Federal Internet Law & Policy
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VoIP: IP - in - the - Middle Dont be a FOOL; The Law is Not DIY

The FCC IP - in - the - Middle cases are cases long distance VoIP cases where the call starts on the PSTN, is routed onto an IP network for long distance transmission, and then terminated back on the PSTN. Consistently at both the FCC and the state level, these services have been held to be regulated telecommunications service not unregulated information services.

Regulation of Prepaid Calling Card Services

In the IP-in-the-Middle Order, the Commission addressed AT&T’s use of IP technology to transport interexchange telephone calls dialed on a 1+ basis. The Commission found that “an interexchange service that: (1) uses ordinary customer premises equipment (CPE) with no enhanced functionality; (2) originates and terminates on the public switched telephone network (PSTN); and (3) undergoes no net protocol conversion and provides no enhanced functionality to end users due to the provider’s use of IP technology” is a telecommunications service. The Commission limited its ruling in the IP-in-the-Middle Order to calls that meet all of the above criteria and are placed using 1+ dialing.

In its November 2004 filing, AT&T stated that it had developed a new prepaid calling card that uses IP technology to transport part or all of the call. AT&T requested a ruling that this service was not a telecommunications service because it did not use 1+ dialing and therefore was not like the service addressed in the IP-in-the-Middle Order. In the Calling Card Order and NPRM, the Commission did not decide the appropriate classification of this new calling card variant, but instead requested comment on how such an offering should be classified. AT&T reiterated its position that these cards should be treated as information services. Other parties, however, argue that the Commission’s analysis in the IP-in-the-Middle Order applies equally to the card described by AT&T and other cards that use IP transport. Other commenters state that the absence of 1+ dialing is inconsequential to the regulatory status of a prepaid calling card.

Other than the use of 8YY dialing instead of 1+ dialing, prepaid calling cards that use IP transport appear to be identical to the services addressed by the Commission in the IP-in-the-Middle Order. We see no reason why the use of a different dialing pattern to make calls, without more, should result in a different regulatory classification. These cards are used to originate calls on the circuit-switched network using standard customer premises equipment, factors that the Commission previously has used to distinguish telecommunications services from information services. Consequently, we find that the use of IP transport in the provision of a prepaid calling card service does not alone convert that service from a telecommunications service to an information service.

  • Regulation of Prepaid Calling Card Services, WC Docket No. 05-68 Declaratory Ruling and Order, June 30, 2006 Word
  • WC Docket No. 05-176

    Comments Due: May 23, 2005
    Reply Comments Due: June 7, 2005

    Ex Parte Period
    APCC IP Enabled Dial Around Payphone Petition Express Your Views!  Comments can be filed with the FCC's Electronic Comment Filing System.  FAQ: How to participate in FCC Proceedings.

    On March 23, 2005, the American Public Communications Council (APCC) filed a petition for a declaratory ruling and rulemaking to establish that payphone-originated Internet Protocol-enabled (IP-enabled) communications are subject to payphone compensation. APCC also requests that its petition be consolidated with, and made part of the record of, the Commission’s ongoing IP-Enabled services rulemaking proceeding in WC Docket No. 04-36 and seeks expedited treatment of the petition.

    In its Petition, APCC asks the Commission to issue a declaratory ruling and initiate a rulemaking proceeding to address payphone compensation for dial-around calls involving an IP-enabled component. In its declaratory ruling request, APCC asks the Commission to: (1) affirm its prior rulings and make explicit that PSTN-originated dial-around calls from payphones are subject to the Commission’s existing dial-around compensation rules, regardless of whether there is an IP-enabled service provider in the transmission path; and (2) make clear that IP-enabled service providers must comply with the compensation rules to the same extent as any other entity in the transmission path. In its petition for rulemaking, APCC asks the Commission to initiate a rulemaking to amend the compensation rule to ensure that it applies to IP-originated calls. APCC contends that a rulemaking is necessary because, while Section 276 clearly requires that payphone service providers be compensated for the use of their phone regardless of how the payphone happens to be connected to the network, the Commission’s evolving framework for IP-enabled communications has not yet addressed the regulatory status of IP-enabled calls.

    The Petition for Declaratory Ruling and Rulemaking Regarding IP-Enabled Dial-Around Calls from Payphones (filed Mar. 23, 2005) (Petition).

    In the Matter of IP-Enabled Services, Motion to Consolidate and to Expedite, WC Docket No. 04-36 (filed Mar. 23, 2005) (Motion to Consolidate). We do not rule on the Motion to Consolidate at this time.

    Petition at 3.


