W&G Regulatory Advisory: FCC Issues Order Extending TRS Fund Obligations to Non-Interconnected VoIP Providers

November 01, 2011

On October 7, 2011, the FCC issued an order extending obligations to contribute to the Telecommunications Relay Service (“TRS”) Fund to non-interconnected VoIP providers.  Previously, telecommunications carriers and interconnected VoIP service providers contributed to the TRS Fund on the basis of interstate end-user revenues.  The Twenty-First Century Communications and Video Accessibility Act of 2010 (“CVAA”) codified interconnected VoIP providers’ contribution to the TRS Fund as well as mandated that non-interconnected VoIP providers also participate in and contribute to the TRS Fund.

In implementing this provision of the CVAA, the FCC has established that TRS Fund contributions by non-interconnected VoIP providers will be assessed against interstate end-user revenues with some exceptions:

·  If interstate end-user revenues are generated from non-interconnected VoIP services that are offered with other, non-VoIP, services, Fund contributions will not be assessed against those revenues, unless

o   The VoIP service is offered as a standalone service for a fee, or

o   The non-VoIP service is offered without the VoIP service at a discounted price.

In creating these exceptions, the Commission has acknowledged that some services may integrate voice communications functions, but the revenues generated from such functions may not be identifiable or separable from the non-voice functions of the service.  Only those non-interconnected VoIP providers that can properly determine what interstate end-user revenue is generated from VoIP services are required to contribute to the TRS Fund.  Participation by other non-interconnected VoIP providers – e.g., those that generate no interstate end-user revenue or those for which it would be impossible to determine the applicable interstate end-user revenue – is therefore waived.

Non-interconnected VoIP providers may allocate their end-user revenues according to the same methods used by telecommunications carriers and interconnected VoIP providers, including use of the safe harbor established in the CPE Bundling Order.[1]  In addition, non-interconnected VoIP providers may use actual revenues, conduct a traffic study, or use a safe harbor percentage of 64.9 percent to estimate the interstate portion of their end-user revenues, as set forth in the VoIP TRS Order.[2]  The minimum contribution by a non-interconnected VoIP provider with interstate end-user revenue is $25.

Non-interconnected VoIP providers that are required to contribute to the Fund must, like other TRS Fund contributors, register with the FCC, including obtaining an FCC registration number (“FRN”), designating a registered agent for service of process in the District of Columbia, and filing Form 499-A, which will be modified to include a clearly marked block for reporting of “non-interconnected VoIP revenues not included in any other category.”  Non-interconnected VoIP providers who are not already Form 499 filers have until December 31, 2011 to register with the FCC and designate a D.C. agent, and must submit their 2011 fourth-quarter interstate end-user revenues on Form 499-A (which will be the basis for TRS Fund contributions for 2012-2013) by April 1, 2012.

For more information regarding this Order or our telecommunications practice, please contact John Nakahata at (202) 730-1320 or jnakahata@wiltshiregrannis.com.

This advisory is not intended to convey legal advice.  It is circulated as a convenience and is not intended to reflect or create an attorney-client relationship as to its subject matter.

[1]  Police and Rules Concerning the Interstate, Interexchange Marketplace/Implementation of Section 254(g) of the Communications Act of 1934, As Amended/1998 Biennial Review – Review of Customer Premises Equipment and Enhanced Services Unbundling Rules in the Interexchange, Exchange, and Local Exchange Markets, Report and Order, 16 FCC Rcd. 7418, 7447-48, ¶¶ 47, 52 (2001).

[2]    Implementation of Sections 255 and 251(a)(2) of the Communications Act of 1934, as Enacted by the Telecommunications Act of 1996: Access to Telecommunications Service, Telecommunications Equipment and Customer Premises Equipment by Persons with Disabilities; Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities, Report and Order, 22 FCC Rcd. 11275, 11295-96, ¶ 40 (2007).



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