Entries in NECA (5)


Rural Panelists Discuss Call Termination Problems – Causes, Effects, Solutions

A Perfect Storm of Economic Incentives and Technology Brews Arbitrage

USF/ICC reform may be the dominant rural telecom regulatory topic at the moment, but rural representatives from across the country took the initiative to come to the FCC this week and present information about rural call termination problems at a public Workshop. The purpose of the October 18 Workshop, which also included panelists from large ILECs and CLECs (but noticeably no pure VoIP providers), was to identify why these problems are occurring, what impact the problems have on companies and consumers, and how the problems can be solved with regulation, standards, enforcement or best practices.

This Workshop was the result of strong efforts by the Rural Associations and several state Commissions, who have pleaded with the FCC to address rural call termination issues throughout the year (The ILEC Advisor:  FCC Finally Gets the Message about Call Termination Problems). Commissioner Mignon Clyburn opened the Workshop by acknowledging that rural call termination problems are indeed troubling for public safety, health care, businesses and people just trying to communicate by phone. She sympathetically said, “I want my call to go through, and I know you want yours to go through as well.”

The first panel tackled the causes, scope and impact of the problems. Panelists included Robert Gnapp (NECA), Fritz Hendricks (Onvoy Voice Services), Denny Law (Golden West Telecommunications), Dave Lewis (ANPI/Zone Telecom), Kim Meola (AT&T), Dale Merten (Toledo Telephone) and Tami Spocogee (PAETEC). Gnapp summed up the situation by saying, “This is the most troubling, time consuming and frustrating problem [rural providers] have ever had to deal with.”  Hendricks added that it “vilifies” RLECs, even though he has “yet to find a rural carrier” who was at technologically at fault.

Lewis and Hendricks provided insightful comments about how the relationship between economic incentives and technology creates ripe opportunities for arbitrage. Lewis reasoned that as telephone rates increase, companies lose business, and they may look for ways to evade economic challenges and “change the cost dynamics.” Unfortunately, it costs more to terminate calls in rural areas, so companies facing economic pressure might refuse to terminate calls to high-cost areas in an effort to save money. Hendricks explained that “technology provides a vehicle for arbitrage, but economics create the incentive.”

In terms of the causes of call termination problems, many are quick to blame Least Cost Routing (LCR) technologies (and the carriers who utilize LCR). However, several panelists pointed out that LCR has been around for at least a decade, whereas these problems have dramatically increased in the last couple of years. Spocogee stated that LCR isn’t the problem if it is done correctly. Another possible troublemaker called “SIM Box Fraud” was also identified.

There was no shortage of examples of the impact on consumers and rural economies. Merten described a rural community in the Pacific Northwest with an economy based largely on tourism and charter fishing. He claimed that this rural community has been “absolutely devastated” as a result of calls not being completed to the charter fishing businesses. Merten’s company has invested significant resources and time to track and identify the source of call termination problems. In Law’s South Dakota service area, hundreds of automated calls from a school district failed to reach parents to notify them of school closings or other important news. Other panelists and audience members cited specific difficulties experienced by rural health care providers and sheriff’s offices. Gnapp explained that there have been at least 10,000 documented complaints, but the complaints are only a “small subset” of the real number of failed calls to rural areas, which could be in the millions or tens of millions.

The second panel addressed possible resolutions. Panelists included Scott Booth (Verizon), Jill Canfield (NTCA), Martin Corso (TDS Telecommunications Corp.), Penn Pfautz (AT&T) and Rick Ratliff (Sprint). The primary means to address call termination problems appear to be through regulatory intervention, enforcement, industry standards or best practices; but the panelists differed as to which solution is most appropriate. Considering how diverse the sources and causes of call termination problems are, a combination of resolution mechanisms may be the best course of action going forward.

