On August 15, 2018, the FCC released its Third Order in the Rural Call Completion (RCC) proceeding (WC Docket No. 13-39). The Third RCC Order builds on the Commission’s prior rulings and is the first order that implements the requirements of the Rural Call Completion Act, which was enacted in late 2017. The goal of these proceedings is to improve the quality of telephone service in rural America, though the new rules extend to providers throughout the country, regardless of where they provide service.

The Third RCC Order imposes three principal requirements: (1) establishes an intermediate provider registry, (2) requires that covered providers use only registered intermediate providers in the call routing process, and (3) requires covered providers to be able to identify and report to the FCC all the intermediate providers in the path of a given call.

Compliance with these new obligations will require on-going monitoring and executing new contracts (or amending old ones) that impose the new compliance obligations on intermediate providers. We review the most significant requirements of the Third RCC Order below.

1. “Covered Voice Communications,” “Covered Providers,” and “Intermediate Providers”

The new rules apply to all voice calls, including VoIP calls, to or from a North American telephone number handled by providers serving at least 100,000 domestic retail subscriber lines.1 A “covered provider” is “a provider of long-distance voice service that makes the initial long-distance call path choice for more than 100,000 domestic retail subscriber lines. 2 In other words, a “covered provider” is, in most cases, the company serving the retail end-user and can include, by definition, ILECs, CLECs, and VoIP providers.

An “intermediate provider” is the next provider in the call path (i.e., the provider to whom the “covered provider” hands-off the call) as well the providers after that, if any, up to the final hand-off of the call to the “terminating provider.” (The terminating provider is the one that delivers the call to the called-party).

2. Intermediate Provider Registration

The RCC Act requires intermediate providers to register with the Commission via a web portal on the FCC’s website. The registration requirement applies to any “intermediate provider that holds itself out as offering the capability to transmit covered voice communications from one destination to another and that charges any rate to any other entity (including an affiliated entity) for the transmission [of the call].” 47 U.S.C. § 262(a).

The registration requirement extends to entities that “charge any rate to any other entity.” Id. § 262(a). The FCC has construed the scope of the registration requirement broadly to include “non-fee” or “non-monetary” arrangements, such as “in-kind” arrangements.3 Thus, the obligation applies to bill-and-keep peering arrangements in which no monetary payments are made.

Intermediate providers must provide the following five categories of information:

(1) business name(s) and primary address;

(2) the name(s), telephone number(s), email address(es), and business address(es) of the intermediate provider’s regulatory contact and/or designated agent for service of process;

(3) all business names that the intermediate provider has used in the past;

(4) the state(s) in which the intermediate provider provides service; and

(5) the name, title, business address, telephone number, and email address of at least one person as well as the department within the company responsible for addressing rural call completion issues.

Intermediate providers must register within 30 days of the FCC announcing OMB approval of the final rules establishing the registry. Registrations must be kept up-to-date. The FCC indicates that it will exercise its forfeiture authority to enforce the RCC Act rules.

3. Covered Providers May Not Use Unregistered Intermediate Providers

The RCC Act states that “A covered provider may not use an intermediate provider to transmit covered voice communications unless such intermediate provider is registered under subsection (a)(1).” The FCC states that this requirement applies to “to providers at all intermediate points in the call chain,” and applies regardless of whether the covered provider is in direct privity with every provider in the call chain. Third RCC Order ¶ 25. Consistent with the monitoring rule established in the Second RCC Order, covered providers are to use contractual restrictions that flow down the entire call path, as the following passage from the Third RCC Order explains:

We require covered providers to (i) ensure that any directly contracted intermediate provider is registered with the Commission; and (ii) implement ‘contractual restrictions that are reasonably calculated to ensure’ that any subsequent intermediate providers with which the covered provider does not directly contract are registered under section 262(a). As with the monitoring rule, covered providers must ‘ensure that these contractual restrictions flow down the entire intermediate provider call path.’ For example, covered providers may require that, as a condition of accepting traffic, (i) any directly contracted intermediate providers must agree to not hand off traffic to any unregistered intermediate providers; and (ii) that they will impose this same restriction on any subsequently contracted intermediate providers.

Third RCC Order ¶ 29 (internal quotations omitted).

Intermediate providers have 30-days to register after the rules become effective to register. Covered providers have 90-days after that to implement the requirements described above.

4. Covered providers must be capable of identifying all intermediate providers in the call path.

Finally, covered providers must know, or be capable of knowing, the identity of all intermediate providers in the path of a given call and must disclose this information to the FCC within two weeks of being asked to do so. As with the requirement that only registered intermediate carriers be used, this requirement is to be implemented via contractual flow-down provisions.

Conclusion

Providers must assess where they fit within these new rules and the steps that must be taken to comply. They must put procedures in place to assure that intermediate provider vendors are registered with the FCC, must revise vendor contracts to assure that all other intermediate providers in the call path are also registered, and ensure that procedures are in place that enable them to identify all intermediate providers in the call path.