 2011 rules. Therefore, in 2019,
the Commission adopted the Access Arbitrage Order, broadening the scope
of its Access Stimulation Rules by adopting two additional definitions
of ``Access Stimulation'' unrelated to the existence of a revenue
sharing agreement between parties. Competitive LECs with a terminating-
to-originating traffic ratio of at least 6:1, absent a revenue-sharing
agreement, and rate-of-return LECs with a terminating-to-originating
traffic ratio of at least 10:1, absent a revenue-sharing agreement,
would be found to be engaged in access stimulation under the rules
adopted in 2019. Most significantly, the Commission also found that
requiring ``IXCs to pay the tandem switching and tandem switched
transport charges for access-stimulation traffic is an unjust and
unreasonable practice'' prohibited by section 201(b) of the
Communications Act of 1934, as amended (the Act). The Commission
addressed this unjust and unreasonable practice by adopting rules
making access-stimulating LECs--rather than IXCs--financially
responsible for the tandem switching and tandem switched transport
service access charges associated with the delivery of traffic from an
IXC to an access-stimulating LEC's end office or its equivalent. The
Court of Appeals for the District of Columbia Circuit upheld the Access
Arbitrage Order.
9. After the rules adopted in 2019 took effect, parties advised
Commission staff that access stimulators had adopted new practices
designed to evade the updated rules, primarily by inserting IPES
Providers into the call flow. For example, some providers began
``converting traditional CLEC telephone numbers to [IPES] numbers in
order to claim that the 2019 [Access] Arbitrage Reform Order is not
applicable'' to the resulting traffic because the calls were bound for
telephone numbers obtained by IPES Providers, rather than to LECs
serving end users, as required by our rules. LECs and IPES Providers
may obtain telephone numbers directly from numbering authorities,
indirectly from a LEC partner, or indirectly via a commercial or
leasing arrangement. All companies receiving telephone numbers directly
from numbering administrators are assigned a unique Operating Company
Number (OCN) that identifies the provider associated with each
telephone number.
10. In a 2021 enforcement order against competitive LEC Wide Voice,
LLC (Wide Voice), we found that Wide Voice ``inserted a VoIP [(Voice
over Internet Protocol)] provider into the call path for the sole
purpose of avoiding the financial obligations that accompany the
Commission's access stimulation rules.'' Then, in July 2022, we adopted
a Further Notice of Proposed Rulemaking seeking comment on proposals to
prevent companies from leveraging perceived ambiguities in our rules to
continue to engage in access arbitrage. In the Further Notice, we
sought comment on sample call flows and proposed several definitions
relevant to our Access Stimulation Rules, as well as rule revisions
making clear ``that an
[[Page 35745]]
Intermediate Access Provider shall not charge an IXC tariffed charges
for terminating switched access tandem switching and switched access
tandem transport for traffic bound to an IPES Provider whose traffic
exceeds the [access-stimulation] ratios in Sec. Sec. 61.3(bbb)(1)(i)
or 61.3(bbb)(1)(ii) of our Access Stimulation Rules.''
11. The following diagrams, which were also included in the Further
Notice, illustrate sample call flows. Diagram 1 represents a call flow
that includes both a LEC and an IPES Provider between an Intermediate
Access Provider and an end user that is a high-volume calling service
provider. Diagram 2 provides an example of a call where the LEC has
been removed from the call flow and there is only an IPES Provider
between the Intermediate Access Provider and the high-volume calling
service provider that is the end-user recipient of the call.
[GRAPHIC] [TIFF OMITTED] TR01JN23.008
Diagram 1: Showing a hypothetical call path including a LEC and
an IPES Provider--to facilitate discussion throughout the remainder
of this Order. ``POP'' refers to point of presence.
[GRAPHIC] [TIFF OMITTED] TR01JN23.009
Diagram 2: Showing a hypothetical call path where the
Intermediate Access Provider sends traffic directly to the IPES
Provider--to facilitate discussion throughout the remainder of this
Order. ``TDM (time division multiplexing) to IP'' refers to a
transition that occurs during the transfer of a telephone call
between the technologies used by the entities involved in the call
flow.
12. In response to the Further Notice, we received widespread
support for further action to stem access arbitrage. USTelecom confirms
that, after the reforms adopted in the 2019 Access Arbitrage Order
became effective, entities manipulated their business models to
continue charging IXCs terminating tandem switching and transport
access charges for calls delivered to access stimulators. USTelecom
suggests that the ``primary difference between the new scheme and the
old scheme is not the concept, but the regulatory classification of the
entities in the call stream, purposely inserted by arbitrageurs to
claim these arrangements are beyond the Commission's reach.'' Verizon
agrees that ``access stimulation has not materially decreased, only
changed form.'' AT&T explains that its long-distance network now
terminates approximately 400 million minutes of use (MOU) to IPES
Providers per month, which is ``essentially twice'' the MOU it
terminated to IPES Providers prior to the 2019 Access Arbitrage Order.
Thus, the record strongly suggests that instead of ceasing access-
stimulation activity--or taking responsibility for paying certain
access charges, as required by our Access Stimulation Rules--some
providers chose to exploit a perceived loophole in those rules.
Commenters also suggested several revisions to the proposed rule
language to further strengthen our Access Stimulation Rules and prevent
ongoing arbitrage.
Discussion
13. We are compelled to act again to fight regulatory arbitrage of
the Commission's access charge regime. In this Order, we eliminate any
perceived ambiguity in our Access Stimulation Rules that results in
parties attempting to circumvent those rules simply by inserting IPES
Providers into the call path. This practice directly contravenes the
Commission's orders, policies, and Access Stimulation Rules. We adopt
narrow and focused changes to our rules that are designed to prevent
entities from evading responsibility for their access-stimulation
activity. The rules and revisions strike an appropriate balance between
addressing harmful access-stimulation conduct on the part of certain
entities and avoiding negative effects on providers that are not
engaged in such activity. We find these rule revisions will serve the
public interest by reducing carriers' incentives and ability to send
traffic over the Public Switched Telephone Network (PSTN) for the
purpose of collecting inflated, tariffed terminating tandem switching
and transport access charges from IXCs, thereby artificially increasing
costs to IXCs and harming their end-user customers.
A. Limiting the Imposition of Access Charges When IPES Providers Are
Engaged in Access Stimulation
14. We find significant support in the record for our proposal to
prohibit
[[Page 35746]]
Intermediate Access Providers from charging IXCs tariffed terminating
tandem switching and transport access charges for traffic bound for
IPES Providers engaged in access stimulation as defined in Sec.
61.3(bbb) of our rules. Therefore, we adopt rules providing that, when
traffic is delivered to an IPES Provider by a LEC or an Intermediate
Access Provider and the terminating-to-originating traffic ratios of
the IPES Provider meet or exceed the triggers in the existing Access
Stimulation Rules, the IPES Provider will be deemed to be engaged in
access stimulation. In this case, ``any entity that provides
terminating switched access tandem switching or terminating switched
access tandem transport services between the final Interexchange
Carrier in a call path and'' an access stimulator is considered an
Intermediate Access Provider and shall not impose tariffed terminating
tandem switching and transport access charges on IXCs sending traffic
to the IPES Provider or the IPES Provider's end-user customer. The
Intermediate Access Provider may seek compensation from the IPES
Provider for charges the Intermediate Access Provider cannot bill to
IXCs. The IPES Provider, if it chooses, may seek reimbursement for
these access charges from its end-user customer(s).
15. Commenters widely agree with our proposal to use the same
terminating-to-originating traffic ratio triggers for IPES Providers
that we currently use for LECs. Thus, we apply to IPES Providers the
3:1 terminating-to-originating traffic ratio plus revenue-sharing
agreement trigger in Sec. 61.3(bbb)(1)(i), and the 6:1 terminating-to-
originating traffic ratio trigger, absent a revenue-sharing agreement,
in Sec. 61.3(bbb)(1)(ii). We find no need, based on the record, to
reconsider the existence of revenue-sharing arrangements between
parties in the context of our rules. At the same time, we do not apply
to IPES Providers the 10:1 terminating-to-originating traffic ratio
applicable to rate-of-return carriers. IPES Providers' rates are not
subject to rate-of-return regulation and no commenters suggested that
their network configurations or call flows are in any way similar to
rate-of-return regulated LECs' networks or call flows. No commenter
suggested applying the 10:1 ratio to IPES Providers, and no information
in the record justifies expanding the applicability of the 10:1 ratio
in such a manner.
16. We reject Teliax's unsupported assertion that price-cap
incumbent LECs should be subject to the same traffic ratio reporting
requirements as competitive LECs, rate-of-return LECs, and IPES
Providers. The Commission has previously explained that ``complaints
regarding access stimulation activities have not directly involved
price cap carriers.'' The record in this proceeding provides no
evidence that this has changed. Nor is there any evidence that supports
Teliax's assertion that any price-cap LECs are engaged in access
stimulation. Even if Teliax's proposal had merit, it is beyond the
scope of this current rulemaking as we did not seek comment on
expanding our Access Stimulation Rules to encompass price-cap LECs. For
these reasons, we lack any basis for expanding our Access Stimulation
Rules as Teliax proposed.
17. According to HD Carrier, an IXC or its wireless affiliate has
an incentive to send traffic over TDM, and then assert that it does not
need to pay access charges by claiming a provider later in the call
path is engaged in access stimulation. HD Carrier provides no support
for its claims, however. To the contrary, HD Carrier's arguments rely
on several incorrect assumptions which we correct here: (a) IXCs cannot
unilaterally enter in to interconnection agreements and for that
reason, they may still have to use the tariffed, TDM path to terminate
traffic; (b) the terminating carrier, not the originating carrier,
dictates the call path possibilities at the terminating end of the
call, and any Intermediate Access Providers, through call routing
instructions detailed in the LERG Routing Guide (LERG); and (c) not all
wireless companies have IXC affiliates.
18. The record confirms that the rules we adopt serve the public
interest because they are essential to deterring access stimulation.
These new rules, similar to those adopted in the Access Arbitrage
Order, will prohibit Intermediate Access Providers and LECs from
requiring IXCs to pay tandem switching and tandem transport charges for
access-stimulation traffic that the Commission has found to be unjust
and unreasonable in violation of section 201(b) of the Act. Under the
rules we adopt, an IPES Provider will be responsible for calculating
its traffic ratios at each end office or end office equivalent and
providing the required notifications of access-stimulation activity to
the Commission and affected entities. These rules are consistent with
other public interest requirements imposed on VoIP providers, such as
universal service, E911, and other reporting obligations.
19. Some commenters ask us to go a step further, and not only apply
the access-stimulation triggers and notification requirements to IPES
Providers, but also impose on IPES Providers the same financial
responsibility for access-stimulation traffic as LECs have under the
current rules. Bandwidth, for example, proposes that, ``[r]ather than
stating an IPES Provider `may' pay for terminating switched access
tandem switching and terminating switched access tandem transport
services where the IPES Provider is engaged in access stimulation, the
rule should require the IPES Provider . . . to assume financial
responsibility for the services.''
20. Although our Access Stimulation Rules require access-
stimulating LECs to assume financial responsibility for tandem services
used to deliver access-stimulation traffic, as proposed in the Further
Notice, we decline to impose the same mandatory condition on access-
stimulating IPES Providers. Instead, the IPES Provider ``may'' assume
financial responsibility. We do, however, make clear that IXCs shall
not be billed by Intermediate Access Providers for terminating tandem
and transport charges to deliver traffic to an IPES Provider engaged in
access stimulation. Under the rules we adopt here, an Intermediate
Access Provider will have an option and may seek compensation from an
access-stimulating IPES Provider, or it shall seek compensation from
the IPES Provider's LEC partner (if that LEC had directly assigned
numbers that it transferred to the IPES Provider that then used those
numbers to receive access-stimulated traffic) for the tariffed
terminating tandem switching and transport access charges related to
traffic bound for an IPES Provider engaged in access stimulation. In
short, Intermediate Access Providers, LECs, and IPES Providers may
determine their own billing arrangements among themselves when an IPES
Provider is engaged in access stimulation but tariffed terminating
switched access charges may not be imposed on IXCs in those situations.
We find that this approach recognizes the difference in regulatory
treatment between LECs and IPES Providers while also advancing our goal
of curbing access stimulation. And under this approach, if access is
being stimulated and an IXC is unlawfully charged for tariffed
terminating tandem switching or transport, the IXC may file a complaint
against the LEC if the stimulated traffic is being sent to numbers that
were directly assigned to the LEC, or it may bring a court action
against the IPES Provider if the stimulated traffic is being sent to
numbers that were directly assigned to the IPES Provider.
[[Page 35747]]
21. In addition, we decline Bandwidth's request to expand the
Access Stimulation Rules to ``require [a]ccess [s]timulators to pay any
tariffed charges associated with stimulated originating and terminating
traffic.'' Bandwidth suggests that its proposal would prevent access-
stimulating entities from charging any originating access charges and
would make them, instead of IXCs, financially responsible for all
tandem service charges--including dedicated tandem charges--for both
terminating and originating traffic heading to or from access
stimulators and argues that not incorporating its proposal would create
a loophole in our Access Stimulation Rules.
22. As AT&T acknowledges, however, we did not seek comment on
expanding the current Access Stimulation Rules to encompass originating
traffic or dedicated tandem service charges. Although Bandwidth
correctly points out that the Further Notice included certain questions
regarding originating 8YY traffic, we only asked about ``issues
regarding the treatment of originating 8YY traffic for purposes of
calculating the traffic ratios related to the triggers in our Access
Stimulation Rules.'' Those questions were focused on whether we needed
to refine the existing methodology for calculating traffic ratios used
to determine whether an entity is engaged in terminating access
stimulation. They were not designed to elicit comments about potential
reforms to our originating access or 8YY access charge rules, and we
thus lack a full record on which to consider such reforms. Indeed, any
changes to our rules governing originating traffic would have far-
reaching implications that are best addressed in other docketed
proceedings, such as the 8YY Access Charge Reform and Intercarrier
Compensation reform dockets.
23. Bandwidth and AT&T also raised concerns about the potential
practice of carriers imposing additional, improper access charges on
IXCs to make up for tandem switching and switched access transport
revenue which terminating carriers lost as a result of the rules
adopted in the Access Arbitrage Order and the 8YY Access Charge Reform
Order. To the extent there are any concerns that providers may be
imposing charges for terminating switched access tandem switching or
terminating switched access transport services that are precluded by
our Access Stimulation Rules, we find that our existing rules
adequately address that issue. The definition of ``tandem-switched
transport and tandem charge'' in Sec. 69.111 of our rules includes
charges for the following services: tandem switched transport facility,
common transport multiplexing, tandem switched transport termination,
and tandem switching. Thus, pursuant to our Access Stimulation Rules,
Intermediate Access Providers and LECs are not permitted to charge IXCs
tariffed rates for any of those four rate elements or services, if the
LEC (under either the current rules or the new and revised rules) or
the IPES Provider (under the new and revised rules) is engaged in
access stimulation. Our rules apply to access-stimulating entities that
provide tariffed services with rate elements that are equivalent to
those described here, even if they are offered under different names.