One of the biggest challenges is actually figuring out the source of the problem—without this key information, it is indeed difficult to remedy the situation. A “carrier list” of contacts at IXCs who will help rural carriers address and resolve problems has been created, but Canfield commented that the carrier list is only helpful if the customer complains, the originating IXC can be identified, and the originating IXC is on the list. She also said that it places the burden on the consumer, and Corso later added that business customers are especially reluctant to contact their customers and then tell them to contact their originating carriers—it is definitely a lot of trouble for all parties afflicted.

I thought it was interesting that the large ILEC panelists all seemed sympathetic and dedicated to working with the RLECs on these issues, but the ILECs have the capacity to invest millions of dollars and dedicated staff specifically to monitor and track down non-compliant parties. For example, Ratliff mentioned that Sprint has an email address for call termination complaints and “several staff” who just monitor complaints and “go after bad actors.” Buying expensive monitoring technology and hiring several full time employees to address call termination problems is a luxury that few—if any—small RLECs can afford right now, yet the number of complaints can reach dozens per day. I would imagine some RLECs could keep a full time employee busy by just addressing call termination complaints.

Differences aside, Pfautz insisted that AT&T “[makes] money by completing calls, not by dropping them on the floor.” Booth added that Verizon wants calls to be completed so consumers have a “positive experience;” and Sprint and AT&T are both dedicated to shutting down arbitragers and ending relationships with non-compliant intermediaries.

Will the pledges to take a hard line on arbitrage be sufficient, or does the FCC need to intervene? The rural panelists at the Workshop seemed to agree that the upcoming ICC reforms will not be a solution in themselves, and the ideal course of action may be a combination of best practices, monitoring, reporting and enforcement. Canfield stated that best practices are a good start, but not everyone will follow them so long as there are financial incentives not to; Corso added that monitoring alone is not an appropriate solution. Canfield also argued that the FCC has the authority and ability to issue forfeitures under the current call blocking rules, and these problems could be treated as de facto call blocking.

Overall, this Workshop was very interesting and definitely an important first step in getting the FCC’s attention and moving forward towards consensus and resolution. A number of states are also conducting inquiries on this issue; so hopefully industry, government and consumer stakeholders will begin experimenting with and implementing remedies.

Meanwhile, it would be great if the “bad actors” would take note that RLECs are not going to sit back and continue to let these problems reach an epidemic scale. The fact that a number of panelist and a large portion of the audience in attendance at the FCC came from all over the country really spoke to the gravity of this matter. Indeed the significance and somberness should not be underestimated—as an audience member who traveled to DC from rural Missouri said, “One death because of this issue is not worth the billions of dollars saved.”

The full video recording of the Workshop is available here.


FCC Finally Gets the Message about Rural Call Termination Problems  

After Months of Pleading by Rural Industry, FCC Announces Workshop and Task Force

On September 26, 2011, the FCC announced plans to hold a workshop on October 18 and launch a Rural Call Completion Task Force “to investigate and address the spreading problem of calls to rural areas that are being delayed or fail to connect.” The FCC’s announcement comes after months of letters, filings, and state efforts to catch the FCC’s attention on this growing problem. NTCA, OPASTCO, WTA and NECA have all been persistent about informing the FCC of call termination problems, and it looks like the FCC has finally gotten the message loud and clear—unlike many rural consumers who are not getting their calls and faxes.

In the September 26 press release, the FCC acknowledged that there has been a reported 2000% increase in call termination complaints between April 2010 and March 2011, and “Failed or degraded calls not only undermine the integrity of the nation’s telephone networks and frustrate customers, but they also pose a serious risk to public safety and harm the rural economy.”

A September 20 “Request for Public Workshop and Policy Statement on Call Routing and Termination Problems in Rural America” by NTCA ceo Shirley Bloomfield may have been the kick that the FCC needed. Bloomfield’s letter to FCC Chairman Julius Genachowski urges the FCC to “issue a clear and unequivocal policy statement” and conduct a public workshop. Bloomfield argues, “Consumers in rural communities deserve at least the same level of network reliability as urban consumers, and failures to deliver calls to rural America are just as worthy of examination in a public forum.” Bloomfield is referring to a recent FCC workshop on network reliability which resulted from network reliability issues being thrust in the spotlight after the recent East Coast earthquake and Hurricane Irene.