  • Released: 04/21/2005. Public Notice Contact: Denise Coca at 0574, email: Denise.Coca  DA-05-1106A1.doc  DA-05-1106A1.pdf  DA-05-1106A1.txt
  • Links
  • American Public Communications Council
  • See also Dial Around Cases
  • FL (CNM)
  • ND (SmartNet)
  • NY (DataNet)
  • OR (LocalDial)
  • WA (LocalDial)
  • WC Docket No.02-361 AT&T IP Telephony Petition Comments Due: 12/18/2002. Reply's Due:  1/24/2003

    "On October 18, 2002, AT&T filed a petition for declaratory ruling that its phone-to-phone” Internet  protocol (IP) telephony services are exempt from the access charges applicable to circuit-switched  interexchange calls. The service at issue in AT&T’s petition consists of an interexchange call that is  initiated in the same manner as traditional interexchange calls by an end user who dials 1 + the  called number from a regular telephone. When the call reaches AT&T's network, AT&T converts it from its existing format into an IP format and transports it over AT&T's Internet backbone. AT&T then converts  the call back from the IP format and delivers it to the called party through local exchange carrier (LEC)  local business lines. We clarify that, under the current rules, the service that AT&T describes is a  telecommunications service upon which interstate access charges may be assessed. We emphasize that our  decision is limited to the type of service described by AT&T in this proceeding, i.e., an interexchange  service that: (1) uses ordinary customer premises equipment (CPE) with no enhanced functionality; (2)  originates and terminates on the public switched telephone network (PSTN); and (3) undergoes no net  protocol conversion and provides no enhanced functionality to end users due to the provider's use of IP technology. Our analysis in this order applies to services that meet these three criteria regardless  of whether only one interexchange carrier uses IP transport or instead multiple service providers are  involved in providing IP transport.

    Petition for Declaratory Ruling that AT&T’s Phone-to-Phone IP Telephony Services are Exempt from Access Charges , WC Docket No. 02-361, Order, 19 FCC Rcd 7457 (2004)

    ATSO AT&T Seeks to Avoid Access Charges for Phone-to-Phone IP Telephony

    State IP in the Middle Cases

    From State Regulatory Approaches to VoIP: Policy, Implementation, and Outcome, TPRC 10/2/2004 (see this link for footnotes)

    Several of the headline VoIP confrontations involved "dial around" services. In this scenario, the subscriber dials a local access number66 in order to access the dial around service provider. After a tone, the subscriber dials the number of the phone the subscriber is seeking to reach. The call is now on the dial-around service provider's network, who arranges to have the call transmitted long distance. At the destination, the call is placed on a LEC network that services the number of the phone the subscriber is seeking to reach. The VoIP version of dial-around utilizes VoIP somewhere in the long distance transmission.67

    Five states have considered dial around VoIP services; two have found that the service is a telecommunications service and three have reached no conclusion.68

    New York69 and Washington70 faced complaints filed by LECs that VoIP dial-around services were not certified to provide service and were failing to pay access charges. Applying the Steven's Report four criteria,71 New York and Washington found:

  • the services hold themselves out in their advertisements as telephone services:72
  • they do not require the use of different CPE,
  • the calls originate and terminate calls on the PSTN, and
  • there is no net protocol conversion takes place.73
  • Both states concluded that the VoIP dial around services were functionally identical to traditional long distance service74 and imposed identical burdens on the PSTN as other IXC services.75 Therefore both states concluded that the dial around services were telecommunications services which, specifically, owe access charges.76

    New York considers and concludes that the Functional approach is the proper approach to apply. New York stated

    The FCC stated that this functional approach is consistent with Congress’s direction that the classification of a provider should not depend on the type of facilities used. A telecommunications service is a telecommunications service regardless of whether it is provided using wireline, wireless, cable, satellite, or some other infrastructure. Its classification depends rather on the nature of the service being offered to customers.77

    The affirmation of the Functional Approach is achieved by reference to Congressional intent. Of course, the Congressional intent here is a negative postulation: policy outcome should not depend on facility type. Okay, this begs the question of what it should depend upon; the Congressional intent cited does not inform us.

    The dial-around cases are the edge cases that do not cause much policy consternation. The functional approach and the market approach are in alignment. Functionally, VoIP dial services are largely indistinguishable from other dial around services on the market. In terms of the market, the entrance of the VoIP dial around services causes no alternation in the competitive market and neither the current players nor the entrants exhibit significant market power. In these easy question cases, one would not expect the decision maker to exhibit anxiety concerning the proper approach leading to a rigorous review of policy and approaches. All analytical roads lead to the same destination.

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