We will scrutinize any tariff modifications filed by LECs or
Intermediate Access Providers that improperly attempt to shift recovery
of precluded terminating switched access tandem switching or
terminating switched access transport costs to other charges in a
provider's tariff. We will also be vigilant in looking for any attempts
carriers may make to impose tariffed charges for functions they do not
actually perform.
24. Definition of ``End Office Equivalent.'' We adopt our proposal
that IPES Providers be required to calculate their traffic ratios in
each end office or equivalent at which they receive traffic for
purposes of determining whether they meet or exceed the traffic ratios
in our Access Stimulation Rules. Contrary to claims in the record, this
is consistent with how the Access Stimulation Rules have been applied.
First, however, we dispel concerns in the record that IPES Providers
may attempt to evade responsibility for calculating their traffic
ratios by claiming their traffic should not be counted because it does
not transit an ``end office or equivalent,'' as the present rules
require.
25. To make clear how providers' traffic ratio calculations should
be made, we adopt two new rules. We add a definition of ``End Office
Equivalent'' to our rules to ensure that our Access Stimulation Rules
are specifically applicable to IPES Providers that do not have a
traditional ``end office,'' as well as to LECs that do have an ``end
office.'' We also adopt a rule that clarifies the methodology that IPES
Providers and other providers are required to use in calculating their
access-stimulation traffic ratios.
26. The term ``end office'' is already defined in our rules and is
a common term used to mean ``the telephone company office from which
the end user receives exchange service.'' We now adopt a new term,
``End Office Equivalent,'' as Sec. 61.3(fff), solely for purposes of
our Access Stimulation Rules, which is defined as follows:
End Office Equivalent. For purposes of this part and Sec. Sec.
51.914, 69.3(e)(12)(iv), and 69.4(l) of this chapter, an End Office
Equivalent is the geographic location where traffic is delivered to
an IPES Provider for delivery to an end user. This location shall be
used as the terminating location for purposes of calculating
terminating-to-originating traffic ratios, as provided in this
section. For purposes of the Access Stimulation Rules, the term
``equivalent'' in the phrase ``end office or equivalent'' means End
Office Equivalent.
27. AT&T expresses concern that arbitrageurs might ``claim[] that
certain IP terminating arrangements do not transit an end office
`equivalent' at all.'' In response, Bandwidth argues that IPES
Providers with authority to receive direct numbering assignments do, in
fact, have an end office equivalent in which they can determine their
terminating-to-originating traffic ratios for purposes of our Access
Stimulation Rules. The new definition we adopt requires a geographic
location. In addition, as Bandwidth suggests, a possible geographic
location for an ``End Office Equivalent'' applicable to IPES Providers
could be a switch POI (point of interconnection) CLLI (Common Language
Location Identifier). Bandwidth explains that both an end office and
switch POI CLLI are associated with a geographic rate center making the
switch POI CLLI the equivalent of an end office. We do not specify that
an IPES Provider must use a switch POI CLLI as the geographic location
of termination for the calculation of traffic ratios, but the
definition of ``End Office Equivalent'' we adopt acknowledges that
every IPES Provider has one or more End Office Equivalent locations and
that each one shall be used as a terminating location for purposes of
calculating traffic ratios under our Access Stimulation Rules.
Therefore, the definition of ``End Office Equivalent'' makes clear
that, for purposes of our Access Stimulation Rules, the definition of
``Access Stimulation'' in Sec. 61.3(bbb) unquestionably applies to
IPES Providers.
28. Calculating Traffic Ratios. We also adopt a rule that
incorporates our proposal that IPES Providers be required to calculate
their terminating-to-originating traffic ratios and provides the
methodology for how such traffic ratios should be calculated for
purposes of our Access Stimulation Rules. Most commenters agree that
the IPES Provider is in the best position to calculate its own traffic
ratios, because it ``necessarily has visibility into its own
[[Page 35748]]
access traffic,'' is ``the entity that chooses how it will send or
receive its traffic,'' and tracks its calls for billing purposes.
Accordingly, we decline to adopt our alternative proposal that would
have required Intermediate Access Providers to calculate IPES
Providers' traffic ratios. We agree with commenters that such a
requirement would unduly burden Intermediate Access Providers and is
unworkable because Intermediate Access Providers do not possess the
information needed to compute the relevant traffic ratios. We find that
requiring IPES Providers to count their own traffic for purposes of the
access-stimulation triggers is necessary to thwart the latest efforts
to evade our Access Stimulation Rules by inserting IPES Providers into
the call flow. As a result of the actions we take today, entities will
no longer be able to ``claim that the [Access Arbitrage Order] is
inapplicable because the traffic is bound for telephone numbers
obtained by IPES Providers and not bound for LECs serving end users.''
29. At the same time, in response to concerns raised in the
comments, it is important for us to provide a clear methodology of how
IPES Providers and LECs should calculate their terminating-to-
originating traffic ratios. Otherwise, there may be confusion that
could lead to the miscalculation of traffic ratios, disputes between
providers, or potential new arbitrage opportunities. Above we detail
where traffic should be calculated (for LECs at each of their end
offices, and for IPES Providers at each of their ``End Office
Equivalents'') for purposes of our Access Stimulation Rules. Here we
detail how a LEC or IPES Provider must calculate its traffic ratios;
that is, based on MOU to and from telephone numbers directly assigned
to that LEC or IPES Provider, respectively. Presently, certain
commenters explain, when an Intermediate Access Provider delivers
traffic to an IPES Provider (for delivery to telephone numbers leased
or bought by the IPES Provider from a LEC that then indirectly assigns
those numbers to the IPES Provider), those calls are still counted in
the LEC's traffic ratios because LECs calculate their ratios on traffic
to and from telephone numbers directly assigned to their OCNs,
including when a LEC provides those telephone numbers to another entity
via indirect assignment.
30. Given the ongoing attempts by some entities to misapply or
exploit perceived loopholes in our current Access Stimulation Rules and
concerns expressed in the record, we agree that we must specify how
carriers calculate their traffic ratios for purposes of our Access
Stimulation Rules. Accordingly, we adopt a new rule, consistent with
how LECs in the industry already count traffic, for compliance with our
Access Stimulation Rules, requiring each competitive LEC, rate-of-
return LEC, or IPES Provider to include in its terminating-to-
originating traffic ratio, to be counted separately at each end office
or End Office Equivalent, all traffic ``going to and from any telephone
number associated with an Operating Company Number that has been
issued'' to such LEC or IPES Provider. Under this rule, IPES Providers
will be required to include in their traffic ratios all calls made to
and from telephone numbers they receive directly from a numbering
administrator, but not calls made to and from telephone numbers
obtained indirectly from a LEC.
31. Similarly, in the case where one LEC supplies another LEC with
telephone numbers (indirectly assigning numbers to the second LEC), the
first LEC that was directly assigned the telephone numbers by a
numbering administrator is required to calculate its ratios by counting
the calls to and from those directly assigned telephone numbers, even
though that first LEC has assigned those telephone numbers to a second
LEC. The clarity this rule provides will prevent confusion and
potential double-counting of calls--once by the LEC that was assigned
the numbers directly and again by the IPES Provider, or LEC, that
received those numbers indirectly from a LEC.
32. We also reject other methods for calculating traffic,
particularly by state, specific end user, or Intermediate Access
Provider, or some other manner, instead of at the end office or End
Office Equivalent. There was some discussion in the record about
calculating traffic ratios at the state level. Calculating traffic
ratios at the state level would make traffic manipulation easier--a
result or potential loophole we do not want to allow. Several other
parties suggested alternative ways to calculate traffic, such as at the
network or aggregate level. None of these parties provided sufficient
support for these suggestions, however, and we find these proposals
would allow for even easier traffic manipulation contrary to our goal
of deterring access stimulation. For example, if traffic were counted
in the aggregate, as some parties suggest, access-stimulating LECs or
IPES Providers could send terminating traffic to one or a few end
offices, or End Office Equivalents, of an unrelated LEC or IPES
Provider such that the original LEC's or IPES Provider's ratios over
the totality of their network, would not meet or exceed the traffic
ratio triggers in the rules, meaning IXCs would have to pay for all
terminating access charges even though if the traffic had not been
shifted the traffic ratio triggers would have been met. Under our new
rules, traffic ratio calculations must be made at each end office or
End Office Equivalent for telephone numbers directly assigned to the
provider's OCN. As under the current rules applicable to LECs, if an
IPES Provider is deemed to be engaged in access stimulation because it
meets or exceeds the traffic ratio triggers in an End Office
Equivalent, then it must comply with the Access Stimulation Rules and
IXCs would not be charged for terminating tandem switching or
transport. This takes into account the possibility that entities have
more than one end office or End Office Equivalent and will discourage
traffic manipulation, whether between end offices or End Office
Equivalents of the same provider, or between different companies' end
offices or End Office Equivalents, to stay under the traffic ratio
triggers.
33. We find that the methodology we adopt--calculating a provider's
traffic ratios at each end office or End Office Equivalent based on
calls to and from telephone numbers assigned to that provider's OCN--
provides a simple-to-administer, bright-line test that eliminates
confusion in determining which entity is responsible for counting
traffic and will deter potential future access-stimulation arbitrage.
Counting traffic based on which entity is assigned a particular
telephone number not only identifies the responsible entity, it also
ensures that all calls are accounted for in calculating the access-
stimulation traffic ratios and that no calls are double-counted. In
addition, even though the networks of IPES Providers and LECs may route
traffic differently, the common denominator of our methodology is that
providers have a bright-line test for calculating ratios on the basis
of calls routed to and from telephone numbers associated with an end
office or equivalent and an OCN that identifies that provider.
34. We conclude that the benefits of this methodology overcome any
potential risks it may pose to a LEC that sells or leases telephone
numbers to IPES Providers or to other LECs. It is true that, under new
Sec. 61.3(bbb)(5), a LEC, for example, is held responsible if it has
directly assigned numbers that it then indirectly assigns to an IPES
Provider that uses those telephone numbers it receives from that LEC to
stimulate traffic, even though the LEC may have limited visibility
into, or control over, the IPES Provider's traffic flow. The
relationship by which a LEC indirectly assigns numbers to an IPES
[[Page 35749]]
Provider, however, is a business arrangement that the parties enter
into voluntarily. As such, each party can contractually protect itself
from the possibility that one of them may engage in access stimulation
and can, for example, require that each party hold the other harmless
from any financial responsibility for such activities and expressly
provide that such numbers will not be used to violate our Access
Stimulation Rules. Under the new rule we adopt today, LECs ``would have
a strong incentive to take corrective steps to avoid being deemed an
access stimulator--up to and including ending the relationship with the
stimulating customer.'' Indeed, competitive LECs took such steps to
terminate their agreements with providers shortly after the Commission
adopted rules in 2019 to make access-stimulating LECs, rather than
IXCs, financially responsible for tandem switching and transport
service access charges in the delivery of traffic.
35. In cases where an IPES Provider obtains telephone numbers from
a LEC, the LEC that indirectly assigns numbers to the IPES Provider
will include calls to those numbers in the LEC's own ratio
calculations. Thus, IXCs can easily ascertain from LERG databases,
available to the public, which telephone numbers are assigned to which
provider (the LEC or the IPES Provider) to evaluate the traffic ratios
based on the OCN associated with any particular group of telephone
numbers. Otherwise, as Inteliquent explains, IXCs:
will have no visibility into the identity of this provider or
providers because the associated traffic will not be assigned to the
provider(s) OCNs in the LERG. Without a public record demonstrating
which phone numbers belong to the provider, the interexchange
carrier[s] will have no visibility as to their inbound or outbound
traffic, meaning that there will be no independent or objective way
to evaluate the traffic ratios of the party using numbers supplied
to it by a LEC.
Without the use of public databases, it would be easier for a LEC,
possibly one that is presently deemed an access stimulator under the
current rules, to evade responsibility for stimulated traffic by
claiming the traffic is the responsibility of the other provider.
36. To conclude, our new rule 61.3(bbb)(5) makes explicit that a
competitive LEC, rate-of-return LEC, or an IPES Provider is required to
calculate its traffic ratios on calls that traverse its end office or
End Office Equivalent and go to and from telephone numbers directly
assigned to that provider's OCN. And if that LEC or IPES Provider meets
or exceeds the relevant traffic ratio trigger, then an IXC shall not be
charged terminating access charges for the delivery of that traffic.
Thus, the addition of this rule will minimize providers' ability to
skirt responsibility for access stimulation.
37. Notification Requirements. We next amend our rules to require
that an IPES Provider notify Intermediate Access Providers, IXCs, and
the Commission if it is engaged in access stimulation as defined in our
revised rules, similar to the obligations that already apply to LECs.
An IPES Provider engaged in access stimulation as defined in Sec.
61.3(bbb)(1)(i) and (ii) of our rules shall satisfy its notice and
reporting requirement to the Commission by filing a record of its
access-stimulating status in WC Docket No. 18-155 on the same day that
it issues such notice to affected IXCs and Intermediate Access
Providers. We find that these requirements are necessary to enable
Intermediate Access Providers to determine whether they can lawfully
charge IXCs tariffed rates for interstate and intrastate terminating
tandem services in connection with calls terminating to, or through, an
IPES Provider, and to help IXCs determine if the charges are
appropriate.
38. We disagree with Bandwidth's proposal to change the present
notice and reporting requirements. Bandwidth suggests that a ``more
prominent, public disclosure'' is necessary, and that the Commission
should publish public filings in its Daily Digest to ``provide all IXCs
(and consumers) with notice of where access stimulation occurs.'' The
Commission has already established a disclosure requirement that is
both well understood by the industry and available to the public
through the Commission's Electronic Comment Filing System. There is no
indication that the present filing procedure is insufficient for
providing effective notice of access-stimulation activity to all
affected or interested parties.
39. We take seriously concerns that IXCs may be using improper
self-help to withhold payment for services they have obtained pursuant
to tariffs. We caution IXCs against improperly using our rules to
engage in the wrongful withholding of payments. We continue to
discourage providers from engaging in self-help except to the extent
that such self-help is consistent with the Act, our rules, and
applicable tariffs. Moreover, we would expect and encourage any IXC
with evidence of unlawful conduct on the part of a LEC or Intermediate
Access Provider to bring a complaint proceeding under section 208 of
the Act for damages to deter such conduct in the future.