Bloomfield also explained that RLECs cannot handle the myriad call termination problems alone, and “Consideration and resolution of these issues can no longer be left to linger in endless debate, or in one-on-one operational discussions, or in behind the scenes industry workgroups, or in sporadic policy deliberations in small conference rooms” because these issues create “substantial risk for public tragedy and financial distress.”

In preparation for the October 18 Workshop, I thought it would be interesting to research recent association, carrier and state efforts to battle this pervasive, nationwide problem. I turned up a considerable amount of interesting information, summarized in the following timeline:

March 11, 2011 Rural Representatives meet with FCC: In this ex parte meeting, the Rural Representatives presented an overview of the rapidly increasing call termination problems experienced in a variety of states. 80% of respondents to an NTCA survey reported experiencing call termination problems. The Rural Representatives described the consequences of call termination problems for RLECs, businesses, consumers and public safety. Apparently, one business “invoiced its rural LEC for more than $50,000, citing lost sales from potential customers” when customers were repeatedly unable to reach the business by telephone.

April 4, 2011- Letter to Genachowski from Representative Robert Latta (R-OH): Rep. Latta explained that he represents the largest agricultural district in Ohio, which is served by 18 RLECs. Latta writes, “I am asking that you investigate the problem of incoming calls being terminated in rural areas and if unjust and unreasonable discrimination is occurring, if there is a violation of common carrier requirements, or if calls are being blocked.” Latta expresses concern that blocked or incomplete calls result in missed opportunities for small businesses. On August 2, FCC Chairman Genachowski responded saying that the FCC needs specific information, and “it is not clear if these calls are being dropped intentionally, or if there is a technical issue that prevents their completion.”

June 13, 2011- Rural Representatives send letter to FCC: This letter described in detail the call termination problems experienced by rural consumers, and hinted that magicJack and other Least Cost Routing (LCR) carriers may be at fault for some of the problems. The Rural Representatives described how difficult it is to identify the source of call termination problems, and that RLECs are often blamed even if they are not at fault (The ILEC Advisor: RLECs to FCC: Please Investigate Call Termination Problems, June 20, 2011).  

June 24, 2011- Oregon Public Utilities Commission Call Termination Workshop: This workshop included presentations by the Oregon Telephone Association RLEC members. Canby Telephone vp of network operations Brandon Zupancic presented a very interesting analysis of least cost routing. He argued, “Least cost routing, if implemented right, would benefit everyone. However, there are many unintended consequences of LCR!” Zupancic explains, “Some originating carriers route calls to LCR providers and those contracts stipulate that they will not complete calls to certain NPA-NXXs (due to costs to terminate in those areas)—but the originating carrier may not know that and keeps sending calls to that LCR provider destined for that terminating location.”

Zupancic also explains that rural customers and businesses are seeing significant problems with receiving faxes; and Canby has tested lines, tested inside wiring, verified filters, sent faxes to the afflicted customers from local lines, and even replaced customer fax machines with the company’s own devices only to see continued delivery failure. According to Zupancic, VoIP compression “creates excessive packet loss that fax machines cannot correct, so fax transmissions consistently fail at a high rate whenever they originate, transit, or terminate a VoIP/SIP network.”  To learn more about LCR, Zupancic's presentation is definitely worth a read (available here). The Oregon Public Utilities Commission announced a formal investigation into call termination problems on July 5, 2011. 

