On May 13, 2009, the Federal Communications Commission (“FCC”) released a Report & Order extending Section 214(a)‘s discontinuance requirements to providers of interconnected VoIP (“I-VoIP”) services. Pursuant to the Order, all I-VoIP providers must now comply with the FCC‘s discontinuance rules, 47 C.F.R. §§ 63.60 – 63.90, by formally notifying the FCC, their customers, and state and federal government officials and obtaining “prior authorization” before discontinuing, reducing, or impairing services to retail customers. The FCC‘s discontinuance rules are intended to extend regulatory protections to consumers of residential and business I-VoIP services alike.

All clients who provide bi-directional, PSTN accessible VoIP services, one-directional VoIP services, and those who provide the underlying IP-based transport services to VoIP providers should carefully review and comprehend the FCC‘s new VoIP discontinuance rules.

In addition, all affected clients should analyze and understand not only the business implications, but also the complex legal issues caused by the FCC‘s decision. In particular, we would direct clients‘ attention to the impact the rules may have on contractual relationships with existing and prospective retail customers. For suppliers that support the provisioning of retail I-VoIP services, we also direct you to evaluate implications on your supplier relationships and contractual duties. For example:

• Do discontinuance rules apply to IP-based “platform” providers or VoIP Enablers, i.e. companies that support retail VoIP and a variety of other IP-based services, but who may not provide direct interconnection to the PSTN or who themselves may not qualify as I-VoIP providers?
• How do the rules apply to bundled I-VoIP and non-telecommunications service offerings?
• How do the rules apply to underlying wholesale providers, and other telecommunications services resellers who may not provide service directly to consumers?
• How can an “upstream” VoIP provider stop providing service to an interconnected VoIP provider, e.g.for non-payment, without violating Section 214(a)?
• Does this confirm that other Section 214 obligations, such as international licensing, extend to VoIP services or is it evidence that Section 214 is inapplicable until expressly extended?
• How can nomadic interconnected VoIP providers determine which states it is considered to be “offering” services in, such that the provider can send proper notice to state government authorities in compliance with the new 214 discontinuance rules?

Answers to these questions are not entirely clear from the language of the FCC‘s Order. Thus, we advise all I-VoIP providers and the businesses that provide telecommunications or other services that “power” I-VoIP, to carefully examine and fully understand their obligations under Section 214(a). Minimally, we advise I-VoIP provider clients to seek counsel prior to discontinuing, impairing, or reducing service to customers to ensure compliance with the extended Section 214(a) discontinuance obligations. As the FCC indicates, this not only includes stopping service entirely, but may include changing the type of service provided to customers.

Clients who have any further questions or concerns about the information contained in the Advisory should contact Jonathan Marashlian at: jsm@commlawgroup.com or 703-714-1313.