40. We decline to adopt Verizon's proposal that we add a rule
defining the financial liability of an IPES Provider that engages in
access stimulation but fails to provide timely notice of that activity
to affected parties. Verizon requests that we amend Sec. 51.914 of our
rules ``to make clear that, where an IPES [P]rovider does not timely
self-identify and the Commission or a court later holds that the IPES
[P]rovider should have self-identified . . . the obligation to bear
tandem switching and transport charges applies retroactively to when
the IPES [P]rovider should have self-identified'' and that the IPES
Provider ``must then reimburse long-distance carriers for any amounts
improperly billed.'' We find that such a rule is unnecessary to achieve
its intended purpose.
41. Under the rules we adopt today, an IPES Provider that meets or
exceeds the access-stimulation triggers but fails to provide the proper
notice would violate our rules. If a LEC or an IPES Provider is engaged
in access stimulation and fails to notify the Intermediate Access
Provider or IXC, for whatever reason, an IXC's recourse is against the
LEC or IPES Provider, not the Intermediate Access Provider. Our rules
and the Act permit an IXC to bring proceedings before the Commission or
the courts and recover full damages, including any retroactive damages,
if the IXC is improperly billed by another carrier. Complaints
involving IPES Providers, which are not common carriers, may be brought
in the courts for adjudication.
42. The determination of liability and the award of specific
damages involving access-stimulation traffic is a fact-intensive
inquiry requiring analysis of the functions of multiple carriers in
transmitting, and billing for, calls in a particular call path. Thus,
the Commission or a court, in an adjudicatory proceeding, is best
suited to determine issues of liability and damages, including whether,
based on the facts at hand, ``the obligation to bear tandem switching
and transport charges applies retroactively to when the IPES [P]rovider
should have self-identified.'' Indeed, Verizon's proposed rule could
have the unintended effect of inappropriately pre-judging liability and
damages.
43. When an IPES Provider Is No Longer Engaged in Access
Stimulation. We received no comments regarding our proposal that IPES
Providers conform to the same requirements as LECs for determining when
an IPES Provider that was engaged in access stimulation is no longer
deemed to be engaged in access stimulation. Thus, we adopt our proposal
to extend those same requirements to IPES Providers.
[[Page 35750]]
Accordingly, if an IPES Provider has an access charge revenue-sharing
agreement and is engaged in access stimulation because it meets or
exceeds the 3:1 interstate terminating-to-originating traffic ratio at
an end office or equivalent in a calendar month, as described in Sec.
61.3(bbb)(1)(i) of our rules, it would no longer be deemed to be
engaged in access stimulation if it terminates all revenue sharing
agreements and its traffic ratio is below 6:1. In the case of an IPES
Provider that has no revenue-sharing agreement and is engaged in access
stimulation because it meets or exceeds the 6:1 traffic ratio
established by Sec. 61.3(bbb)(1)(ii) of our rules, it would no longer
be deemed to be engaged in access stimulation if its traffic ratio
falls below 6:1 for six consecutive months, similar to the current rule
applicable to competitive LECs. Additionally, once an IPES Provider
terminates its engagement in access stimulation, it would be required
to notify the Commission and any affected Intermediate Access Providers
and IXCs of its changed status, similar to the current rule applicable
to LECs.
44. Implementation and Effective Dates. In the Further Notice, we
proposed that providers should be required to comply with the new and
revised rules adopted in this Order within 45 days following their
effective date. This is the same timeframe that the Commission found to
be reasonable when it adopted the current Access Stimulation Rules. We
asked parties if this timeframe posed any challenges or difficulties.
We did not receive any comments in response and have no reason to
believe this timeframe is insufficient, as there have been no
complaints about this timeframe since it was first adopted for the
existing rules. Thus, we give providers 45 days to come into compliance
with our new and revised rules once they become effective. The
effective date of the rules that do not require Paperwork Reduction Act
(PRA) review is 30 days after publication in the Federal Register.
Several of the rules we adopt may require Office of Management and
Budget (OMB) review pursuant to the PRA. A separate notice will be
published in the Federal Register detailing the effective dates and
compliance dates for those rules.
B. Declining To Adopt Commenters' Proposals That Are Unnecessary or
Insufficiently Supported
45. Commenters submitted several additional proposals not addressed
in the Further Notice that, for the reasons discussed below, we decline
to adopt. We find that these proposals are duplicative of our existing
processes, lack sufficient support in the record to allow us to adopt
them, or have already been rejected by the Commission.
46. Formally Establish a Rebuttable Presumption and an Access-
Stimulation Specific Complaint Process. We received several comments
requesting clarification of, or changes to, our current informal and
formal complaint processes targeted to access stimulation. Because
these suggestions do not materially differ from our current enforcement
processes, and are moot with regard to IPES Providers because our Sec.
208 complaint process does not apply to IPES Providers, we reject them
as duplicative and unnecessary.
47. Several commenters request that we make clear that the
rebuttable presumption process outlined in the USF/ICC Transformation
Order applies to IPES Providers. These commenters explain that IXCs
lack access to access stimulators' (and their partners') traffic and
call routing information. Therefore, these commenters argue that a
complaining carrier should be permitted to rely on its own internal
data to show that an IPES Provider's traffic with the complaining
carrier meets or exceeds the access-stimulation triggers, shifting the
burden to the IPES Provider or its LEC partner to rebut the presumption
with its own traffic data. These parties propose that if the LEC or
IPES Provider is unable to rebut this presumption, or chooses not to
provide data, then Intermediate Access Providers or LECs could not
charge IXCs for terminating tandem switching and transport service for
the delivery of traffic to that LEC or IPES Provider.
48. We confirm that IXCs remain able to initiate a complaint with
the Commission by using their traffic data to assert that a LEC is
engaged in access stimulation, with the burden then shifting to the LEC
to use its traffic data to confirm or refute the IXC's allegations, and
that this process will remain in place after this Order takes effect. A
complaining IXC may rely on its own data, for example data calculated
at a LEC or IPES Provider's company-wide level, about the traffic it
exchanges as the basis for filing a complaint or a court action. Lumen
and USTelecom provide examples of information that may be used to
support (for example, traffic ratio data calculated at the company-wide
level rather than in an end office or equivalent) or rebut (for
example, showing that traffic associated with certain telephone numbers
should be attributed to an IPES Provider rather than the LEC) a claim
of access stimulation. We do not dictate the type or amount of
information that may be effective to support or rebut an IXC's claim of
access stimulation and acknowledge that a court will manage any
complaints presented before it as it deems appropriate. The LEC (or
IPES Provider) would then have the burden of showing that it is not
engaged in access stimulation by providing the necessary traffic data
rebutting the IXC's allegation. We rely on the industry to self-police
this issue, and we find that our current complaint processes or
appropriate court proceedings have been effective in addressing
violations of our Access Stimulation Rules. We also expect that the
rule we adopt today detailing how LECs and IPES Providers are to
calculate their traffic ratios will, by use of publicly available
information, provide greater transparency into entities' traffic ratios
which will help resolve disputes about whether an entity is engaged in
access stimulation. To the extent commenters request that our
enforcement process be extended to IPES Providers, IPES Providers are
not subject to complaints made pursuant to section 208 of the Act
because IPES Providers are not common carriers under Title II of the
Act. We therefore must decline proposals to extend our enforcement
process to IPES Providers.
49. Verizon offers a similar proposal for streamlining the process
for bringing access-stimulation complaints, calling for us to establish
a new ``hybrid informal-formal'' complaint process ``to lower the
[transaction] costs'' for identifying access stimulators. Verizon
proposes that we modify our complaint processes to allow an IXC to
initiate a complaint by presenting sufficient evidence that an alleged
access stimulator (LEC or IPES Provider) meets or exceeds the traffic
ratios in our rules. Unlike the current enforcement rules, Verizon
proposes that the primary burden of producing data would be on the
entity alleged to be engaged in access stimulation, and that an alleged
access stimulator could meet that burden by, for example, submitting to
the Commission its complete switched access call detail records. Under
this proposal, the responding LEC or IPES Provider would also be
required to provide ``a certification that the records are complete and
accurate.'' Then the Commission could conduct an independent evaluation
of the traffic data. According to Verizon, the Commission's evaluation
would enable the filing of a formal complaint if the alleged access
stimulator refuses to self-identify as an access stimulator regardless
of what the call detail records indicate.
50. We decline to adopt Verizon's proposal to create a new
``hybrid''
[[Page 35751]]
process to adjudicate an IXC's claims of access stimulation. Verizon's
proposal does not differ appreciably from our already-established
informal and formal complaint processes as applied to Title II
carriers. For example, as AT&T acknowledges, our rules currently
require written responses to informal complaints. Although Verizon
proposes mandating that parties certify that their records are complete
and accurate, our rules already require parties to respond to discovery
requests fully in writing under oath or affirmation. Likewise,
Verizon's proposal that discovery be subjected to an ``independent
evaluation'' is currently required by section 208(a) of the Act, which
confirms that it is ``the duty of the Commission to investigate the
matters complained of in such manner and by such means as it shall deem
proper.'' Thus, we find that Verizon's proposal is already
substantially captured by our current enforcement rules and processes.
For these reasons, we reject proposals that we create a special process
to resolve access-stimulation complaints.
51. No Direct Connection Mandate or Sec. 61.26(f) Clarification.
We next reject Lumen's proposal that we ``should mandate that VoIP
provider applicants for direct access [to numbers] certify that their
CLEC partners will allow IXCs to have direct connection in terminating
switched access routing.'' Aureon opposes this proposal, noting that it
is outside the scope of this proceeding, and that the Commission has
already considered and rejected Lumen's proposal. It also explains that
Lumen's proposal would be ineffective, and cautions that direct
connections would result in access stimulators moving their traffic,
leading to stranded costs for LECs and IXCs.
52. We also reject Lumen's request that we clarify the
applicability of Sec. 61.26(f) of our rules, which addresses the rates
a competitive LEC may charge for switched exchange access services,
because, according to Lumen, there is a ``lack of uniformity in the
industry when it comes to the billing capability afforded'' by that
rule. Lumen suggests that this issue is directly within the scope of
the Further Notice. AT&T argues that such a clarification would be
contrary to the Commission's goal of transitioning to bill-and-keep by
expanding ``situations in which access charges could be billed.''
53. Lumen's proposals are outside the scope of this proceeding, and
we therefore decline to consider them here. We emphasize, however, that
the Commission has previously rejected suggestions to mandate direct
connections, and note that Lumen has not provided good reason for us to
reconsider that decision. Likewise, any requirement for direct
connection would be counter to the Commission's long-standing policy
that parties determine their best means of interconnection.
Furthermore, we disagree with Lumen's suggestion that Sec. 61.26(f) of
our rules is unclear or needs modification. Even if we agreed with
Lumen, we find that its arguments are better addressed in our existing
proceeding on direct access to numbers, not in the context of
addressing the access stimulation of terminating switched tandem and
transport charges, and we note that Lumen has already made similar
arguments in the Direct Access to Numbers proceeding.
54. HD Carrier suggests that we ``provide an `access-stimulating'
IPES the option to offer to connect directly in IP on a bill-and-keep
basis to the originating service provider to avoid the shifting of
financial responsibility that may otherwise occur under [the
Commission's Access Stimulation Rules] if the IPES exceeded certain
traffic ratios.'' Wide Voice agrees that we have ``other tools at [our]
disposal, such as IP reciprocal, bill and keep interconnection
arrangements to stomp out the so-called abuse of access charges.'' As
discussed here, the Commission has not, and we do not now, mandate how
entities interconnect for the exchange of traffic--in IP or TDM. If
parties wish to enter into contractual agreements for the exchange of
traffic using IP technology at mutually beneficial terms, perhaps bill-
and-keep, they have been, and remain, free to do that; i.e., they have
the ``option'' to do so. No action we take in this Order affects that
ability. Consistent with precedent, we expressly limit the requirements
of IPES Providers, adopted in this Order, to measures targeted to
address the arbitrage of terminating tandem switching and transport
switched access charges.
55. We Do Not Require IPES Providers with Direct Access to Numbers
to Certify They Will Not Use Numbering Resources to Evade or Violate
Our Access Stimulation Rules. We reject proposals that we require IPES
Providers with direct access to numbers to certify annually that they
will not use numbering resources to evade the Access Stimulation Rules.
We have already sought comment on this issue in our Direct Access to
Numbers proceeding. The Direct Access to Numbers docket is a separate
proceeding with a separate record. To make a decision on this proposal
here would introduce confusion and unnecessarily complicate the Direct
Access to Numbers proceeding. Additionally, we received a more
comprehensive record on the certification proposal in the Direct Access
to Numbers proceeding where related questions were asked and discussed.
We therefore decline to adopt an annual certification requirement here
and leave any final decision on that issue for the Direct Access to
Numbers proceeding.
56. Proposals for Which the Commission Has Already Provided a
Decision. In its comments, Inteliquent describes an arbitrage practice
whereby calls routed to a LEC or an IPES Provider are blocked or
otherwise rejected when transmitted via a regulated path to the high-
volume calling service provider served by the terminating LEC or IPES
Provider. Inteliquent claims that when the calls are rerouted through
unregulated providers, they are completed. Inteliquent asks that we
address this issue by clarifying that ``traffic will be attributed to
the [traffic ratios of the] terminating IPES Provider or LEC whenever
an IXC attempts to deliver that traffic over the path specified by the
IPES Provider/LEC in the LERG, but the call is rejected over that
path,'' so the IPES Provider/LEC is not able ``to escape designation as
an access stimulating provider'' by diverting some traffic over an
unregulated path. We decline to act as Inteliquent requests because
traffic traversing the non-regulated path is outside the scope of our
Access Stimulation Rules, which are tied to tariffed services. Also,
the Commission has already explicitly explained that, in the case of
traffic destined for an access-stimulating LEC, an IXC or Intermediate
Access Provider may consider its call completion duties satisfied once
it has delivered the call to the tandem. For similar reasons, such a
limitation on the scope of call completion duties would be reasonable
to apply to traffic destined for an access-stimulating IPES Provider in
the calling scenario Inteliquent describes.
57. Teliax questions whether ``[a] ratio alone could prove to be
overly inclusive by encompassing LECs that had realized access traffic
growth through general economic development--as well as changes in
technology and markets.'' On the other hand, AT&T and Verizon express
concerns that because the traffic ratio triggers are bright-line rules,
then ``traditionally those `triggers are necessarily under-inclusive.'