July 21, 2011- New Mexico Exchange Carriers Group presentation to NM Science Technology & Telecommunications Committee: Jeremy Graves, coo of Valley Telephone Cooperative, presented information about LCR and rural call termination problems in response to a request from the NM Science Technology & Telecommunications Committee. He stressed that RLECs cannot help customers resolve many of these problems, and the livelihood of rural residents and businesses is at stake. He explains that businesses, “in most cases, are solely dependent on their ability to receive calls. Calls to these businesses, when not completed, give the impression that they are closed and revenue is lost.” Graves presented the following chart which illustrates the nature of LCR:

September 7, 2011- Montana Telecommunications Association letter to FCC: MTA general manager Geoffrey Feiss writes, “It seems to me that a virus that has been afflicting telecommunications traffic nationwide for more than a year, which the FCC has been made aware of repeatedly, warrants at least as much attention as the also-important issue of intermittent loss of signal during natural disasters,” also referring to the recent East Coast earthquake and hurricane. Feiss includes letters from customers that highlight increasing problems in call quality, missed business opportunities, and concern about family members who cannot be reached by telephone.

September 20, 2011- Oklahoma Corporation Commission, “Making a Connection:” OCC announced that it sent a letter to the FCC supporting a July 20 National Association of Regulatory Utility Commissioners (NARUC) resolution to investigate call termination problems. NARUC determined that call termination problems “create negative public interest,” and “are antithetical to the public interest by creating confusion, isolation and frustration on the part of called parties and calling parties.” OCC is also conducting an inquiry.

These examples clearly illustrate that call termination problems are serious, substantial, and persistent. They are not a result of a technological defect in the RLECs’ networks, they are a result of regulatory loopholes and access charge avoidance schemes. Even though the FCC intends to reform the Intercarrier Compensation system soon, RLECs cannot afford any more delay on resolving call termination problems.

The failure to complete calls to rural customers on such a large scale weakens America’s entire telecommunications industry and creates inexcusable public safety risks in addition to lost business opportunities. The problems prevent family and friends from communicating with each other, and reflect poorly on an RLEC’s reputation. It is not only difficult for RLECs to troubleshoot these problems, but it is difficult to even explain to consumers what is happening when they cannot be reached by telephone or fax. How many everyday consumers would actually assume that a call isn’t completed because of least cost routing, much less understand it? More importantly, how many failed calls are not reported every day?

I, for one, am happy that the “call” to the FCC to address these problems went through. What do you think is the best course of resolution for rural call termination problems? Is ICC reform the solution, or should the FCC do more?


Rural Associations Urge FCC to Reject Last-Minute USF “Wish Lists”

The Consensus Framework is an Opportunity for Pragmatic and Meaningful Reform

In reply comments filed last week, NTCA, OPASTCO, WTA and NECA encouraged the FCC to adopt the RLEC Plan without modification, and reject various alternative plans filed in this last comment cycle on USF/ICC reform. The Rural Associations argue that the last-minute alternative plans “provide little, if anything, in the way of detail and even less in terms of how consumers would benefit by their enactment,” and are based mostly on “broad policy statements recast from earlier phases of these proceedings.” The Rural Associations believe that the FCC has in its hands a reasonable, realistic and practical framework for thorough reform with the Consensus Framework (RLEC and ABC Plans), and “The time for concepts and theories is long past. Reform will go nowhere if the industry continues to spiral around high-level policy debates and the grinding of ‘old axes’ in lieu of delving into the gritty details that are essential to complete the reform process.”

The Rural Associations explain that the RLEC Plan has received widespread support, and it presents a much less radical solution than some of the alternatives which propose hard caps on the fund, reverse auctions, and total elimination of access revenue. Furthermore, the Rural Associations explain that “The Consensus Framework represents a detailed, balanced and pragmatic approach to comprehensive reform that is capable of getting the Commission and industry beyond the seemingly endless stalemate.”

Although the Consensus Framework has been criticized by cable, wireless, and other industry sectors as being far from an industry consensus, the Rural Associations make the important distinction that “some of the largest contributors to the USF as well as those who depend the most upon the Fund” participated in the negotiations. In other words, the destiny of the Fund should probably be determined, to some degree anyway, by those companies who keep the fund in existence and use it successfully, like RLECs. At the very least, RLECs should have a primary say in how RLEC funding is distributed, and “The RLEC Plan seeks to preserve the past and present successes of RLECs in bringing quality, affordable voice and broadband services to their high-cost markets.” In addition to maintaining stability for RLECs, the Rural Associations also explain that the RLEC Plan abides by the FCC’s USF/ICC reform guiding principles of responsibility, modernization, fiscal accountability and market-driven policy.

