Overview of the New Rules
On Nov. 8, 2013, the Federal Communications Commission (FCC) released its Rural Call Completion Report and Order adopting rules to address problems with the completion of long-distance calls to rural end user customers, as well as a Further Notice of Proposed Rulemaking asking additional questions about this issue (the Order).¹ The new rules apply to carriers that provide long-distance voice service to more than 100,000 domestic retail subscriber lines and that make the initial call path choice for the long distance call based on the called number—in other words, to local exchange carriers (LECs) and interconnected VoIP service providers who use third-party interexchange carriers (IXCs) to handle long-distance calls (the Covered Providers). The rules require Covered Providers to collect call data for all long distance calls and for long distance calls directed to rural carriers—to make it possible to measure the call completion rate differential—and to retain that data for up to six months, and to file quarterly reports based on the data.

Covered Providers may reduce data retention and reporting obligations by taking advantage of a safe harbor (described below), which requires management of intermediate downstream providers. In addition, the new rules prohibit false audible ringing (that is, signaling to the calling party that the phone is ringing at the called party’s premises when it is not) and require originating and intermediate carriers to convey audio tones and announcements sent by the terminating carrier to the calling party.

If a provider does not make the initial long-distance call path choice, then it must file a letter with the FCC identifying the long-distance provider that does.

Covered Providers must begin recording the required data on the first day of the calendar month that is at least 20 days after the effective date of the new rules, which will be announced in the Federal Register upon approval of the collections by the Office of Management and Budget (OMB). The Wireline Competition Bureau will issue a public notice announcing when carriers must begin recording data.

Background
Several years ago, a group of rural local exchange carriers (RLECs) and their trade association complained to the FCC that long-distance calls to their rural customers were failing at an abnormal rate. As the FCC has explained, the problem appears to be occurring in rural areas where long distance or wireless carriers pay higher-than-average charges to the local telephone company to complete calls. These charges are part of the decades-old system of “access charges” that help pay for the cost of rural networks. While terminating access charges are slated to be phased out by the end of the decade, today rural carriers often charge significantly more—in some cases, as much 500 percent more—to terminate calls than their non-rural counterparts.

To minimize these charges, some IXCs and wireless carriers contract with third-party “least-cost routing” providers to connect calls to their destination at the lowest available cost. Although many of these contracts include strictly-defined performance parameters, the FCC determined in the Order that, in some cases, performance levels are not being met and that some calls are not connecting at all. There was also evidence that some providers even create artificial ringing or busy tones to make calling parties believe that their calls are going through, but just not being answered when, in fact, the call is not being completed.

In February 2012, the FCC issued a Declaratory Ruling designed to hold originating carriers responsible for the adequacy of call quality of calls destined for rural areas.² In that declaratory ruling, the FCC clarified that carrier practices that lead to call completion failure and poor call quality may violate the Communications Act, and told carriers that they are responsible for the provision of service to their customers even when they contract with another provider, such as a least cost routing provider, to carry a call to its destination. The FCC also issued a notice of proposed rulemaking to determine further steps to address the problem.

Later, in an effort to demonstrate its commitment to the issue, the FCC entered a consent decree with Level 3 for its call routing and completion practices.³ Without admitting any wrongdoing, Level 3 agreed to make a $975,000 “voluntary contribution” to the U.S. Treasury, and agreed to complete long-distance calls to incumbent local exchange carriers in rural areas at a rate within 5% of that in non-rural areas over a two-year period, to report compliance with that benchmark quarterly beginning in January 2014, and to make an additional $1,000,000 “voluntary” contribution if a benchmark is missed. In addition, Level 3 agreed to: (1) develop scorecards for intermediate providers used to route calls, assessing the providers’ performance with regard to post-dial delay in connecting calls, network failure and call completion rates; (2) identify problematic routes to intermediate providers monthly; (3) cease using poorly performing intermediate providers; and (4) assist the FCC Enforcement Bureau in other investigations by providing data concerning the performance of intermediate providers.