'' We have seen no evidence in the industry that our ratios are not
working as intended, nor, as discussed, is there evidence in the record
to support establishing
[[Page 35752]]
different traffic ratios to apply to IPES Providers than those in the
existing rules. Indeed, the Commission purposely decided to err on the
side of caution and adopted conservative triggers in an effort to avoid
the chance that a company might be wrongly identified as engaging in
access-stimulation activity. Further, as is already the case with LECs,
if an IPES Provider, ``not engaged in arbitrage, finds that its traffic
will meet or exceed a prescribed terminating-to-originating traffic
ratio,'' the provider may request a waiver and demonstrate special
circumstances that warrant a deviation from our rules. The traffic
ratios in Sec. 61.3(bbb) of our rules are the bright-line tests the
Commission has established for determining when an entity is engaged in
access stimulation and for enforcing our rules to prevent it. We do not
expect our rules to capture any entities that are not actively engaged
in access stimulation. But we do expect that the rules adopted today
will capture additional entities engaged in access stimulation,
strengthen our existing rules, close perceived loopholes, and enhance
the overall enforceability of our Access Stimulation Rules.
C. Adopting Additional Rule Revisions
1. Definition of ``IPES Provider''
58. To implement the rules adopted in this Order, we add a
definition of ``IPES Provider'' in Sec. 61.3(eee) that applies only in
the context of the Access Stimulation Rules. In the Further Notice, we
proposed a definition of ``IPES Provider'' based on the existing
definition of ``Interconnected VoIP service'' in our rules, but we make
changes to that proposed definition, based on comments we received in
the record.
59. First, we remove the proposed requirement that an IPES Provider
support real-time, ``two-way voice'' communications. We sought comment
on USTelecom's proposal to remove ``two-way voice'' from the definition
of ``IPES Provider'' in the Further Notice, and several commenters
supported this modification, arguing that the definition should be
broader. For example, Verizon discusses a ``call-to-listen'' service,
whereby a user can make a long-distance telephone call to listen to a
radio station. Verizon explains that a ``call-to-listen'' service uses
only a simplex channel--``one that sends voice communications in one
direction (to the listener).'' Verizon argues that such services should
be covered by our Access Stimulation Rules, but is concerned that they
may not be considered ``two-way voice communications.'' We do not need
to determine whether a ``call-to-listen'' service, or other similar
services mentioned in the comments, are two-way services, or one-way
services. We agree, however, that we should not limit the definition of
``IPES Provider'' to encompass only entities that provide two-way voice
services. Instead, we eliminate the phrase ``two-way voice'' from our
final rule to avoid any ambiguity and close what could have been a
potential loophole in our definition of ``IPES Provider.'' No commenter
objected to the removal of ``two-way voice.''
60. Second, we eliminate language in the proposed ``IPES Provider''
definition referring to ``real-time'' communications. In the Further
Notice, we asked whether the proposed definition of ``IPES Provider''
would ``capture all providers that could be used to try to circumvent
the Access Stimulation Rules.'' One commenter suggested the deletion of
the requirement for the provision of ``real-time communications.'' We
are concerned that arbitrageurs could develop services that do not
provide ``real time'' communications in an effort to evade our Access
Stimulation Rules. Like our decision to delete the phrase ``two-way
voice'' from the definition of ``IPES Provider,'' the elimination of
the term ``real-time'' will also help advance our goal of eliminating
arbitrage of our access charge regime. Furthermore, similar to our
decision to eliminate the ``two-way voice'' phrase, we need not
determine whether a service provides ``real-time'' communications. By
deleting the term ``real-time'' from the definition of ``IPES
Provider,'' we eliminate another potential loophole in the proposed
rules by capturing more providers that may try to circumvent the Access
Stimulation Rules. No commenter opposed the elimination of the term
``real-time.'' With this change, and the above change to eliminate the
phrase ``two-way voice,'' the phrase ``enables real-time two-way voice
communications'' in the proposed definition of ``IPES Provider'' is
changed to simply ``enables communications'' in the final definition we
adopt in this Order.
61. Third, we define ``IPES Provider'' to include those entities
that receive terminating traffic, regardless of whether they also
originate traffic. In the proposed definition of ``IPES Provider,'' the
requirement to originate traffic was given in the following text: ``a
provider offering a service that . . . permits users . . . to terminate
calls to the public switched telephone network or . . . terminate to an
internet Protocol service or an internet Protocol application.''
Commenters objected to the proposed definitional language arguing that
the inclusion of such language could create potential loopholes in our
Access Stimulation Rules. For example, commenters asserted that if we
required an IPES Provider to both originate and terminate traffic, an
arbitrageur could separate terminating and originating traffic, and
provide just terminating services and claim that it was not subject to
the Access Stimulation Rules because it did not also originate traffic.
We agree. Accordingly, we eliminate the text in the proposed definition
of ``IPES Provider'' in our Access Stimulation Rules that would have
applied those rules only to providers that transmit both originating
and terminating traffic; no commenters requested that we require IPES
Providers to originate traffic. Additionally, because our definition of
``IPES Provider'' applies to Sec. 51.914 of our rules, we do not adopt
proposed Sec. 51.903(q). The sole purpose of proposed Sec. 51.903(q)
was to define ``IPES Provider'' for Sec. 51.914, but that definition
is not needed because Sec. 51.914 now references the definition of
IPES Provider in Sec. 61.3(eee). No commenters addressed proposed
Sec. 51.903(q).
62. Finally, both Bandwidth and Inteliquent suggest that the
definition of ``IPES Provider'' should include a requirement that the
IPES Provider acquire the telephone numbers it uses directly from a
numbering administrator. Bandwidth argues that this would provide a
clear definition and ``capture more potential access stimulators in the
marketplace.'' Alternatively, Bandwidth proposes that we modify either
the Access Stimulation definition or the IPES Provider definition in
our rules to account for possible ``wholesale IPES Providers.'' We find
that Bandwidth's concerns are better addressed by our rule governing
the calculation of traffic ratios, rather than in the definition of
``IPES Provider.'' In our new rule governing the calculation of traffic
ratios for purposes of our Access Stimulation Rules, we require LECs
and IPES Providers to include in their ratio calculations all traffic
going through their end office or equivalent to and from any telephone
number associated with an Operating Company Number issued to that LEC
or IPES Provider (that is, numbers directly assigned to that LEC or
IPES Provider).
[[Page 35753]]
2. Definition of ``Intermediate Access Provider''
63. As proposed in the Further Notice, we amend the definition of
``Intermediate Access Provider'' in Sec. 61.3(ccc) of our rules to
include IPES Providers as entities that may receive traffic from an
Intermediate Access Provider, and to specify the type of service being
provided by the Intermediate Access Provider. One commenter supported,
and no commenters opposed, the proposed addition of IPES Providers to
the definition of ``Intermediate Access Provider.'' As discussed below,
we incorporate minor edits to the definition that we proposed in the
Further Notice.
64. We make a total of four changes to our definition of
``Intermediate Access Provider'' in Sec. 61.3(ccc). First, as proposed
in the Further Notice, we amend Sec. 61.3(ccc) to specify two
additional types of entities that may receive traffic from the final
IXC in the call path. The amendment we adopt adds the phrase ``IPES
Provider'' to Sec. 61.3(ccc) in two circumstances: (a) where a LEC
delivers traffic to an IPES Provider engaged in access stimulation; and
(b) where an Intermediate Access Provider delivers calls directly to an
IPES Provider engaged in access stimulation. Second, as proposed in the
Further Notice (with one exception), we modify the phrase ``any entity
that carries or processes traffic at any point between the final
Interexchange Carrier . . .'' in current Sec. 61.3(ccc) to specify the
access service being provided, as follows: ``any entity that provides
terminating switched access tandem switching or terminating switched
access tandem transport services between the final Interexchange
Carrier . . . .'' This change makes Sec. 61.3(ccc) clearer and more
consistent with our other Access Stimulation Rules, such as revised
Sec. 69.4(l).
65. Third, we amend the list of sections to which the revised
definition of ``Intermediate Access Provider'' applies. Currently, the
definition begins with: ``[t]he term means, for purposes of this part
and Sec. Sec. 69.3(e)(12)(iv) and 69.5(b) of this chapter.'' We now
add Sec. Sec. 51.914 and 69.4(l) to this list, because they also
reference ``Intermediate Access Provider.'' We remove the reference to
Sec. 69.3(e)(12)(iv), because that section does not reference
``Intermediate Access Provider.'' Thus, the revised definition of
``Intermediate Access Provider'' begins with ``[t]he term means, for
purposes of Sec. Sec. 51.914, 69.4(l), and 69.5(b) of this chapter.''
Although we did not specifically propose this amendment in the Further
Notice, we did seek comment on conforming edits and non-substantive
edits to our rules. These edits to Sec. 61.3(ccc) are conforming or
non-substantive edits made to ensure consistency in our Access
Stimulation Rules. Finally, we change the reference to ``Intermediate
Access Provider'' in the last clause of Sec. 61.3(ccc) in the proposed
definition in the Further Notice to ``the entity,'' so that the
definition is not self-referential. We consider this edit also to be a
conforming or non-substantive edit.
66. Bandwidth suggests that we go further and broaden the
definition of ``Intermediate Access Provider'' to include the
possibility that there may be more than one Intermediate Access
Provider in a call flow, and to prohibit all Intermediate Access
Providers in the call flow from imposing any tariffed access charges
when the LEC (or, with the other rule revisions adopted today, the IPES
Provider) is engaged in access stimulation. We find that we do not need
to broaden the definition as Bandwidth suggests, but we take this
opportunity to emphasize that the definition of ``Intermediate Access
Provider'' in Sec. 61.3(ccc) of our rules includes any entity ``that
provides terminating switched access tandem switching or terminating
switched access tandem transport services between the final
Interexchange Carrier in a call path'' and the LEC or IPES Provider, as
discussed above. The reference to ``any entity'' was in Sec. 61.3(ccc)
prior to the revisions adopted today. Section 61.3(ccc), read in
combination with Sec. Sec. 51.914, 69.4(1), and 69.5(b), prohibits
IXCs from being charged for terminating tandem switching or tandem
transport charges provided by any entity that meets the definition of
``Intermediate Access Provider'' in the call flow. The definition is
broad enough to include more than one entity as an Intermediate Access
Provider in a call flow. Thus, the rule addresses the concerns raised
by Bandwidth.
67. Bandwidth also suggests not including references to terminating
switched access tandem switching or terminating switched access tandem
transport services in the proposed definition of ``Intermediate Access
Provider,'' and elsewhere in our Access Stimulation Rules, and
replacing it with the more general term ``tariffed access services.''
Bandwidth argues that these changes are necessary to ensure that
Intermediate Access Providers do not improperly impose additional
tariffed charges to make up for access charge revenue they may lose as
a result of our Access Stimulation Rules. As described above, Sec.
69.111 of our rules, which defines ``tandem-switched transport and
termination charge,'' specifies the four rate elements or services that
will become the financial responsibility of an access-stimulating LEC
or IPES Provider and addresses Bandwidth's concerns. Accordingly, we
find no reason to make the additional rule changes Bandwidth proposes
to address this issue.
68. Bandwidth also seems to suggest that we should expand the
definition of ``Intermediate Access Provider'' to include Intermediate
Access Providers on the originating side of the telephone call by
adding the phrase ``or the first Interexchange carrier in an
originating call path'' to the ``Intermediate Access Provider''
definition. We decline to consider the changes Bandwidth proposes, as
they are outside the scope of this proceeding. This proceeding is
focused on addressing arbitrage of terminating access charges. The
service providers and charges involved in the arbitrage of originating
access have been addressed in a separate Commission proceeding.
69. Finally, we reject Bandwidth's suggestion that we eliminate
proposed Sec. 61.3(ccc)(2) from the ``Intermediate Access Provider''
definition. Bandwidth provides no explanation for this change. The call
path provided in the rule that Bandwidth seeks to remove corresponds to
many situations described in the record where a LEC is located in the
call path between an Intermediate Access Provider and an access-
stimulating IPES Provider. We retain such call paths in the
Intermediate Access Provider definition to ensure that the definition
applies to entities in such call paths.
3. Calculating Traffic Ratios at the ``End Office or Equivalent'' and
the Requirement That an Access Stimulator Serve End Users
70. End Office or Equivalent. As proposed in the Further Notice, we
amend many of our Access Stimulation Rules to apply to traffic ratios
counted at the ``end office or equivalent.'' As discussed above, we
also add a definition of ``End Office Equivalent'' to ensure that our
Access Stimulation Rules are also specifically applicable to IPES
Providers.
71. Some commenters would prefer that we remove the phrase ``end
office or equivalent'' wherever that phrase currently appears in our
Access Stimulation Rules. These commenters assert that the phrase ``end
office or equivalent'' complicates the calculation of traffic ratios.
None of these commenters provide any examples or explanations of how
our amendments
[[Page 35754]]
would complicate the relevant calculations, nor do they explain what
alternative location should be used for purposes of calculating traffic
ratios, if not at each ``end office or equivalent.'' Indeed, the
commenters do not explain where the calculations are made now.
72. Commenters also assert that the phrase ``end office or
equivalent'' could create new potential loopholes in our rules. AT&T,
USTelecom, and NCTA posit that arbitrageurs could shift traffic between
end offices to keep from meeting or exceeding the traffic ratio
triggers in the Access Stimulation Rules. But these commenters do not
show whether carriers allegedly engaged in access stimulation have more
than one end office (or an equivalent location, in the case of IPES
Providers) to move traffic between, or if they are moving traffic to
another entity, or if there is some other traffic manipulation.
73. In sum, we include the phrase ``end office or equivalent'' in
new Sec. 51.914(c) and add it to Sec. 61.3(bbb)(1)(i)(B),
(bbb)(1)(ii) and (iii), and (bbb)(2) and (3) for consistency, to make
the rules applicable to both LECs and IPES Providers equally, and to
clearly designate where the traffic ratio calculations shall be made.
We add the definition of ``End Office Equivalent'' as new Sec.
61.3(fff) to avoid any ambiguity about the meaning of the word
``equivalent'' in the phrase ``end office or equivalent,'' as that
phrase is used in our Access Stimulation Rules.
74. Serving End User(s). As proposed in the Further Notice, we
retain the phrase ``serving end user(s)'' in the rule defining when a
LEC, and now an IPES Provider, engages in Access Stimulation. We also
add the phrase ``serving end user(s)'' to the rules defining when a LEC
and, now, an IPES Provider will be deemed to continue to be engaging in
Access Stimulation. Although AT&T expresses concern that this language
may hinder enforcement of our Access Stimulation Rules, AT&T did not
provide any explanation supporting these concerns, and acknowledged
that ``[i]f IPES Providers are brought directly within the [Access
Stimulation Rules], then this language may in theory become less
problematic.'' The other rule revisions we make today bring IPES
Providers within our Access Stimulation Rules.