The Rural Associations point to the National Cable and Telecommunications Association’s “Amended ABC Plan” and the Google, Skype, Sprint-Nextel and Vonage “Tech/User Plan” as two examples of late filed, “potentially dangerous” proposals.  The Rural Associations assert that NCTA’s proposal to reduce rate of return to 8.5% and eliminate it completely in 2019 “provides no analysis whatsoever of the impact of this proposal on consumers or the USF itself.”  Throughout this proceeding, the Rural Associations have advocated “methodical and surgical” reforms, and they warn the FCC that “A particular policy approach that may seem ‘visionary’ or ‘progressive’ could turn out to be disastrous if put into practice without a thorough understanding of its implications.”

By contrast, the Rural Associations submitted the RLEC Plan months ago, and the FCC and industry have had ample time to consider the benefits, consequences and estimated short- and long-term impacts of an entire suite of reforms, from the size of the fund to access rates to arbitrage.  The opportunity for heavy-duty analysis does not exist with the late-filed plans, nor do most of the alternative plans cover the entire range of USF/ICC reform topics in great detail.  The FCC’s Public Notice, which specifically asked questions about three alternatives plans (RLEC and ABC Plans, and the Joint Board Plan) should have been a fairly clear hint that the time was up presenting new, radical plans—some members of the industry are even speculating that the FCC had already begun writing the final rules before the Public Notice was released last month.  The Rural Associations recognize that at this stage in the game, it is time to focus on how the plans outlined in the Public Notice will work for the industry at large: “In lieu of leaping into the unknown based upon undeveloped proposals and last-minute plans for purportedly-groundbreaking (and equally damaging) policy shifts, the Commission should adopt the RLEC Plan, as modified by the Consensus Framework.”

The question now is will the FCC accept the Consensus Framework “as is,” or will it be modified in light of the opposition that has emerged in this comment cycle?  The Rural Associations believe that many of the suggested modifications are “unworkable” and would significantly threaten the “delicate balance” that was achieved through ILEC-RLEC negotiations.  One particular area where the Rural Associations are not willing to budge is the proposed $4.5b Fund budget.  Cable industry commenters are calling for a “hard and durable permanent cap” on the fund; but the Rural Associations insist that the $4.5b budget, which could be modified as needed in the future, is a “far more effective approach for driving and demanding efficiency in the reform and operation of these programs, while avoiding the legal quagmire that would arise in adopting a firm (and potentially permanent) cap notwithstanding the statutory mandates.”

The Rural Associations argue that a hard cap is contrary to the Telecommunications Act, it would discourage new investment, and challenge the ability of carriers to recover current investments in broadband networks.  They assert that Comcast provides no data or evidence to illustrate that a hard cap at today’s funding levels will be sufficient in the future, and imposing a hard cap would require a separate rulemaking proceeding which could take years.  Furthermore, a permanent cap may have “unintended and unforeseen consequences,” since nobody can predict with certainty what the future holds.  Rather, “All that anyone can know at this point is that budget targets are more flexible than permanent hard caps, and can be much more readily modified to address economic and industry changes (probably substantial) that are likely to take place at any given point in the future.”

Some critics of the RLEC and ABC Plans believe the Consensus Framework solutions are too focused on the wireline industry, despite the fact that the wireline industry market share is under constant attack from wireless and cable.  However, the Rural Associations insist that the RLEC Plan is not “backward-looking.” They explain, “It constitutes a pragmatic way to preserve and promote access to high-quality, affordable broadband services that many rural consumers enjoy only because the existing High Cost program for RLEC service areas has been so effective.”

