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FCC to Consider Scope of VoIP Interconnection Rights and Related Issues

03.09.06
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On March 7 the Federal Communications Commission (“FCC”) formally sought comments on two critical issues for VoIP providers: interconnection and competition with rural telephone companies. The FCC acted in response to requests from Time Warner Cable to: (1) declare that competitive LECs (“CLECs”) carrying the traffic of VoIP providers have the right to interconnect with incumbent LECs (“ILECs”) and exchange traffic over the public switched telephone network (“PSTN”) for the purpose of connecting VoIP providers to the PSTN; and (2) pre-empt a decision from South Carolina regulators preventing Time Warner from offering competing telephone services in areas served by rural ILECs.

1) Interconnection Rights of Wholesale Telecommunications Carriers Serving VoIP Service Providers

Time Warner has asked the FCC to affirm that providing connectivity to the PSTN for VoIP providers is a “carrier” function, so that CLECs who serve VoIP providers have interconnection rights against ILECs for such traffic. A ruling is needed because PSCs in South Carolina and Nebraska have held that carriers like Sprint and MCI may not demand interconnection with the PSTN for the purpose of providing wholesale telecommunications services, in the form of call termination and origination to VoIP service providers.

The South Carolina and Nebraska PSCs based their decisions on a narrow reading of Section 251 of the Communications Act (“Act”)—finding that interconnection is only required if the CLEC is serving its own retail end users. Under this logic interconnecting CLECs like Sprint, MCI or Level 3 may not be able to provide VoIP providers access to the PSTN through existing interconnection arrangements.

Time Warner asks the FCC to rule that CLECs have the right to interconnect with ILECs and provide interconnection service to VoIP providers, effectively reversing the two PSC decisions. More specifically, Time Warner seeks a declaratory ruling that CLECs have the statutory right to interconnect for the purposes of providing wholesale telecommunications services. We believe that Time Warner’s request is well grounded. However, some state PSCs,either in response to the FCC’s pre-emption of jurisdiction over VoIP, or at the urging of ILECs,disagree. Obviously these interconnection rights are critical to VoIP operations.

2) Pre-empting State PSC Decisions Prohibiting Competition with Rural Telephone Companies

Time Warner also seeks to pre-empt the South Carolina PSC’s decision denying Time Warner the right to provide service in areas served by independent “rural” ILECs. Section 251(f) of the Act gives rural ILECs some protection from having to comply with the full set of Section 251(c) interconnection obligations. The South Carolina PSC, however, has apparently taken the view that those protections justify failing to authorize competition (in the form of a “Certificate of Public Convenience and Necessity”) in those ILECs’ territories at all. Time Warner argues that this violates Section 253 of the Act, which prohibits (subject to some conditions not relevant here) state or local governmental actions that constitute barriers to entry, and asks the FCC to pre-empt the South Carolina PSC's decision.

VoIP Service Providers Should File Comments With the FCC to Support Time Warner's Requests

We believe that Time Warner's requests raise two critical regulatory issues facing cable operators and other entities providing (or planning to provide) VoIP service. If the state decisions under challenge remain in place they will erode VoIP providers' ability to provide competitive voice services. For these reasons we believe it is important for VoIP service providers to file comments in these proceedings to support Time Warner's requests.

Interested parties must file comments no later than March 27, and reply comments by April 11. If you would like more information, or are interested in filing comments or monitoring the proceedings, please contact us.

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