75. We also decline to adopt AT&T's proposed language to define the
meaning of ``serving end users'' on which we sought comment in the
Further Notice. AT&T had proposed that we define a LEC to be ``serving
end users'' when ``it provides service to a called or calling party,
either directly or through arrangements with one or more VoIP providers
or other entities that serve called or calling parties,'' except if the
LEC is an Intermediate Access Provider. Bandwidth suggested edits to
AT&T's proposed rule language, but also acknowledged that ``bringing
IPES [P]roviders with direct numbering resources within the scope of
the [Access Stimulation Rules] may make the `serving end users'
language unnecessary.'' AT&T also acknowledged that the inclusion of
the phrase ``serving end user(s)'' in our Access Stimulation Rules
indicates that it is not appropriate to calculate ratios of
``originating-to-terminating traffic for a LEC or IPES entity that
includes aggregated originating traffic placed by end users not served
by the LEC or IPES [P]rovider.'' This practical result would deter
arbitrage and provides another reason to retain and add, where
appropriate, the phrase ``serving end user(s)'' to our Access
Stimulation Rules. No other commenters specifically addressed our
proposed uses of the phrase ``serving end user(s).'' We find that the
changes to our rules will allow for greater consistency in the Access
Stimulation Rules. We also find that AT&T's and Bandwidth's proposed
revisions are rendered moot by the other reforms we adopt in this
Order. Accordingly, we adopt the proposed modifications and reject
other proposals to define our use of the term ``serving end user(s).''
4. Interstate/Intrastate Language
76. As proposed in the Further Notice, we amend Sec. Sec.
51.914(a)(1), 69.4(l), and 69.5(b)(1) and (2) of our rules to include
the phrase ``interstate or intrastate'' to reflect language in the
Access Arbitrage Order making clear that the rules adopted in that
Order apply to the charges for both interstate and intrastate access
services. We also include the phrase ``interstate or intrastate'' in
new Sec. 51.914(e) (which is the new designation for current Sec.
51.914(c), because other sections have been added above it). No
commenter objected to these proposed changes.
77. In the Access Arbitrage Order, the Commission made clear that
the rules it was adopting to combat access stimulation were intended to
prohibit providers of tandem switching and transport from billing IXCs
for interstate and intrastate terminating switched access tandem
switching or terminating switched access tandem transport, for traffic
bound for access-stimulating LECs. The Commission explained that
applying the rules ``equally to interstate and intrastate traffic will
discourage gamesmanship related to the geographic classification of the
traffic; i.e., carriers creating ways to move access-stimulation
schemes to intrastate service.'' The reference to intrastate traffic
was not reflected in the text of the rules, however. As proposed in the
Further Notice, we now amend Sec. Sec. 51.914(a)(1), 69.4(l), and
69.5(b)(1) and (2) of our rules to make clear that competitive LECs,
rate-of-return LECs, and Intermediate Access Providers shall not charge
IXCs for interstate or intrastate terminating switched access tandem
switching and terminating switched access tandem transport when the
terminating traffic is destined for a competitive LEC, rate-of-return
LEC, or IPES Provider engaged in access stimulation, as defined in
Sec. 61.3(bbb) of our rules.
78. We reject, however, Bandwidth's suggestion that we add the term
``intrastate'' to the definition of ``Access Stimulation'' in Sec.
61.3(bbb) of our rules or delete references to ``interstate''
throughout that section. Bandwidth briefly comments that this will make
the section ``consistent with [the] proposal [in the Further Notice]
that [the] rules address intrastate access.'' We disagree. Bandwidth's
proposed changes would result in providers having to include both
interstate and intrastate traffic in calculating their ratios of
terminating traffic to originating traffic. That is not consistent with
our intent in this Order or with the Commission's actions in the Access
Arbitrage Order. Bandwidth is correct that we proposed rule amendments
reflecting language in the Access Arbitrage Order indicating that when
a LEC or IPES Provider is engaged in access stimulation, the IXC shall
not be charged interstate or intrastate terminating switched access
tandem switching and terminating switched access tandem transport
charges. That is different, however, than requiring that both
intrastate and interstate traffic be included in the traffic ratio
calculations described in Sec. 61.3(bbb) of our rules. Not only is
Bandwidth's proposal contrary to the language in the Access Arbitrage
Order and Further Notice, but Bandwidth does not provide any
justification for us to adopt this significant change to our Access
Stimulation Rules. We therefore reject Bandwidth's proposed
modifications to Sec. 61.3(bbb) of our Access Stimulation Rules.
5. Conforming Edits to Our Rules
79. We amend Sec. Sec. 51.914(a)(2) and (b)(2), 69.4(l), and
69.5(b)(1) and (2) of our rules to eliminate inconsistencies among
sections of the Access Stimulation Rules that are meant to be
consistent. We received no comment opposing these proposed rule
revisions
[[Page 35755]]
and therefore adopt the rules as proposed. New Sec. 51.914(c)(1) and
(d)(2) are consistent with our amendments to Sec. 51.914(a)(2).
80. We amend Sec. 51.914(a)(2) of our rules to remove any
ambiguity about its mandatory requirement. The unrevised Sec.
51.914(a)(2) requires that an access-stimulating LEC shall designate,
``if needed,'' the Intermediate Access Provider that will provide
certain terminating access services to the LEC. This designation
applies in cases where an Intermediate Access Provider is different
from the end office LEC. However, the current wording may lead to a
misconception that a LEC may subjectively decide on its own when this
designation is needed. Therefore, as we proposed in the Further Notice,
we change the phrase ``if needed'' to ``if any.'' We similarly use the
phrase ``if any'' in new Sec. 51.914(c)(1) and (d)(2) which apply to
an access-stimulating IPES Provider and its designation of an
Intermediate Access Provider. We received no comment about ensuring
that new Sec. 51.914(c)(1) and (d)(2) conform with the proposed edit
to Sec. 51.914(a)(2), and we adopt the rule language as proposed. We
also amend Sec. 51.914(b)(2) by adding the phrase ``if any'' and
similarly require the designation of an Intermediate Access Provider
``if any'' that will provide service to an access-stimulating LEC. This
addition is a conforming edit intended to ensure consistency in our
Access Stimulation Rules.
81. We amend current Sec. 51.914(d), which applies when traffic is
bound for a LEC engaged in access stimulation, to also apply when
traffic is bound for an IPES Provider engaged in access stimulation,
consistent with our intent to conform our Access Stimulation Rules to
apply equally to IPES Providers, as well as to LECs, and redesignate
the section as 51.914(f). We do not add the phrase ``or receives
traffic from an Intermediate Access Provider destined for an IPES
Provider engaged in Access Stimulation,'' as we proposed in the Further
Notice, because we find it redundant and unnecessary. We received no
comments addressing specific terms in this proposed rule. The rule is
now Sec. 51.914(f), because other rules were added that precede it.
82. We amend Sec. 69.4(l) of our rules to ensure that the
requirement to not bill certain carriers is mandatory. Section 69.4(l)
currently requires that a LEC engaged in access stimulation ``may not
bill'' IXCs terminating switched access tandem switching or terminating
switched access tandem transport charges for access-stimulation
traffic. However, in the Access Arbitrage Order, the Commission made
clear that it is unlawful for a LEC engaged in access stimulation to
charge an IXC terminating switched access tandem switching or
terminating switched access tandem transport charges. As we proposed in
the Further Notice, we change the phrase ``may not bill'' to ``shall
not bill,'' in Sec. 69.4(l) to eliminate any ambiguity that a LEC
engaged in access stimulation ``shall not bill'' IXCs terminating
switched access tandem switching or terminating switched access tandem
transport charges for access-stimulation traffic.
83. We also make consistent where appropriate in the Access
Stimulation Rules the references to ``terminating switched access
tandem switching or terminating switched access transport'' services.
Currently, some of the Access Stimulation Rules refer to ``terminating
switched access tandem switching or terminating switched access
transport,'' and some refer to ``terminating switched access tandem
switching and terminating switched access transport.'' This primarily
is an inadvertent error which results in an inconsistency in the rules
that may be exploited by entities engaged in access stimulation or that
want to engage in access stimulation. For example, with the use of the
``and'' in Sec. 51.914(b)(2), we are concerned that a LEC engaged in
access stimulation may claim that it does not use an Intermediate
Access Provider that provides both tandem switching and transport, and
argue that it, therefore, does not need to provide the notifications
required in Sec. 51.914(b)(2). Such an outcome would be contrary to
our rules and policies against arbitrage. We have indicated our
intention to remove potential loopholes in our Access Stimulation
Rules, reduce opportunities for arbitrage, and minimize unintended
consequences. In furtherance of those goals, we change ``terminating
switched access tandem switching and terminating switched access
transport'' to ``terminating switched access tandem switching or
terminating switched access transport'' in Sec. 51.914(a)(2) and
(b)(2), and the word ``or'' is used in new Sec. 51.914(c)(1) and
(d)(2) to make clear that the rules apply to either, or both,
terminating switched access tandem switching and terminating switched
access transport.
84. We adopt our proposed amendments to Sec. 69.5(b)(2) to: (a)
correct the inadvertent omission of the word ``not''; (b) change the
word ``may'' to ``shall'' to be consistent with other uses in these
rules; and (c) make clear that it is ``IXCs'' and not ``LECs'' that are
not being charged access charges under our Access Stimulation Rules. We
make similar amendments to Sec. 69.5(b)(1) to be consistent with Sec.
69.5(b)(2). Thus, we correct ``may not'' to ``shall not.'' We also make
a wording clarification by adding ``of this part'' to the two
references to ``Sec. 69.4(b)(5)'' in Sec. 69.5(b)(1) and (2).
Finally, we edit text in Sec. 69.5(b)(1) and (2), for consistency
between those sections. Thus, the middle of both sections now refers to
traffic that is destined ``for a competitive local exchange carrier, or
a rate-of-return local exchange carrier, or is destined, directly or
indirectly, for an IPES Provider, where such carrier or Provider is
engaged in Access Stimulation.'' These are conforming and non-
substantive edits made to ensure consistency in our Access Stimulation
Rules. These amendments are shown in Appendix A.
D. Legal Authority
85. We conclude that sections 201, 251, and 254 of the Act provide
us with the authority needed to adopt the definitions, rule changes,
and rule additions contained in this Order. Several commenters support
our tentative conclusion in this regard in the Further Notice and the
use of ancillary authority pursuant to section 4(i) of the Act.
Commenters also point out that the rules we adopt in the Order are
similar to other requirements the Commission has imposed on IP
providers. Although the Commission has never asserted expansive
jurisdiction over IP providers, it has consistently adopted rules to
address specific issues and serve the public interest. The rules we
adopt today are consistent with that practice. Our new rules directed
at IPES Providers are narrowly tailored to address specific concerns
related to access arbitrage. For example, although we require IPES
Providers to calculate their traffic ratios and comply with the Access
Stimulation Rules' reporting requirements, we do not require an access-
stimulating IPES Provider to pay an Intermediate Access Provider's
tandem and transport access charges.
86. Section 201 of the Act. In the Access Arbitrage Order, the
Commission determined that imposing tariffed tandem switching and
tandem switched transport access charges on IXCs for terminating
access-stimulation traffic is an unjust and unreasonable practice under
section 201(b) of the Act. In rejecting challenges to the Access
Arbitrage Order, the United States Court of Appeals for the D.C.
Circuit held that ``[o]n its face, Section 201(b) gives the Commission
broad authority to define and prohibit practices or charges that it
determines unreasonable. Fees intentionally accrued by artificially
[[Page 35756]]
stimulating and inefficiently routing calls would appear to fall within
that wide authority.'' Thus, we find that we have ample authority to
adopt the limited rule revisions in this Order.
87. Providers' attempts to assess tandem switching or tandem
switched transport access charges on IXCs for delivering traffic to
access-stimulating IPES Providers are virtually indistinguishable from
practices the Commission has already found to be unjust and
unreasonable. Section 201(b) of the Act gives us the authority to
``prescribe such rules and regulations as may be necessary in the
public interest to carry out the provisions of this Act.'' This
language provides us with the authority to prohibit Intermediate Access
Providers or other LECs from charging IXCs tariffed tandem switching
and transport access charges for traffic routed to an access-
stimulating IPES Provider, or an access-stimulating LEC. Furthermore,
section 201(b) grants us authority to ensure that all charges and
practices ``in connection with'' a common carrier service are ``just
and reasonable.'' This authority encompasses a situation, such as here,
where an IPES Provider is receiving traffic from Intermediate Access
Providers and/or LECs for the purpose of engaging in access arbitrage.
Thus, section 201(b) grants us authority to require IPES Providers to
designate the Intermediate Access Provider(s), if any, that will
provide terminating switched access tandem switching and transport
services, and to require IPES Providers to calculate their traffic
ratios and notify Intermediate Access Providers, IXCs, and the
Commission if the IPES Provider is engaged in access stimulation.
Intermediate Access Providers will then be able to determine whether
they can lawfully charge IXCs for interstate and intrastate tandem
switching and transport services (and IXCs can determine if such
charges are appropriate).
88. Sections 251 and 254 of the Act. Our authority to adopt these
rule revisions is also rooted in other sections of the Act on which the
Commission relied in the Access Arbitrage Order. First, section
251(b)(5) of the Act gives us authority to regulate exchange access and
providers of exchange access, during the transition to bill-and-keep.
Indeed, the Commission ``br[ought] all traffic within the section
251(b)(5) regime'' years ago, as part of the reforms adopted in the
USF/ICC Transformation Order. Second, section 251(g) of the Act
provides us with the authority to address problematic conduct that
occurs during the ongoing transition to bill-and-keep. Third, section
254 of the Act provides the Commission with the authority to eliminate
implicit subsidies. To the extent that the access charges paid by IXCs
for access-stimulation traffic continue to subsidize LEC networks,
section 254 gives us the authority to adopt the rules in this Order to
eliminate those implicit subsidies. The rules we adopt are intended to
encourage terminating LECs and IPES Providers to make efficient
interconnection choices in the context of access-stimulation schemes
and are thus consistent with longstanding Commission policy and
Congressional direction. Accordingly, sections 201, 251, and 254 of the
Act give us the authority to adopt the rules described in this Order.
89. Section 4(i) of the Act. Although we conclude that the
statutory sections identified above provide us sufficient authority to
adopt our revised rules, we also conclude that our ancillary authority
pursuant to section 4(i) of the Act provides an additional, independent
basis to adopt limited rules with respect to IPES Providers. Commenters
agreed with this conclusion; no commenters disagreed. Section 4(i) of
the Act gives the Commission the authority to perform acts, adopt
rules, and issue orders, as necessary in the execution of its
functions. The D.C. Circuit has determined that the Commission's
exercise of its ancillary authority is appropriate when `` `(1) the
Commission's general jurisdictional grant under Title I [of the Act]
covers the regulated subject and (2) the regulations are reasonably
ancillary to the Commission's effective performance of its statutorily
mandated responsibilities.' '' The requirements we adopt today, that
are applicable to IPES Providers, are ``reasonably ancillary to the
Commission's effective performance of [its] responsibilities.''
