Complex USAC Registration and 499 Reporting Rules Now in Effect for Non–Interconnected VoIP Services


If revenue reporting using FCC Form 499-A was not complicated enough, the Federal Communications Commission (“FCC”) and USAC, the Universal Service Fund administrator, recently released a revised Form 499-A, accompanied by revised Instructions to implement the Registration, Reporting and TRS Fund contribution obligations of providers of certain types of non-Interconnected Voice over IP services. The new rules became effective on October 7, 2011, a full week before the revised Form 499-A and Instructions became publicly available, thereby affording service providers potentially affected by the new rules no time at all to digest the rules, comprehend the new Form and Instructions, or implement any internal changes needed to accommodate the change in regulatory requirements affecting the entirely new category of services called, “non-Interconnected VoIP.”

On October 7, 2011, the FCC released an order adopting rules to implement Section 103(b) of the Twenty-First Century Communications and Video Accessibility Act of 2010 (“CVAA” or “Act”).  By enacting the CVAA, Congress authorized the Commission to implement rules and regulations applicable to providers of “advanced communications services.”  Under the Act, “advanced communications services” include:
(a) Interconnected VoIP service;
(b) Non-interconnected VoIP service;
(c) Electronic messaging services; and
(d) Interoperable video conferencing service.
The Act defines “non-interconnected VoIP service” as a service that:
“(i) enables real-time voice communications that originate from or terminate to the user’s location using Internet protocol or any successor protocol; and (ii) requires Internet protocol compatible customer premises equipment; and does not include any service that is interconnected.”
Section 103(b) of the Act required that by October 2011, the Commission promulgate rules requiring interconnected and non-interconnected VoIP providers to contribute to the Telecommunications Relay Services (“TRS”) Fund.  As interconnected VoIP providers are already required to contribute, the provision effectively applies only to non-interconnected VoIP providers.
To implement Section 103(b), the Commission ordered non-interconnected VoIP service providers to (1) register with the Commission and designate a District of Columbia agent for service of process using FCC Form 499-A in accordance with the form’s instructions by December 30, 2011; and (2) complete and submit FCC Form 499-A to report fourth-quarter 2011 interstate end-user revenues, which shall be the basis for TRS Fund contributions for the 2012-2013 funding period, by April 1, 2012.
The Commission clarified that the contribution obligation applies only to providers of non-interconnected VoIP services that offer non-interconnected VoIP services: (a) on a stand-alone basis for a fee; or (b) with other (non-VoIP) services that generate end-user revenues (1) when those providers also offer the non-interconnected VoIP service on a stand-alone basis for a fee, or (2) when those providers also offer the other (non-VoIP) services without the non-interconnected VoIP service feature at a different (discounted) price.  When a non-interconnected VoIP service provider offers the non-VoIP component of a bundled service (with non-VoIP and non-interconnected VoIP components), at a different (discounted) price, it may rely upon the Commission’s safe harbor methods in its CPE Bundling Order to allocate revenues.  In addition, non-I-VoIP providers may rely upon the FCC’s safe harbor for jurisdictionalizing traffic (i.e. treat 64.9% of its revenues as interstate, thereby subject to TRS).
In other words, where interstate end-user revenues are generated from non-interconnected VoIP services offered with other (non-VoIP) services, TRS contributions will not be assessed against those revenues unless the providers of such services (1) also offer the non-interconnected VoIP service on a stand-alone basis for a fee; or (2) also offer the non-VoIP services without the non-interconnected VoIP services at a different (discounted) price.
Per the FCC’s rules, only non-interconnected VoIP service providers that are actually subject to TRS contribution obligations are required to register and report via FCC Form 499-A. Thus, even if a service provider offers “non-interconnected VoIP” service, unless it likewise meets the criteria for contribution, the provider will not be required to register and report.
The revised Form 499-A instructions for 2011 now provide that “All providers of ‘non-interconnected VoIP service’ (as defined in section 64.601(a) of the Commission’s rules), with interstate end-user revenues subject to TRS contributions, must file this Worksheet in order to register with the Commission by December 31, 2011.” The form includes, at line 105, a checkbox for a provider to identify itself as offering “non-interconnected VoIP.”  The 2012 FCC Form 499-A instructions include the foregoing revisions as well as some additional modifications, including a updates to lines 404.1-404.3 and 414.1-414.2 and the addition of line 418.4(d) for reporting of “non-interconnected VoIP revenues not included in any other category.”
While simple in theory, USAC’s instructions implementing the FCC’s order raise a number of reporting concerns for non-interconnected VoIP service providers, which are likely to complicate reporting for this new category of regulated services.  In particular, a number of carrier’s carrier reporting issues may arise as a result of the manner in which USAC has chosen to implement the FCC’s TRS Order.
Clients who think they may be providing non-interconnected VoIP services or who are uncertain as to whether a particular service qualifies as non-Interconnected VoIP (either for purposes of registration, TRS contributions or both) are strongly advised to contact the Attorney assigned to their account for a full review of their services and the possible implications of the FCC’s Order, new rules and USAC’s implementing instructions on their businesses and regulatory responsibilities.
Additionally, upstream service providers who think they may be selling non-Interconnected VoIP services to downstream resellers and who are concerned about ensuring their ability to exempt wholesale revenue from contribution requirements, i.e., compliance with the limited Carrier’s Carrier Rule applicable to TRS contributions as set forth in Line 511 of Form 499-A, are also urged to contact the Attorney assigned to their account to obtain guidance.

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