The New Rules
The new rules apply only to “Covered Providers.” A Covered Provider is any carrier that provides long-distance voice service, including LECs, IXCs, CMRS providers, as well as interconnected and one-way VoIP service providers, that (1) satisfies the customer size requirement (more than 100,000 domestic retail subscriber lines) and (2) makes the “initial long-distance call path choice” for the long distance call. The term “initial long-distance call path choice” means the static or dynamic selection of the path for a long-distance call based on the called number of the individual call. (The IXC to whom the Covered Provider hands the call is considered an “intermediate carrier” under the taxonomy of the new rules.)

Thus, a provider is not a “Covered Provider” if it indiscriminately hands-off all long-distance calls to a single IXC or allocates long distance calls to two or more IXCs based on factors other than the called number (for example, least cost routing algorithms, volume, geographic origin, or basic jurisdiction (i.e., all intrastate vs. interstate and international)).

Recordkeeping and Retention Requirements
Covered Providers must collect the following information about each long distance call attempt: calling party number; called party number; date; time of day; whether the call is handed-off to an intermediate provider and, if so, which intermediate provider; whether the call is going to a rural carrier and, if so, which rural carrier, as identified by its Operating Carrier Number (OCN); whether the call is interstate or intrastate; whether the call attempt was answered; and whether the call attempt was completed to the incumbent LEC but signaled as busy, ring no answer, or unassigned number.

Call attempts that are returned to the originating carrier by the intermediate provider and re-attempted count as a single call attempt and call attempts to toll-free numbers should not be counted.

The new rules require that the foregoing information be retained for a period of six months only for call attempts to a rural OCN; however, the data must be collected for all call attempts for reporting purposes. Covered Providers and their affiliates who are also Covered Providers may record and retain the foregoing information individually or in the aggregate.

Reporting Requirements
Each Covered Provider must submit a certified report once per calendar quarter that includes the following data for each full month in that quarter:

For each rural OCN:

1. 1. The OCN and the state; and
   2. For long distance call attempts, the total number of attempted calls, the number of attempted calls that were answered, and the number of attempted calls that were not answered, reported separately for call attempts signaled as busy, ring no answer, or unassigned number.

For non-rural OCNs: The same information described in (2) but reported in the aggregate.

Data for interstate and intrastate calls must be reported separately. In addition, Covered Providers may submit separate calculations in their reports that segregate autodialer traffic from other traffic, accompanied by an explanation of the method the provider used to identify the autodialer traffic. Covered Providers and their affiliates who are also Covered Providers may report the foregoing information individually or in the aggregate.

Safe Harbor
The FCC adopted a safe harbor that allows a Covered Provider to reduce its reporting obligations and reduce the data retention obligations from six months to three months. To qualify for the safe harbor, a Covered Provider must certify on an annual basis either that it uses no intermediate carriers, or that all of its contracts with directly connected intermediate carriers allow those intermediate carriers to pass a call to no more than one additional intermediate carrier before the call reaches the terminating carrier or terminating tandem. If intermediate carriers are used, the Covered Provider must also certify that (1) any nondisclosure agreement with an intermediate carrier permits the Covered Provider to reveal the identity of the directly connected intermediate carrier and any additional intermediate carriers to the FCC and to the rural ILECs whose incoming long-distance calls are affected by the intermediate carrier’s performance and (2) that it has a process in place to monitor the performance of its intermediate carriers.

Covered Providers may utilize the safe harbor by filing a certification on any of the four quarterly filing dates throughout the year (and filings are due annually thereafter).

Voluntary Reporting by Rural Incumbent Local Exchange Carriers
Rural ILECs may, but are not required to, report quarterly on the number of incoming long-distance call attempts received, the number answered on its network, and the call answer rate calculation for each of the previous three months, by the reporting dates for Covered Providers.