Specifically, IPES Providers interconnected with the PSTN and
exchanging IP traffic clearly provide ``interstate . . . communication
by wire or radio'' pursuant to section 152(a) of the Act. The rules we
adopt, that are applicable to IPES Providers, are reasonably ancillary
to our established authority to deter access arbitrage. For example,
the Commission has found it to be an unjust and unreasonable practice
under section 201(b) of the Act for IXCs to pay terminating tandem
switching and tandem switched transport charges for the delivery of
access-stimulation traffic. The record indicates that IPES Providers
have been inserted into the call flow in an effort to evade this
holding and for parties to continue to engage in access stimulation.
Therefore, we are justified in asserting our ancillary authority in
adopting rule revisions applicable to IPES Providers to help deter
access arbitrage and ensure just and reasonable practices under our
statutory responsibilities provided in section 201(b) of the Act.
90. Similarly, as the Commission has repeatedly made clear, it may,
pursuant to section 251(b)(5), require the transition of access charges
to a bill-and-keep framework. And, the Commission has recognized that
section 251(g) grandfathers the historical exchange access system
``until the Commission adopts rules to transition away from the
system.'' In the Access Arbitrage Order the Commission found that
access stimulation arises, ``in significant part, because of ways in
which the Commission's planned transition to bill-and-keep is not yet
complete, and in that context, we find it necessary to address
problematic conduct that we observe on a transitional basis until that
comprehensive reform is finalized.'' In this Order, we have found that
IPES Providers are inserted into the call flow for the purpose of
collecting inflated, tariffed terminating tandem switching and
transport access charges from IXCs. This practice is contrary to the
Commission's stated goal of transitioning to bill-and-keep; that is,
reducing the access charges carriers pay one another. Taking action to
deter the insertion of IPES Providers into a call flow, in direct
contravention of Commission precedent, orders and rules, is reasonably
ancillary to our statutory mission to ensure just and reasonable rates
and practices under section 201(b) of the Act.
91. Finally, as relevant here, the Commission has previously
applied the statutory requirements of section 254 to VoIP providers
pursuant to its ancillary authority. Specifically, the Commission found
that its statutory requirement to establish ``specific, predictable and
sufficient mechanisms . . . to preserve and advance universal service''
necessitated that VoIP providers contribute to the Universal Service
Fund. As discussed above, section 254 also requires the elimination of
implicit subsidies. Asserting ancillary authority over IPES Providers
will help ensure that LEC networks are not implicitly subsidized by
access charges for access-stimulation traffic. This action will help
close a perceived loophole in our rules that has been exploited by
those interested in continued arbitrage of our access charge regime and
the improper use of access charges to fund ``free,'' or no-cost to the
consumer, high-volume calling services. For these reasons, we conclude
that requiring IPES Providers,
[[Page 35757]]
as defined for the purposes of our Access Stimulation Rules, to comply
with our limited revised rules is reasonably ancillary to the
Commission's effective performance of its statutory responsibilities as
described above.
E. Cost Benefit Analysis
92. Harms of Access Arbitrage. Access arbitrage exploits our
intercarrier compensation regime by requiring the payment of
terminating switched access tandem switching and switched access
transport charges for activities and to providers that our policies are
not intended to benefit. As Bandwidth explains, ``[s]o long as access
charges exist, . . . parties that originate and terminate traffic have
an incentive to arbitrage the associated economies for themselves,
their affiliates, and their carrier partners. The purpose of this
proceeding is to reduce the arbitrage and fraud based on that
incentive.'' Parties pursue access arbitrage opportunities by
artificially stimulating traffic, and then routing that traffic along
more expensive, and/or less efficient, call paths. We first outline how
the actions we take today will reduce the various harms caused by
access arbitrage. We then show that the expected benefits from reducing
just one of the harms--reducing the burden on IXCs to avoid being
exploited--exceed the estimated costs of our actions.
93. The record does not allow us to fully quantify the cost of
artificial traffic stimulation and inefficient routing, but given that
tens of millions of dollars of payments are made to access
arbitrageurs, these costs are likely high. The waste of inefficient
traffic routing is acute because the party that chooses the call path
does not pay the relevant intercarrier compensation charges, and
instead typically gains from them. The costs of access stimulation are
also likely large because the costs of these traffic-generating
activities are not fully paid for by the users of the high-volume
calling services, who often pay nothing for these services. This means
some consumers use such services even though they value them less than
the cost of supply. It also means consumers who do not use the high-
volume calling services effectively pay for them when they purchase
other telecommunications services at rates that are higher because they
are based on recovering the costs of artificially inflated access
charges their carriers must pay to deliver access-stimulation traffic.
These rates unnecessarily and inefficiently curtail demand for those
other telecommunications services. If providers of high-volume calling
services were to charge prices that wholly recovered the costs of
arbitrage (rather than a portion of those costs being borne by
consumers who do not use high-volume calling services), then purchases
of the high-volume calling services would decline, leaving only
purchases where the consumer values the service at more than its cost.
Every call minute so reduced would help eliminate waste or create value
equal to the difference between the cost-covering prices and these low-
demand consumers' valuations of the service. At the same time, a
reduction in the costs paid by other consumers due to a decrease in
arbitrage would efficiently expand the use of telecommunications
services, to the benefit of the general public by, for example,
reducing call congestion and service disruptions caused by access
stimulation.
94. Behavior driven by access arbitrage also threatens the
Commission's mandate to ensure that telecommunications services are
provided at just and reasonable rates. The telecommunications network
depends on carriers being able to exchange vast quantities of traffic
every minute in an efficient and reasonable manner at just and
reasonable rates absent the artificial inflation of costs due to
arbitrage. Without the actions we take today, this process of
exchanging traffic--fundamental to personal and business interactions
across our nation--would be undermined, thereby threatening the longer-
term viability of the network. We are not able to quantify this harm
with a specific cost in dollars, but any threat to the long-term
viability of the nationwide communications network is intolerable and
subject to our legislative mandate to ensure just and reasonable rates
and practices for consumers.
95. Lastly, service providers seeking to avoid being exploited by
access arbitrageurs must engage in costly defensive measures that would
be unnecessary in the absence of access arbitrage. Examples of these
wastes include:
<bullet> disputes over questionable demands for payment by tandem
service providers that send calls to apparent access stimulators;
<bullet> attempts by IXCs to identify the sources of traffic that
appears to have been arbitraged; and
<bullet> time and money spent by parties seeking to protect against
or reduce access arbitrage opportunities, as in this proceeding.
96. Evidence from AT&T allows us to demonstrate the costs parties
incur in seeking to avoid being exploited by access arbitrageurs would
vastly exceed the costs parties would incur as a result of the rules we
adopt today. For example, AT&T reported spending 15,000 employee-hours
over three years to identify and combat access stimulation. Applying an
hourly rate of $50, the annual expense of this labor for AT&T alone
would come to $250,000. If the Commission takes no action, AT&T would
incur similar annual costs every year. Even if, being conservative, our
actions were to save AT&T just half of the costs it may incur in only
three years, this would be a benefit of approximately $300,000. The
actual cost savings will be much higher, however: AT&T will save costs
every year well beyond just a three-year period. In addition, AT&T is
only one of many IXCs that are harmed by access arbitrage. Every IXC
that delivers traffic to access stimulators will also realize savings.
These estimates do not even count the gains from reducing the
unquantified, but likely much more significant, harms discussed above.
97. Costs of Our New Rules. When the 2019 Access Arbitrage Order
was adopted, at least 21 carriers were identified as allegedly engaging
in access stimulation. At least five former access-stimulating LECs
have notified the Commission that they have left the access-stimulation
business. That suggests 16 LECs are engaged in access stimulation
today. We assume a similar number of IPES Providers engage in access
stimulation. In that case, our Access Stimulation Rules would impact
approximately 30 providers. Our existing, modified and new Access
Stimulation Rules will require those providers to: (1) perform traffic
studies; (2) calculate traffic ratios to determine if they are engaged
in access stimulation under the traffic ratios in our Access
Stimulation Rules; (3) notify Intermediate Access Providers, IXCs, and
the Commission if they are engaged in access stimulation; and (4)
notify Intermediate Access Providers, IXCs, and the Commission if they
are no longer engaged in access stimulation. Those access-stimulating
providers that file tariffs may also have to: (1) adjust their billing
systems to no longer bill IXCs; and (2) modify their tariffs to ensure
that IXCs are not billed for tandem switching or tandem transport
access charges for calls delivered to access-stimulating LECs or IPES
Providers. As the Commission did in the 2019 Access Arbitrage Order, we
estimate that the required effort for each firm (here, a LEC or IPES
Provider) would be unlikely to exceed 100 hours of work. By applying an
hourly rate of $100, the present value of the costs that
[[Page 35758]]
all access-stimulating LECs or IPES Providers may incur would not
exceed $300,000.
98. The Benefits of Our New and Revised Rules Outweigh Their Costs.
The rules we adopt today promote the integrity of tariffed rates for
tandem switching and tandem switched transport services, and hence the
goal of connectivity--the ability of consumers to connect with each
other across the entire U.S. telecommunications network--at just and
reasonable rates. By meeting our legislative responsibility to ensure
IXCs do not pay tariffed tandem switching and transport rates for
access-stimulation traffic, which the Commission has found to be an
unjust and unreasonable practice, we help to protect the policies that
underlie our intercarrier compensation rules, and the widespread
willingness of carriers to interconnect and deliver calls across the
network. Although the bulk of the benefits of maintaining the ability
to connect with each other cannot be quantified, as we have shown, even
the quantifiable components are significant and likely are vastly
greater than $300,000--our present value estimate of the costs of our
actions.
Procedural Matters
99. Paperwork Reduction Act Analysis. This document may contain new
or modified information collection requirements subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. All such new
or modified information collection requirements will be submitted to
OMB for review under Section 3507(d) of the PRA. OMB, the general
public, and other Federal agencies will be invited to comment on any
new or modified information collection requirements contained in this
proceeding. In addition, we note that pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C.
3506(c)(4), we previously sought specific comment on how the Commission
might further reduce the information collection burden for small
business concerns with fewer than 25 employees.
100. In this Order, we have assessed the effects of requiring IPES
Providers to keep necessary records, calculate applicable ratios, and
provide required third-party disclosure of certain information to the
Commission, parties they do business with and the public, and find that
IPES Providers likely keep this information and perform these
responsibilities in the normal course of business. Therefore, these
additional requirements should not be overly burdensome. We do not
believe there are many access-stimulating IPES Providers operating
today but note that of the small number of access-stimulating IPES
Providers in existence, most, if not all, will be affected by this
Order. We believe that access-stimulating IPES Providers are typically
smaller businesses and may employ fewer than 25 people. We sought
comment on the potential effects of the information collection rules we
adopt today in the Further Notice, and we received no comment
specifically addressing burdens on small business concerns either in
response to this request or on our Initial Regulatory Flexibility Act
Analysis. We find the benefits that will be realized by a decrease in
the uneconomic effects of access stimulation outweigh any burden
associated with the changes required by this Second Report and Order.
101. Congressional Review Act. The Commission has determined, and
the Administrator of the Office of Information and Regulatory Affairs,
Office of Management and Budget, concurs that these rules are ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The
Commission will send a copy of this Second Report and Order to Congress
and the Government Accountability Office pursuant to 5 U.S.C.
801(a)(1)(A).
102. Final Regulatory Flexibility Analysis. As required by the
Regulatory Flexibility Act of 1980 (RFA), as amended, an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the Further
Notice of Proposed Rulemaking for the access arbitrage proceeding. We
sought written public comments on the proposals in the Further Notice,
including comment on the IRFA. This present Final Regulatory
Flexibility Analysis (FRFA) conforms to the RFA.
A. Need for, and Objectives of, the Final Rules
103. For over a decade, the Commission has combatted arbitrage of
its access charge regime, which ultimately raises the rates consumers
pay for telecommunications service. In the 2011 USF/ICC Transformation
Order, the Commission adopted rules identifying local exchange carriers
(LECs) engaged in access stimulation and requiring that such LECs lower
their tariffed access charges. In 2019, to address access arbitrage
schemes that persisted despite prior Commission action, the Commission
adopted the Access Arbitrage Order, in which it revised its Access
Stimulation Rules to prohibit LECs and Intermediate Access Providers
from charging interexchange carriers (IXCs) for terminating tandem
switching and transport services used to deliver calls to access-
stimulating LECs.
104. Since the 2019 rules were implemented, the Commission has
received information about new ways entities are manipulating their
businesses to continue their arbitrage schemes in the wake of the new
rules. In this Order, we adopt rule revisions to close perceived
loopholes in our Access Stimulation Rules that are being exploited by
opportunistic access-stimulating entities whose actions ultimately
cause consumers to continue to bear costs for services they do not use.
105. We modify our Access Stimulation Rules to address access
arbitrage that takes place when an internet Protocol Enabled Service
(IPES) Provider is incorporated into the call flow. When a LEC or
Intermediate Access Provider delivers traffic to an IPES Provider and
the terminating-to-originating traffic ratios of the IPES Provider meet
or exceed the triggers in the Access Stimulation Rules, the IPES
Provider will be deemed to be engaged in access stimulation. In such
cases, a LEC or an Intermediate Access Provider will be prohibited from
charging an IXC tariffed charges for terminating switched access tandem
switching and switched access transport for traffic bound to an IPES
Provider whose traffic meets or exceeds the ratios in Sec.
61.3(bbb)(1)(i) or (ii) of our Access Stimulation Rules. The IPES
Provider will be responsible for calculating its traffic ratios and for
making the required notifications to the affected IXC(s), Intermediate
Access Provider(s) and the Commission. We likewise modify the
definition of Intermediate Access Provider to include entities
delivering traffic to an IPES Provider. The rules we adopt will serve
the public interest by reducing the incentives and ability to send
traffic over the Public Switched Telephone Network for the purpose of
collecting tariffed tandem switching and transport access charges from
IXCs to fund high-volume calling services, which the Commission has
found to be an unjust and unreasonable practice.
106. The reforms adopted in this Order apply the same framework
that we currently use for competitive LECs that have engaged in access
stimulation to determine when an IPES Provider that was engaged in
access stimulation no longer is considered to be engaged in access
stimulation. The Access Stimulation Rules currently require traffic
ratios to be calculated at the end office. The rules adopted today
apply this manner of traffic calculations to IPES Providers as well.
Affected entities must comply with the final rules no
[[Page 35759]]
later than 45 days after their effective date. The effective date is 30
days after publication in the Federal Register except for certain rule
revisions which contain information collection requirements that are
subject to review by the Office of Management and Budget under the
Paperwork Reduction Act. The effective date for these latter rules will
be announced separately by the Commission.
B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA
107. The Commission did not receive comments specifically
addressing the rules and policies proposed in the IRFA.
C. Response to Comments by Chief Counsel for Advocacy of the Small
Business Administration
108. Pursuant to the Small Business Jobs Act of 2010, which amended
the RFA, the Commission is required to respond to any comments filed by
the Chief Counsel of the Small Business Administration (SBA) and to
provide a detailed statement of any change made to the proposed rule(s)
as a result of those comments.