While it may have been exciting for some members of the industry to draft radical and completely transformative proposals for USF/ICC reform—which we have definitely seen no shortage of—the fact remains that there must be specific and predictable universal service support going forward in accordance with statutory requirements.  If adopted, the Consensus Framework could help facilitate further, more dramatic changes down the road as the industry transforms to all-IP, as consumer broadband technology demands and trends become more predictable, and as ubiquitous broadband becomes a reality.  The Rural Associations make some very interesting points about the importance of flexibility and stability, because we definitely do not know for certain what the future holds.  This is only the first significant step in transforming USF for a broadband world, and it may be the best option for the FCC to err on the side of caution while still ensuring that outdated and insufficient policies are modernized.

The Rural Associations' reply comments are available here.


Transitioning to CAF: RLEC Plan Steps and Impact

NTCA Outlines RLEC Plan’s Steps, NECA Calculates Preliminary Impact on RLECs' Slice of USF Pie

Last week, rural telecom association NTCA and the National Exchange Carriers' Association (NECA) held ex parte meetings with members of the FCC to provide additional details about the associations’ RLEC Plan for USF/ICC Reform—NECA submitted a chart illustrating how legacy USF support for RLECs may transition to the Connect America Fund (CAF) coupled with a Restructure Mechanism (RM); and NTCA presented a condensed summary of the steps in the RLEC Plan.

As shown below, NECA’s Preliminary RLEC CAF + RM Computation chart starts at $2b and accounts for modest growth of $50m per year up to “a total annual budget of $2.3b” by the sixth year.  By the eighth year, Legacy USF support is reduced by more than half, with CAF + RM support replacing the legacy funds without increasing the overall size of the fund by more than $300m.  According to NECA, “incremental funding will be necessary to enable access restructuring, promote further broadband build-out (but only to the extent supported by increases in USF/CAF funding above current levels for any individual company), and provide a reasonable opportunity to recover the costs associated with existing investments in broadband-capable plant.”

NECA’s calculations were produced “using industry-wide assumptions and growth rates, together with preliminary inputs and factors.”  NECA also provided a summary of their calculations and assumptions, and a description of the RM.  NECA explains, “The RM is designed to recover revenue losses as a result of capping interstate originating and terminating switched access rates at the start of access reform as well as revenue losses caused by reducing terminating access rates to targeted levels in three phases,” where the targeted level is ultimately the $0.0007 per minute terminating end office rate.

To calculate the RM, NECA explains, “The total revenue shortfall is the sum of the intrastate and interstate revenue shortfalls…The RM is calculated by offsetting the combined revenue shortfalls by increases in subscriber line charge (SLC) revenue.”  If residential rates in a study area are below the $25 local rate benchmark, the monthly residential SLC can be increased by 75 cents per year until the benchmark is met.  NECA further explains, “if additional SLC revenues in a given step exceed the intrastate RM, the SLC revenue in excess of the intrastate RM is then used to offset the interstate component of the RM;” and “earnings in excess of a 10% RoR for that year will be used to offset the intrastate component of the RM for that year after the SLC revenue offset has been taken into account.” 

Also helpful for understanding the potential road ahead for USF is NTCA’s summary of the steps in the RLEC Plan.  The four steps explained in NTCA’s August 26 ex parte filing are as follows:

Step 1: “Implement short-term ICC reform measures that confirm intercarrier compensation is due for all traffic originating from or terminating to the PSTN regardless of technology; VoIP pays established interstate access rates for all interexchange traffic and reciprocal compensation for local.”  The FCC should also address phantom traffic and access stimulation in this step.

Step 2: Short-term USF reform, beginning January, 1, 2012, including “a limitation on recovery of prospective RLEC capital expenditures,” and “cap recovery of corporate operations expenses by applying the current HCLS corporate operations expense cap formula to all federal high cost support mechanisms.”