Disclosure of Reported Data
The FCC adopted streamlined procedures for Covered Providers to request confidentiality for submitted data under section 0.459 of the FCC’s rules. The FCC expects to make aggregated data available to states and the public.

False Ring Signaling
The Order also adopts a new rule that prohibits false audible ringing, which occurs when an originating or intermediate carrier prematurely triggers audible ring tones to the calling party before the call setup request has actually reached the terminating carrier. False audible ringing causes the calling party to believe the phone is ringing at the called party’s premises when it is not.

Under the new rule, all originating and intermediate carriers are prohibited from causing audible ringing to be sent to the calling party before the terminating provider has signaled that the called party is being alerted (alerting the called party includes alerting devices, services or parties that can answer the call such as an interactive voice response, answering service, voicemail or call-forwarding system or any such system that can cause the network to register that the terminating party has gone off hook). In addition, originating and intermediate carriers must convey audio tones and announcements sent by the terminating provider to the calling party.

FCC Report
The Order directs the Wireline Competition Bureau to publish information analyzing the effectiveness of the rules based on the first two years of the program and to recommend changes, if necessary.

Further Notice of Proposed Rulemaking
The FCC also issued a Further Notice of Proposed Rulemaking (FNPRM) that covers several issues related to those covered by the new rules. Comments on the FNPRM are due 30 days after the date of publication in the Federal Register and reply comments are due 60 days after publication.

The FNPRM seeks comment on the following issues:

Autodialer Traffic

• Whether providers are able to isolate autodialer calls because of the way such traffic is delivered or otherwise and what are the burdens and benefits of distinguishing autodialer traffic. 
• Whether Covered Providers should be required to file a separate report that segregates autodialer traffic from other traffic, accompanied by an explanation of the method used to identify the autodialer traffic, and on the relative benefits and burdens of doing so.

Intermediate Providers

• Whether the new collection, retention, and reporting rules should be extended to intermediate providers (or a subset thereof), whether the FCC has the authority to do so, and if so extended, whether the burden on the originating carrier should be reduced or eliminated.
• Whether certification or other obligations should be imposed on intermediate carriers (such as certifying compliance with intercarrier compensation orders, tariffs and agreements, obtaining certifications from its downstream providers used to terminate traffic, certifying the maximum number of intermediate downstream carriers it will use to deliver a call to a particular area, prohibiting intermediate carriers that fail to provide such certifications from carrying traffic).

Modifications to the Safe Harbor

• Whether the safe harbor adopted should be modified based on compliance with certain industry standards or performance metrics. 
• Whether the FCC should relieve any of the data retention obligations if the adopted safe harbor is revised or another safe harbor is adopted.

Rural Incumbent Local Exchange Carriers

• Whether rural ILECs should be required to file terminating call answer rate data reports and if so, whether only rural ILECs above a certain size should be required to submit such reports.

Additional Rule Changes

• Whether rules formally codifying existing prohibitions on blocking, choking, reducing, or restricting traffic should be adopted.
• Whether any additional requirements should be adopted with respect to acts or omissions by a carrier that directly block, choke, reduce, or restrict traffic, governing its acts or omissions with respect to its intermediate providers, or that otherwise lead to rural call completion problems.
• Whether additional guidance should be provided as to how existing or any new requirements should apply to specific scenarios.

Next Steps
Providers should review the Order carefully to determine their status under the new rules and, if they are covered, whether they can readily comply with the new rules’ reporting requirements. Please do not hesitate to contact us if we can provide assistance and/or if you interested in filing comments in the further rulemaking.

FOOTNOTES

1 Rural Call Completion, Report and Order and Further Notice of Proposed Rulemaking, FCC WC Dkt. No. 13-39, FCC No. 13-135, ___ FCC Rcd. ___ (2013).

2 Developing an Unified Intercarrier Compensation Regime, Declaratory Ruling, 27 FCC Rcd. 1351 (2012).

3 In the Matter of Level 3 Communications, LLC, Order, 28 FCC Rcd 2274 (2013).