FCC Order Clarifies Interconnection Rights of Carriers Serving VoIP Providers

In a widely anticipated decision issued March 1, 2007, the Federal Communications Commission (FCC) granted a Petition for Declaratory Ruling filed by Time Warner Cable (TWC). TWC’s petition, filed exactly one year ago, asked the FCC to declare that telecommunications carriers are entitled, pursuant to Sections 251(a) and (b) of the Communications Act, to interconnect with incumbent local exchange carriers in order to provide public switched telephone network (PSTN) connectivity and other telecommunications services to providers of interconnected Voice over Internet Protocol (VoIP) service.¹ The order addresses many, but hardly all, of the issues facing interconnected VoIP providers. Importantly, it does not resolve the issue of how VoIP will be classified for regulatory purposes, i.e., whether VoIP is an information service or a telecommunications service.

TWC’s petition was precipitated by state regulatory orders in South Carolina and Nebraska that denied Sprint and MCI the right to interconnect with certain rural local exchange carriers (RLECs) in order to provide PSTN connectivity to TWC. The RLECs had opposed Sprint’s and MCI’s interconnection requests on three grounds: (1) interconnection under Section 251 of the Act is only available for retail carriers, i.e., carriers that serve end-users directly, but not to “wholesale carriers” such as Sprint and MCI, who planned to serve VoIP providers like TWC who, in turn, would have the end-user relationships; (2) interconnection is not available for the purpose of providing a VoIP service; and (3) the RLECs claimed that they did not have to interconnect with competitive LECs at all in light of the so-called “Rural Exemption” in Section 251(f), which potentially exempts RLECs from certain interconnection obligations.

The FCC’s order addressed the first two arguments. First, citing a long line of precedent, it ruled that the Act does not differentiate between the provision of telecommunications services on a wholesale or retail basis, so providers of wholesale telecommunications services enjoy the same rights as any other “telecommunications carrier” under those provisions of the Act.

As to the RLECs’ second argument, the FCC had little trouble ruling that the regulatory classification of the service provided to the ultimate end user does not affect the wholesale telecommunications carrier’s rights to interconnect under Section 251. Thus, the classification of a third-party provider’s VoIP service as an information service or a telecommunications service is irrelevant to the issue of whether a wholesale provider of telecommunications may seek interconnection under Section 251(a) and (b). What matters is that the wholesale carrier is providing telecommunications for a fee; the type of service the carrier’s customer is providing (in this case, VoIP) is not relevant.

Other noteworthy aspects of the order include the following:

• The FCC affirmed that these interconnection rights arise under Sections 251(a) and (b), thereby further solidifying the independent right of interconnection under those provisions, which had been the subject of some debate. The FCC did not extend its holding to requests for interconnection under Section 251(c). This is significant because, in certain circumstances, RLECs may claim an exemption from certain interconnection obligations arising under Section 251(c). By focusing its ruling on Sections 251(a) and (b), the FCC rejected the RLECs’ positions without addressing the issue head on.
• The order cites Section 706 (the “Advanced Telecommunications Incentives” provision of the Act) as a basis for finding that CLECs can provide wholesale interconnection to VoIP providers. Given the FCC had a sufficient basis under Section 251 and its existing precedent to decide this case, its willingness to invoke Section 706 may foreshadow future elaboration of that authority for commission action, possibly in the IP-Enabled Services proceeding.
• The order makes clear that this FCC decision does not extend to VoIP providers directly. In other words, this order does not give VoIP providers their own interconnection rights.
• The order clarifies that CLECs serving interconnected VoIP providers must provide number portability pursuant to section 52.23 of the FCC’s rules when a VoIP provider’s customer changes carriers. This eliminates a somewhat technical argument that some VoIP providers had raised to resist number portability, viz., that since the VoIP provider—not the end user—was the “customer” of the CLEC, the actual end user (the customer of the VoIP provider) could not keep his or her telephone number when changing carriers. The order confirms that a CLEC providing wholesale services to a VoIP provider is obliged to port-out that number if the actual end user changes providers, irrespective of the wishes of the VoIP provider.

Davis Wright Tremaine counsels interconnected VoIP service providers and telecommunications carriers on these and other issues. If you would like additional information or assistance with these matters, please contact us.

Footnotes

1 Memorandum Opinion and Order, TWC Request for Declaratory Ruling that Competitive Local Exchange Carriers May Obtain Interconnection under Section 251 of the Communications Act of 1934, as Amended, to Provide Wholesale Telecommunications Services to VoIP Providers, WC Docket No. 06-55, DA 07-709 (Mar. 1, 2007) (“Order”).