In an Order on Remand and Declaratory Ruling last month, the FCC determined that VoIP service providers could only collect end-office switching access charges if they supply the local loop to the end user. This rule change officially implements the 8th U.S. Circuit Court of Appeals’ remand of the FCC’s 2015 VoIP symmetry rules.

There has been a long-standing battle over VoIP carriers’ ability to share in access charge revenue. VoIP carriers claimed that because they terminated the call to the end user, they were entitled to collect the end-office switching access. Originally in 2011, the FCC determined that VoIP carriers could collect end-office switching charges only if they performed functionally equivalent functions, such as end-office switching and call termination. But in 2015, the Commission concluded that both facilities-based and over-the-top (OTT) VoIP carriers provided functionally equivalent end-office switching and should be able to collect the access charges. The 8th Circuit Court overturned those 2015 rules, but there continued to be various interpretations of the remand that resulted in billing disputes.

This new clarification limits the VoIP carriers’ ability to collect some end-office switching access to only VoIP carriers that provide the local loop. The FCC has found that physically delivering the call to the end user is an essential part of call termination. As such, OTT VoIP providers, such as Vonage, would not be eligible to collect access. However, a LEC and its VoIP-provider partner, who together provide both the loop and switch, are permitted to charge end-office switching.

The FCC has made this rule retroactive; therefore many outstanding billing disputes can be resolved. This rule has little overall impact on future billing since the end-office rate element for Price Cap Carriers is already zero and will be zero for rate-of-return carriers and rural CLECs in July 2020. The primary impact of this rule is for carriers that are currently involved with a billing dispute that involves VoIP carriers.

If you have any questions about this Order on Remand or VoIP billing disputes, contact Valerie Wimer at 301-459-7590.