109. The Chief Counsel did not file any comments in response to the
proposed rule(s) in this proceeding.
D. Description and Estimate of the Number of Small Entities to Which
the Final Rules Will Apply
110. The RFA directs agencies to provide a description of, and
where feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one that: (1) is independently owned
and operated; (2) is not dominant in its field of operation; (3)
satisfies any additional criteria established by the Small Business
Administration (SBA).
111. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe, at the
outset, three broad groups of small entities that could be directly
affected herein. First, while there are industry specific size
standards for small businesses that are used in the regulatory
flexibility analysis, according to data from the Small Business
Administration's (SBA) Office of Advocacy, in general a small business
is an independent business having fewer than 500 employees. These types
of small businesses represent 99.9% of all businesses in the United
States, which translates to 32.5 million businesses.
112. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2020, there were
approximately 447,689 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
113. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicate there were
90,075 local governmental jurisdictions consisting of general purpose
governments and special purpose governments in the United States. Of
this number, there were 36,931 general purpose governments (county,
municipal, and town or township) with populations of less than 50,000
and 12,040 special purpose governments--independent school districts
with enrollment populations of less than 50,000. Accordingly, based on
the 2017 U.S. Census of Governments data, we estimate that at least
48,971 entities fall into the category of ``small governmental
jurisdictions.''
114. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired communications networks. Transmission
facilities may be based on a single technology or a combination of
technologies. Establishments in this industry use the wired
telecommunications network facilities that they operate to provide a
variety of services, such as wired telephony services, including VoIP
services, wired (cable) audio and video programming distribution, and
wired broadband internet services. By exception, establishments
providing satellite television distribution services using facilities
and infrastructure that they operate are included in this industry.
Wired Telecommunications Carriers are also referred to as wireline
carriers or fixed local service providers.
115. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms that operated in this industry for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on Commission data in the 2021 Universal Service
Monitoring Report, as of December 31, 2020, there were 5,183 providers
that reported they were engaged in the provision of fixed local
services. Of these providers, the Commission estimates that 4,737
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
116. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. Providers of these services
include both incumbent and competitive local exchange service
providers. Wired Telecommunications Carriers is the closest industry
with an SBA small business size standard. Wired Telecommunications
Carriers are also referred to as wireline carriers or fixed local
service providers. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms that operated in this industry for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on Commission data in the 2021 Universal Service
Monitoring Report, as of December 31, 2020, there were 5,183 providers
that reported they were fixed local exchange service providers. Of
these providers, the Commission estimates that 4,737 providers have
1,500 or fewer employees. Consequently, using the SBA's small business
size standard, most of these providers can be considered small
entities.
117. Incumbent Local Exchange Carriers (Incumbent LECs). Neither
the Commission nor the SBA have developed a small business size
standard specifically for incumbent local exchange carriers. Wired
[[Page 35760]]
Telecommunications Carriers is the closest industry with an SBA small
business size standard. The SBA small business size standard for Wired
Telecommunications Carriers classifies firms having 1,500 or fewer
employees as small. U.S. Census Bureau data for 2017 show that there
were 3,054 firms in this industry that operated for the entire year. Of
this number, 2,964 firms operated with fewer than 250 employees.
Additionally, based on Commission data in the 2021 Universal Service
Monitoring Report, as of December 31, 2020, there were 1,227 providers
that reported they were incumbent local exchange service providers. Of
these providers, the Commission estimates that 929 providers have 1,500
or fewer employees. Consequently, using the SBA's small business size
standard, the Commission estimates that the majority of incumbent local
exchange carriers can be considered small entities.
118. Competitive Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a size standard for small
businesses specifically applicable to local exchange services.
Providers of these services include several types of competitive local
exchange service providers. Wired Telecommunications Carriers is the
closest industry with a SBA small business size standard. The SBA small
business size standard for Wired Telecommunications Carriers classifies
firms having 1,500 or fewer employees as small. U.S. Census Bureau data
for 2017 show that there were 3,054 firms that operated in this
industry for the entire year. Of this number, 2,964 firms operated with
fewer than 250 employees. Additionally, based on Commission data in the
2021 Universal Service Monitoring Report, as of December 31, 2020,
there were 3,956 providers that reported they were competitive local
exchange service providers. Of these providers, the Commission
estimates that 3,808 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, most of
these providers can be considered small entities.
119. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA have developed a small business size standard specifically for
Interexchange Carriers. Wired Telecommunications Carriers is the
closest industry with a SBA small business size standard. The SBA small
business size standard for Wired Telecommunications Carriers classifies
firms having 1,500 or fewer employees as small. U.S. Census Bureau data
for 2017 show that there were 3,054 firms that operated in this
industry for the entire year. Of this number, 2,964 firms operated with
fewer than 250 employees. Additionally, based on Commission data in the
2021 Universal Service Monitoring Report, as of December 31, 2020,
there were 151 providers that reported they were engaged in the
provision of interexchange services. Of these providers, the Commission
estimates that 131 providers have 1,500 or fewer employees.
Consequently, using the SBA's small business size standard, the
Commission estimates that the majority of providers in this industry
can be considered small entities.
120. Local Resellers. Neither the Commission nor the SBA have
developed a small business size standard specifically for Local
Resellers. Telecommunications Resellers is the closest industry with a
SBA small business size standard. The Telecommunications Resellers
industry comprises establishments engaged in purchasing access and
network capacity from owners and operators of telecommunications
networks and reselling wired and wireless telecommunications services
(except satellite) to businesses and households. Establishments in this
industry resell telecommunications; they do not operate transmission
facilities and infrastructure. Mobile virtual network operators (MVNOs)
are included in this industry. The SBA small business size standard for
Telecommunications Resellers classifies a business as small if it has
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that
1,386 firms in this industry provided resale services for the entire
year. Of that number, 1,375 firms operated with fewer than 250
employees. Additionally, based on Commission data in the 2021 Universal
Service Monitoring Report, as of December 31, 2020, there were 293
providers that reported they were engaged in the provision of local
resale services. Of these providers, the Commission estimates that 289
providers have 1,500 or fewer employees. Consequently, using the SBA's
small business size standard, most of these providers can be considered
small entities.
121. Cable Companies and Systems (Rate Regulation). The Commission
has developed its own small business size standard for the purpose of
cable rate regulation. Under the Commission's rules, a ``small cable
company'' is one serving 400,000 or fewer subscribers nationwide. Based
on industry data, there are about 420 cable companies in the U.S. Of
these, only seven have more than 400,000 subscribers. In addition,
under the Commission's rules, a ``small system'' is a cable system
serving 15,000 or fewer subscribers. Based on industry data, there are
about 4,139 cable systems (headends) in the U.S. Of these, about 639
have more than 15,000 subscribers. Accordingly, the Commission
estimates that the majority of cable companies and cable systems are
small.
122. Cable System Operators (Telecom Act Standard). The
Communications Act of 1934, as amended, contains a size standard for a
``small cable operator,'' which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than one percent of
all subscribers in the United States and is not affiliated with any
entity or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' For purposes of the Telecom Act Standard, the
Commission determined that a cable system operator that serves fewer
than 677,000 subscribers, either directly or through affiliates, will
meet the definition of a small cable operator based on the cable
subscriber count established in a 2001 Public Notice. Based on industry
data, only six cable system operators have more than 677,000
subscribers. Accordingly, the Commission estimates that the majority of
cable system operators are small under this size standard. We note
however, that the Commission neither requests nor collects information
on whether cable system operators are affiliated with entities whose
gross annual revenues exceed $250 million. Therefore, we are unable at
this time to estimate with greater precision the number of cable system
operators that would qualify as small cable operators under the
definition in the Communications Act.
123. All Other Telecommunications. This industry is comprised of
establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems. Providers of
internet services (e.g., dial-up ISPs) or Voice over internet Protocol
(VoIP) services, via client-supplied telecommunications connections are
also included in this industry. The SBA small business size standard
for this industry classifies firms with annual receipts of $35 million
or less as small. U.S. Census Bureau data for 2017 show that there
[[Page 35761]]
were 1,079 firms in this industry that operated for the entire year. Of
those firms, 1,039 had revenue of less than $25 million. Based on this
data, the Commission estimates that the majority of ``All Other
Telecommunications'' firms can be considered small.
E. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
124. The rule revisions adopted in the Order will affect LECs,
Intermediate Access Providers, and IPES Providers. This Order modifies
our Access Stimulation Rules to address arbitrage which takes place
when an IPES Provider is incorporated into the call flow. In this
Order, we adopt rules to further limit or eliminate the occurrence of
access arbitrage, including access stimulation, which could affect
potential reporting requirements. The adopted rules also contain
recordkeeping, reporting, and third-party notification requirements for
access-stimulating LECs and IPES Providers, which may impact small
entities. Some of the requirements may also involve tariff changes.
125. The rules adopted in the Order require that when an
Intermediate Access Provider or a LEC delivers traffic to an IPES
Provider and the terminating-to-originating traffic ratios of the IPES
Provider meet or exceed the triggers in the Access Stimulation Rules,
the IPES Provider will be deemed to be engaged in access stimulation.
In those cases, the IPES Provider will be responsible for calculating
its traffic ratios and for making the required third-party
notifications. As such, providers may need to modify their in-house
recordkeeping to comply with the new rules. If the IPES Provider's
traffic ratios meet or exceed the applicable rule triggers, it must
notify the Intermediate Access Providers it subtends, the Commission,
and affected IXCs. The Intermediate Access Provider is then prohibited
from charging IXCs tariffed rates for terminating switched access
tandem switching or terminating switched access transport charges.
F. Steps Taken To Minimize the Significant Economic Impact on Small
Entities and Significant Alternatives Considered
126. The RFA requires an agency to describe any significant,
specifically small business alternatives that it has considered in
reaching its approach, which may include the following four
alternatives (among others): ``(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for such small entities; (3) the
use of performance, rather than design, standards; and (4) and
exemption from coverage of the rule, or any part thereof, for such
small entities.''
127. The actions taken by the Commission in the Order were
considered to be the least costly and minimally burdensome for small
and other entities impacted by the rules. As such, the Commission does
not expect the adopted requirements to have a significant economic
impact on small entities. Below we discuss actions we take in the Order
to minimize any significant economic impact on small entities and some
alternatives that were considered.
128. Transition Period To Assist Small Entity Compliance. To
minimize the impact of changes that may affect entities, we implement
up to a 45-day transition period for compliance. We expect that
transition period will allow even small business entities adequate time
to amend their tariffs and recordkeeping, reporting and third-party
notification practices, if needed, to meet the requirements in the
adopted rules. This will also allow time if parties choose to make
additional changes to their operations as a result of our reforms to
further reduce access stimulation. To ensure clarity and increase
transparency, we require that access-stimulating LECs and IPES
Providers notify affected IXCs, Intermediate Access Providers, and the
Commission of their access-stimulating status within 45 days of PRA
approval (or, for an entity that later engages in access stimulation,
within 45 days from the date it commences access stimulation), and file
a notice in the Commission's Access Arbitrage docket on the same date
and to the same effect.
129. We announced aspects of the transition period in the Further
Notice, and received no related comments. Such changes are also subject
to the Paperwork Reduction Act approval process which allows for
additional notice and comment on the burdens associated with the
requirements. This process will occur after adoption of this Order,
thus providing additional time for parties to make the changes
necessary to comply with the newly adopted rules. Also, being mindful
of the attendant costs of any reporting obligations, we do not require
that affected entities adhere to a specific notice format. Instead, we
allow each responding entity to prepare third-party notice and notice
to the Commission in the manner they deem to be most cost-effective and
least burdensome, provided the notice announces the entities' access-
stimulating status and acceptance of financial responsibility.
Furthermore, by electing not to require carriers to fully withdraw and
file entirely new tariffs and requiring only that they revise their
tariffs to remove relevant provisions, if necessary, we mitigate the
filing burden on affected carriers.
130. We consider any potential billing system changes to be
straightforward, but to allow sufficient time for affected parties,
including small business entities, to make any adjustments. We grant
small entities the same period from the effective date for implementing
such changes. Thus, affected Intermediate Access Providers have 45 days
from the effective date of this rule (or, with respect to those
entities that later engage in access stimulation, within 45 days from
the date such entities commence access stimulation) to implement any
billing system changes or prepare any tariff revisions which they may
see fit to file. The time granted by this period should help small
business entities affected make an orderly, less burdensome,
transition.
131. These same considerations were taken into account for LECs and
IPES Providers that cease access stimulation, a change that carries
concomitant reporting obligations and to which we apply associated
transition periods for billing changes and/or for tariff revisions
that, collectively, are virtually identical to those mentioned above.
G. Report to Congress
132. The Commission will send a copy of this Order, including this
FRFA, in a report to be sent to Congress pursuant to the Congressional
Review Act. In addition, the Commission will send a copy of the Order,
including this FRFA, to the Chief Counsel for Advocacy of the SBA. The
Order and FRFA (or summaries thereof) will also be published in the
Federal Register.
Ordering Clauses
133. Accordingly, it is ordered that, pursuant to sections 1, 2,
4(i), 201, 251, 254, and 303(r), of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 152, 154(i), 201, 251, 254, and 303(r), and
section 1.1 of the Commission's rules, 47 CFR 1.1, this Second Report
and Order is adopted.
134. It is further ordered that, pursuant to sections 1.4, 1.103
and 1.427 of the Commission's Rules, 47 CFR 1.4, 1.103, 1.427, the
amendments to the Commission's rules as set forth in Appendix A are
adopted, effective 30
[[Page 35762]]
days after publication in the Federal Register, except that the
amendments to Sec. 51.914(d) and (g) of the Commission's rules, 47 CFR
51.914(d) and (g), which may contain new or modified information
collection requirements, will not become effective until the Office of
Management and Budget completes review of any information collection
requirements that the Wireline Competition Bureau determines is
required under the Paperwork Reduction Act. Compliance with the
amendments to the Commission's rules as set forth in Appendix A will be
required 45 days following the effective date. The Commission directs
the Wireline Competition Bureau to announce the effective dates and the
compliance dates for Sec. 51.914(d) and (g) by subsequent Public
Notice.
135. It is further ordered that the Office of the Managing
Director, Performance Evaluation and Records Management, shall send a
copy of this Second Report and Order, including the Final Regulatory
Flexibility Analysis, in a report to be sent to Congress and the
Government Accountability Office pursuant to the Congressional Review
Act, 5 U.S.C. 801(a)(1)(A).
136. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center shall send a
copy of this Second Report and Order, including the Final Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects
47 CFR Part 51
Communications; Communications common carriers; Telecommunications;
Telephones.
