From the desk of the Law Offices of Thomas K. Crowe, P.C.
On June 30, 2008, the FCC released an order (“InterCall Order”) rejecting InterCall, Inc.’s (“InterCall’s”) appeal of a determination by the Universal Service Administrative Company (“USAC”) that the company’s voice conferencing services were “telecommunications services” subject to Universal Service Fund (“USF”) contributions. Last week, the FCC requested public comment on petitions for reconsideration of this determination filed by Global Conference Partners, A+ Conferencing Ltd., Free Conferencing Corporation, and the Conference Group. Comments are due by September 8, 2008 and reply comments are due by September 22, 2008.
InterCall is a provider of, among other things, conference calling services. These services allow conference participants to connect, via a toll-free number purchased by InterCall, to an audio bridge which connects the participant to others in the conference. Generally, charges for the toll-free calls were passed on to the customer. In its FCC Forms 499-A and 499-Q, the company treated this revenue as non-telecommunications revenue, arguing that conference calling providers were end users for the purposes of USF contributions, and therefore did not contribute directly to the fund. USAC, which audited the company in 2007, took the position that conference calling services were subject to USF contributions because the FCC Form 499-A instructions requires companies to report “toll teleconferencing services”. InterCall appealed USAC’s decision before the FCC arguing that, even if its products could be considered “toll teleconferencing services”, such requirement could only be imposed on conference calling service providers after full notice and comment proceedings.
In its InterCall Order, the FCC rejected the appeal, finding that InterCall’s services were “telecommunications services” under the FCC’s rules and prior decisions. It rejected InterCall’s argument that it is an end user of telecommunications services because conference calling products allow customers to transmit voice communications between specified points, and therefore meet the definition of “telecommunications” under federal statutes. Therefore, the FCC reasoned, prior FCC rules and orders were sufficient to apply USF filing and assessment requirements to InterCall.
InterCall also argued that its services were “information services” because the company’s conference products allowed customers additional functionality such as muting participants, recording, and access to operator assistance. The FCC also rejected this argument because the services were not sufficiently integrated with the telecommunications portion of the products.
However, recognizing that underlying carriers have generally “treated these providers as end users and have assessed universal service contribution fees”, the FCC decided to enforce USF requirements on a prospective basis only. This means that conference calling providers, in general, will be required to file the FCC Forms 499 and contribute USF from the effective date of the InterCall order (July 30, 2008) forward.
Other Regulatory Implications: Because the InterCall Order classifies conference calling products as “telecommunications services”, conference calling providers may be subject not only to Universal Service regulatory obligations, but a whole host of other federal regulatory obligations as well. This includes, but is not limited to, obligations to safeguard Customer Proprietary Network Information (“CPNI”), Communications Assistance for Law Enforcement Act (“CALEA”) obligations, payment of annual regulatory fees, and other reporting requirements. These additional requirements will increase the regulatory burden on conference calling providers, increasing the expense and creating several legal liabilities which were not present prior to this decision.
Because of this impact on conference calling businesses, four companies have filed petitions of reconsideration of the InterCall Order and the FCC, as indicated above, has requested public comment.
Please let the author of this alert know if you have any questions or are interested in participating in this proceeding. This is their contact information:
Thomas K. Crowe, Principal [[email protected]]
Law Offices of Thomas K. Crowe, P.C.
1250 24th Street, N.W.
Washington, D.C. 20037
(202) 263-3640 (voice)
(202) 263-3641 (fax)