Step 3: This step would initiate the process of capping interstate access rates with an 8-step “realignment program,” that includes unifying RLEC intrastate terminating access rates at interstate levels; reducing RLEC terminating local switching rates to $.005 per minute; and finally “unless the FCC determines otherwise, terminating local switching rates would be reduced to $.0007 per minute in 3 equal installments for RLECs.”  Step 3 would also see the implementation of the $25 rate benchmark (as described above in the summary of the NECA calculations).  NTCA emphasizes that “ICC rate reduction will be deferred in any year in which, for any reason, there is insufficient high-cost support and/or restructure mechanism funding available.”

Step 4: The final step in the RLEC Plan is to “implement an RLEC-specific CAF mechanism designed to re-focus existing RLEC USF support on broadband.”  As illustrated by the NECA chart above, legacy funding would decline as CAF funding is phased in.  NTCA explains that RLEC CAF support is determined “by subtracting the product of an urban broadband transmission cost benchmark times broadband lines in service, from actual RLEC network broadband transmission costs.”

If the RLEC Plan is implemented, NTCA recommends that the FCC review and modify the plan as needed after 3-5 years.  NTCA also presents several “overarching principles” that the FCC should keep in mind as the final rules are drafted; such as not imposing a hard cap on high cost support, allowing the RLEC portion of the fund modified growth of $300m by the sixth year, removing the high cost fund budget after 2017, allocating $300m for mobile broadband service, and targeting $2.2b for areas served by price cap carriers consistent with the Consensus Framework proposals.

In this final comment cycle, the RLEC Plan has gained considerable support from statewide telecom associations and a number of individual RLEC commenters, but not all RLECs are completely on board. With reply comments due this week, it will be interesting to see how the Consensus Framework parties react to the questions and critiques posed in the comments. Although not all RLECs advocate the same reform plan, the RLECs who have participated in this proceeding have presented a tremendous amount of evidence and commentary to illustrate how harmful the FCC's initial USF/ICC Reform NPRM proposals would be for these companies and for the rural Americans they serve. It is now up to the FCC to ensure that RLECs have reasonable opportunities for existing broadband investment and lost access revenue recovery, and ample opportunities to continue bringing the benefits of broadband to high-cost rural areas.

NECA’s chart and calculation explanation is available here, and NTCA’s ex parte filing is available here.


RLECs to FCC: Please Investigate Call Termination Problems

Rural Telecom Associations Alert FCC about Troubling Call Termination Complaints

You have probably seen the commercials for magicJack: $20 per year for unlimited calling through an easy-to-use device that plugs a traditional telephone right into your PC. Surely, this is a tempting offer for many budget telecom consumers, but it comes with a major caveat—calls intended for high-cost rural areas may not be completed. Last week, NTCA, NECA, OPASTCO and WTA (the “Rural Representatives”) filed a letter with the FCC pleading for an investigation into the dirty business of call termination problems, likely caused by magicJack and other “least cost routing” originating and intermediary carriers. Although specific information about the potentially guilty parties was redacted in the public version of the letter, the Rural Representatives included a screenshot from a magicJack FAQ website stating that “some restrictions in cost prohibitive areas may apply.” In other words, buyer beware, because magicJack customers may not be able to place calls to friends, family and business associates served by an RLEC. The letter describes that when call termination problems arise and are actually reported, it is often the RLEC who is erroneously blamed.

The letter, which was a follow-up to an earlier meeting with the FCC on the topic of call termination problems, outlined several specific problems that RLECs have been experiencing at a dramatically increasing rate over the last few months. The first problem is that calls ring on the calling party end, but they are delayed or nonexistent for the called party. Second, the calling party receives a message that the call cannot be completed, but the call never actually reaches the RLEC’s switch. Third, calls “appear to ‘loop’ between routing providers, but never reach the RLEC or tandem it subtends;” and finally, the called party sees incorrect or garbled caller ID information which may make the called party ignore the call completely. All of these problems are serious—the Rural Representatives argue that “the problems currently faced by customers in rural America fly in the face of every reasonable expectation of what the PSTN should be,” and “small businesses [lose] tens of thousands of dollars in sales because their customers cannot reach them.” Furthermore, the Rural Associations point out that these problems present a serious public safety risk, with “families being unable to communicate and check on the safety and well-being of their loved ones.”