47 CFR Part 61
Communications common carriers; Reporting and recordkeeping
requirements; Telephones.
47 CFR Part 69
Communications common carriers; Reporting and recordkeeping
requirements; Telephones.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rules
For the reasons set forth above, the Federal Communications
Commission amends parts 51, 61, and 69 of title 47 of the Code of
Federal Regulations as follows:
PART 51--INTERCONNECTION
0
1. The authority citation for part 51 continues to read as follows:
Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 225-27, 251-
52, 271, 332 unless otherwise noted.
0
2. Revise Sec. 51.914 to read as follows:
Sec. 51.914 Additional provisions applicable to Access Stimulation
traffic.
(a) Notwithstanding any other provision of this part, if a local
exchange carrier is engaged in Access Stimulation, as defined in Sec.
61.3(bbb) of this chapter, it shall, within 45 days of commencing
Access Stimulation, or within 45 days of July 3, 2023, whichever is
later:
(1) Not bill any Interexchange Carrier for interstate or intrastate
terminating switched access tandem switching or terminating switched
access transport charges for any traffic between such local exchange
carrier's terminating end office or equivalent and the associated
access tandem switch; and
(2) Designate the Intermediate Access Provider(s), if any, that
will provide terminating switched access tandem switching or
terminating switched access tandem transport services to the local
exchange carrier engaged in Access Stimulation; and
(3) Assume financial responsibility for any applicable Intermediate
Access Provider's charges for such services for any traffic between
such local exchange carrier's terminating end office or equivalent and
the associated access tandem switch.
(b) Notwithstanding any other provision of this part, if a local
exchange carrier is engaged in Access Stimulation, as defined in Sec.
61.3(bbb) of this chapter, it shall, within 45 days of commencing
Access Stimulation, or within 45 days of July 3, 2023, whichever is
later, notify in writing the Commission, all Intermediate Access
Providers that it subtends, and Interexchange Carriers with which it
does business of the following:
(1) That it is a local exchange carrier engaged in Access
Stimulation; and
(2) That it shall designate the Intermediate Access Provider(s), if
any, that will provide the terminating switched access tandem switching
or terminating switched access tandem transport services to the local
exchange carrier engaged in Access Stimulation; and
(3) That the local exchange carrier shall pay for those services as
of that date.
(c) Notwithstanding any other provision of the Commission's rules,
if an IPES Provider, as defined in Sec. 61.3(eee) of this chapter, is
engaged in Access Stimulation, as defined in Sec. 61.3(bbb) of this
chapter, then within 45 days of commencing Access Stimulation, or
within 45 days of July 3, 2023, whichever is later:
(1) The IPES Provider shall designate the Intermediate Access
Provider(s), if any, that will provide terminating switched access
tandem switching or terminating switched access tandem transport
services to the IPES Provider engaged in Access Stimulation; and
further
(2) The IPES Provider may assume financial responsibility for any
applicable Intermediate Access Provider's charges for such services for
any traffic between such IPES Provider's terminating end office or
equivalent and the associated access tandem switch; and
(3) The Intermediate Access Provider shall not assess any charges
for such services to the Interexchange Carrier.
(d) [Reserved].
(e) In the event that an Intermediate Access Provider receives
notice under paragraph (b) of this section that it has been designated
to provide terminating switched access tandem switching or terminating
switched access tandem transport services to a local exchange carrier
engaged in Access Stimulation, as defined in Sec. 61.3(bbb) of this
chapter, or to an IPES Provider engaged in Access Stimulation,
directly, or indirectly through a local exchange carrier, and that
local exchange carrier engaged in Access Stimulation shall pay or the
IPES Provider engaged in Access Stimulation may pay for such
terminating access service from such Intermediate Access Provider, the
Intermediate Access Provider shall not bill Interexchange Carriers for
interstate or intrastate terminating switched access tandem switching
or terminating switched access tandem transport service for traffic
bound for such local exchange carrier or IPES Provider but, instead,
shall bill such local exchange carrier or may bill such IPES Provider
for such services.
(f) Notwithstanding paragraphs (a) through (c) of this section, any
local exchange carrier that is not itself engaged in Access
Stimulation, as that term is defined in Sec. 61.3(bbb) of this
chapter, but serves as an Intermediate Access Provider with respect to
traffic bound for a local exchange carrier engaged in Access
Stimulation or bound for an IPES Provider engaged in Access
Stimulation, shall not itself be deemed a local exchange carrier
engaged in Access Stimulation or be affected by paragraphs (a) and (b)
of this section.
(g) [Reserved].
[[Page 35763]]
0
3. Delayed indefinitely, Sec. 51.914 is amended by adding paragraphs
(d) and (g) to read as follows:
Sec. 51.914 Additional provisions applicable to Access Stimulation
traffic.
* * * * *
(d) Notwithstanding any other provision of the Commission's rules,
if an IPES Provider, as defined in Sec. 61.3(eee) of this chapter, is
engaged in Access Stimulation, as defined in Sec. 61.3(bbb) of this
chapter, it shall, within 45 days of commencing Access Stimulation, or
within 45 days after [the effective date of this paragraph (d)--which
will be 30 days after the Commission publishes the notification of OMB
approval in the Federal Register], whichever is later, notify in
writing the Commission, all Intermediate Access Providers that it
subtends, and Interexchange Carriers with which it does business of the
following:
(1) That it is an IPES Provider engaged in Access Stimulation; and
(2) That it shall designate the Intermediate Access Provider(s), if
any, that will provide the terminating switched access tandem switching
or terminating switched access tandem transport services directly, or
indirectly through a local exchange carrier, to the IPES Provider
engaged in Access Stimulation; and
(3) Whether the IPES Provider will pay for those services as of
that date.
* * * * *
(g) Upon terminating its engagement in Access Stimulation, as
defined in Sec. 61.3(bbb) of this chapter, the local exchange carrier
or IPES Provider engaged in Access Stimulation shall provide
concurrent, written notification to the Commission and any affected
Intermediate Access Provider(s) and Interexchange Carrier(s) of such
fact.
PART 61--TARIFFS
0
4. The authority citation for part 61 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 154(j), 201-205, 403, unless
otherwise noted.
0
5. Section 61.3 is amended by revising paragraphs (bbb)(1) through (3),
adding paragraphs (bbb)(5), revising paragraph (ccc), and adding
paragraphs (eee) and (fff) to read as follows:
Sec. 61.3 Definitions.
* * * * *
(bbb) * * *
(1) A Competitive Local Exchange Carrier serving end user(s) or an
IPES Provider serving end user(s) engages in Access Stimulation when it
satisfies either paragraph (bbb)(1)(i) or (ii) of this section; and a
rate-of-return local exchange carrier serving end user(s) engages in
Access Stimulation when it satisfies either paragraph (bbb)(1)(i) or
(iii) of this section.
(i) The rate-of-return local exchange carrier, Competitive Local
Exchange Carrier, or IPES Provider:
(A) Has an access revenue sharing agreement, whether express,
implied, written or oral, that, over the course of the agreement, would
directly or indirectly result in a net payment to the other party
(including affiliates) to the agreement, in which payment by the rate-
of-return local exchange carrier, Competitive Local Exchange Carrier,
or IPES Provider is based on the billing or collection of access
charges from interexchange carriers or wireless carriers. When
determining whether there is a net payment under this rule, all
payments, discounts, credits, services, features, functions, and other
items of value, regardless of form, provided by the rate-of-return
local exchange carrier, Competitive Local Exchange Carrier, or IPES
Provider to the other party to the agreement shall be taken into
account; and
(B) Has either an interstate terminating-to-originating traffic
ratio of at least 3:1 in an end office or equivalent in a calendar
month, or has had more than a 100 percent growth in interstate
originating and/or terminating switched access minutes of use in a
month compared to the same month in the preceding year for such end
office or equivalent.
(ii) A Competitive Local Exchange Carrier or IPES Provider has an
interstate terminating-to-originating traffic ratio of at least 6:1 in
an end office or equivalent in a calendar month.
(iii) A rate-of-return local exchange carrier has an interstate
terminating-to-originating traffic ratio of at least 10:1 in an end
office or equivalent in a three-calendar month period and has 500,000
minutes or more of interstate terminating minutes-of-use per month in
the same end office in the same three-calendar month period. These
factors will be measured as an average over the three-calendar month
period.
(2) A Competitive Local Exchange Carrier serving end user(s), or an
IPES Provider serving end user(s), that has engaged in Access
Stimulation will continue to be deemed to be engaged in Access
Stimulation until: For a carrier or provider engaging in Access
Stimulation as defined in paragraph (bbb)(1)(i) of this section, it
terminates all revenue sharing agreements covered in paragraph
(bbb)(1)(i) of this section and does not engage in Access Stimulation
as defined in paragraph (bbb)(1)(ii) of this section; and for a carrier
or provider engaging in Access Stimulation as defined in paragraph
(bbb)(1)(ii) of this section, its interstate terminating-to-originating
traffic ratio for an end office or equivalent falls below 6:1 for six
consecutive months, and it does not engage in Access Stimulation as
defined in paragraph (bbb)(1)(i) of this section.
(3) A rate-of-return local exchange carrier serving end user(s)
that has engaged in Access Stimulation will continue to be deemed to be
engaged in Access Stimulation until: For a carrier engaging in Access
Stimulation as defined in paragraph (bbb)(1)(i) of this section, it
terminates all revenue sharing agreements covered in paragraph
(bbb)(1)(i) of this section and does not engage in Access Stimulation
as defined in paragraph (bbb)(1)(iii) of this section; and for a
carrier engaging in Access Stimulation as defined in paragraph
(bbb)(1)(iii) of this section, its interstate terminating-to-
originating traffic ratio falls below 10:1 for six consecutive months
and its monthly interstate terminating minutes-of-use in an end office
or equivalent falls below 500,000 for six consecutive months, and it
does not engage in Access Stimulation as defined in paragraph
(bbb)(1)(i) of this section.
* * * * *
(5) In calculating the interstate terminating-to-originating
traffic ratio at each end office or equivalent under this paragraph
(bbb), each Competitive Local Exchange Carrier, rate-of-return local
exchange carrier or IPES Provider shall include in such calculation
only traffic traversing that end office or equivalent and going to and
from any telephone number associated with an Operating Company Number
that has been issued to such Competitive Local Exchange Carrier, rate-
of-return local exchange carrier or IPES Provider. The term
``equivalent'' in the phrase ``end office or equivalent'' means ``End
Office Equivalent,'' as defined in this section.
(ccc) Intermediate Access Provider. The term means, for purposes of
this part and Sec. Sec. 51.914, 69.4(1), and 69.5(b) of this chapter,
any entity that provides terminating switched access tandem switching
or terminating switched access tandem transport services between the
final Interexchange Carrier in a call path and:
(1) A local exchange carrier engaged in Access Stimulation, as
defined in paragraph (bbb) of this section; or
(2) A local exchange carrier delivering traffic to an IPES Provider
engaged in Access Stimulation, as defined in paragraph (bbb) of this
section; or
[[Page 35764]]
(3) An IPES Provider engaged in Access Stimulation, as defined in
paragraph (bbb) of this section, where the entity delivers calls
directly to the IPES Provider.
* * * * *
(eee) IPES (Internet Protocol Enabled Service) Provider. The term
means, for purposes of this part and Sec. Sec. 51.914, 69.4(l) and
69.5(b) of this chapter, a provider offering a service that:
(1) Enables communications;
(2) Requires a broadband connection from the user's location or end
to end;
(3) Requires internet Protocol-compatible customer premises
equipment (CPE); and
(4) Permits users to receive calls that originate on the public
switched telephone network or that originate from an Internet Protocol
service.
(fff) End Office Equivalent. For purposes of this part and
Sec. Sec. 51.914, 69.3(e)(12)(iv) and 69.4(l) of this chapter, an End
Office Equivalent is the geographic location where traffic is delivered
to an IPES Provider for delivery to an end user. This location shall be
used as the terminating location for purposes of calculating
terminating-to-originating traffic ratios, as provided in this section.
For purposes of the Access Stimulation Rules, the term ``equivalent''
in the phrase ``end office or equivalent'' means End Office Equivalent.
PART 69--ACCESS CHARGES
0
6. The authority citation for part 69 continues to read as follows:
Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254,
403.
0
7. Section 69.4 is amended by revising paragraph (l) to read as
follows:
Sec. 69.4 Charges to be filed.
* * * * *
(l) Notwithstanding paragraph (b)(5) of this section, a competitive
local exchange carrier or a rate-of-return local exchange carrier
engaged in Access Stimulation, as defined in Sec. 61.3(bbb) of this
chapter, the Intermediate Access Provider it subtends, or an
Intermediate Access Provider that delivers traffic directly or
indirectly to an IPES Provider engaged in Access Stimulation, as
defined in Sec. 61.3(bbb) of this chapter, shall not bill an
Interexchange Carrier, as defined in Sec. 61.3(bbb) of this chapter,
for interstate or intrastate terminating switched access tandem
switching or terminating switched access tandem transport charges for
any traffic between such competitive local exchange carrier's, such
rate-of-return local exchange carrier's, or such IPES Provider's
terminating end office or equivalent and the associated access tandem
switch.
0
8. Section 69.5 is amended by revising paragraph (b) to read as
follows:
Sec. 69.5 Persons to be assessed.
* * * * *
(b) Carrier's carrier charges shall be computed and assessed upon
all Interexchange Carriers that use local exchange switching facilities
for the provision of interstate or foreign telecommunications services,
except that:
(1) Competitive local exchange carriers and rate-of-return local
exchange carriers shall not assess terminating interstate or intrastate
switched access tandem switching or terminating switched access tandem
transport charges described in Sec. 69.4(b)(5) on Interexchange
Carriers when the terminating traffic is destined for a competitive
local exchange carrier, or a rate-of-return local exchange carrier, or
is destined, directly or indirectly, for an IPES Provider, where such
carrier or Provider is engaged in Access Stimulation, as that term is
defined in Sec. 61.3(bbb) of this chapter, consistent with the
provisions of Sec. 61.26(g)(3) of this chapter and Sec.
69.3(e)(12)(iv).
(2) Intermediate Access Providers shall not assess terminating
interstate or intrastate switched access tandem switching or
terminating switched access tandem transport charges described in Sec.
69.4(b)(5) on Interexchange Carriers when the terminating traffic is
destined for a competitive local exchange carrier, or a rate-of-return
local exchange carrier, or is destined, directly or indirectly, for an
IPES Provider, where such carrier or Provider is engaged in Access
Stimulation, as that term is defined in Sec. 61.3(bbb) of this
chapter, consistent with the provisions of Sec. 61.26(g)(3) of this
chapter and Sec. 69.3(e)(12)(iv).
* * * * *
[FR Doc. 2023-10661 Filed 5-31-23; 8:45 am]
BILLING CODE 6712-01-P
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