The Rural Representatives provided considerable and telling statistics about these problems. Apparently, 80% of 200 RLECs surveyed had experienced problems of this nature; and between 2008 and April 2011, 10,163 customer complaints about these problems had been documented. Unfortunately, the Rural Representatives note that this number is just the “tip of the iceberg” because many of these problems are never reported. The statistic that I found most shocking was that call termination complaints have increased 2000% over a one-year period from April 2010 through March 2011. The following chart illustrates the dramatic increase in call termination complaints since 2008:

The Rural Representatives discuss how difficult it is for RLECs to identify the source of the problem, because there is often more than one “Underlying Provider” (wholesale IXCs, IP transport and “least cost routing” providers) utilized between the calling party at point A and the called party at point X. To add to the trouble of pinpointing the source of the problem, the “Retail Provider” (the source of the call—usually retail IXCs, wireless or VoIP providers) is often unwilling to work with RLECs for any number of reasons. The Rural Representatives included comments from RLECs illustrating the hoops that RLECs must jump through to cooperate with the Retail Provider and resolve the call termination issues:

  • “We leave messages with the originating caller, but often they don’t return our calls. When we are able to make contact with the originating party, they are not always cooperative, they just see it as our problem, and we should be able to fix it without wasting their time.”
  • “Most carriers will not talk to us because we are not the Customer of Record. CPNI rules prevent them from working with us unless their customer initiates the trouble ticket. So we must convince somebody that has never heard of us to call their long distance company and open a trouble ticket and give us permission to talk with them, and we must also request this person call us long distance to troubleshoot.”

The Rural Representatives asked the FCC to open an investigation and provide assistance to “get to the bottom” of these issues, because “RLECs are powerless to correct this issue on their own.” The Rural Representatives cite Section 201 and Section 251(a) of the Communications Act, previous declaratory rulings, and even the Net Neutrality rules as support for the argument that Retail and/or Underlying Providers cannot continue to play foul with traffic headed for RLEC customers. According to the Rural Representatives, a 2007 FCC declaratory ruling deemed that “no carrier, including interexchange carriers, may block, choke, reduce or restrict traffic in any way;” and the fundamental No Blocking rule in the Net Neutrality Order states that fixed and wireless broadband providers cannot block lawful applications, services or devices.  The Rural Representatives argue that Retail Providers are largely responsible for the problems, because they are the provider that “[sets] into motion the chain of events that caused the call to fail.” 

I believe that if these problems remain unresolved, there will be profound negative implications for the reputation of RLECs. With all the regulatory uncertainty and impending USF changes, RLECs cannot risk “looking bad” to consumers or the FCC. The average customer of magicJack or a similar VoIP service probably does not know about the roles of routing tables or call signaling, or what happens to a call in the split second it takes to reach the called party (that is, if it reaches the called party). When a call to an RLEC customer is not complete, the first response from calling and called parties is probably to blame the RLEC, which could ultimately threaten an RLEC’s very existence if customers drop their service as a result of these problems.

I also see a direct connection between these particular problems and “phantom traffic” problems outlined in comments filed on April 1, 2011 for the Intercarrier Compensation portion of the USF Reform proceeding. RLECs and other voice carriers are concerned that VoIP providers are masking or failing to include critical call signaling information as part of an access rate avoidance scheme. If the FCC were to impose strict call signaling information requirements, would some of these call termination problems—like the problem of called parties receiving garbled caller ID information—be mitigated? I certainly hope that the FCC takes the Rural Representatives’ letter seriously and opens an official investigation into these matters before more RLECs waste time, resources and personnel to troubleshoot problems that they clearly are not liable for. Meanwhile, I hope magicJack customers realize that they may be getting what they pay for, so to speak, with their $20 per year service—at half the cost per year of what most contract-service providers charge per month, some restrictions are bound to apply.

You can download the letter from OPASTCO’s Press Center here.