Head in the Sand?Head in the Sand?Regulatory Requirements and Pitfalls for VoIP Providers in the U.S.Regulatory Requirements and Pitfalls for VoIP Providers in the U.S.

Prepared by Kris TwomeyPrepared by Kris TwomeyLaw Office of Kristopher E. Twomey, P.C.Law Office of Kristopher E. Twomey, P.C.

Regulation by the Federal Communications CommissionRegulation by the Federal Communications Commission

Offering voice services to the public is not a hobbyOffering voice services to the public is not a hobby Your responsibility, not the wholesale providerYour responsibility, not the wholesale provider Regulatory vacuum/free-ride for VoIP is long overRegulatory vacuum/free-ride for VoIP is long over Time to Make a Plan Now to Deal With Current Time to Make a Plan Now to Deal With Current

Requirements and For Future HasslesRequirements and For Future Hassles E911- November 2005E911- November 2005 FUSFFUSF CALEACALEA CPNI- No More Hiding!CPNI- No More Hiding! VoIP Subscriber Reporting- Form 477VoIP Subscriber Reporting- Form 477 Various Federal Regulatory Fees Besides FUSFVarious Federal Regulatory Fees Besides FUSF New rules coming?New rules coming?

Fines by the FCC Enforcement BureauFines by the FCC Enforcement Bureauaka Scare Marketingaka Scare Marketing

Take a look at Take a look at http://transition.fcc.gov/eb/ http://transition.fcc.gov/eb/Headlines.html

EB Notifies (for First Time!) Providers of Form 477 EB Notifies (for First Time!) Providers of Form 477 ObligationsObligations

$25,000 for failure to file CPNI certifications$25,000 for failure to file CPNI certifications $1,000 to $6,000 for non-compliant CPNI $1,000 to $6,000 for non-compliant CPNI

statementsstatements June 30, 2011- Advisory Guidance on Open June 30, 2011- Advisory Guidance on Open

Internet RulesInternet Rules Various fines for failing to pay USFVarious fines for failing to pay USF

Federal Universal Service Fund and 499-As and QsFederal Universal Service Fund and 499-As and Qs

All VoIP Providers Must Obtain a Federal Registration All VoIP Providers Must Obtain a Federal Registration Number, and then File a 499-A Every April 1Number, and then File a 499-A Every April 1stst

Yes, even if you are buying wholesale VoIP Yes, even if you are buying wholesale VoIP If VoIP Provider owes less than $10K to USAC annually, If VoIP Provider owes less than $10K to USAC annually,

then considered de minimis, no money owed to FCCthen considered de minimis, no money owed to FCC Formula? 64.9% of VoIP is “interstate,” subject to USFFormula? 64.9% of VoIP is “interstate,” subject to USF But then, Wholesaler must report de minimis wholesale But then, Wholesaler must report de minimis wholesale

customer revenues to the FCC as if the customer was an customer revenues to the FCC as if the customer was an end user so that the USF gets paid by somebodyend user so that the USF gets paid by somebody

Providers that are not de minimis should bill for USF, but Providers that are not de minimis should bill for USF, but the funds would be retained to be sent to the FCC laterthe funds would be retained to be sent to the FCC later

Non-de minimis providers must also make quarterly filings Non-de minimis providers must also make quarterly filings of 499-Qs, similar to reporting and paying estimated of 499-Qs, similar to reporting and paying estimated taxes. 499-As are really a true-up mechanism.taxes. 499-As are really a true-up mechanism.

CALEACALEA VoIP Providers Are Subject to the Communications VoIP Providers Are Subject to the Communications

Assistance for Law Enforcement ActAssistance for Law Enforcement Act Wholesalers are, or at least should be, responsible for Wholesalers are, or at least should be, responsible for

making sure its wholesale services are CALEA compliant making sure its wholesale services are CALEA compliant on a technical levelon a technical level

Providers must report on FCC form 445 that they are Providers must report on FCC form 445 that they are using a wholesalers’ services, that as far as they have using a wholesalers’ services, that as far as they have been told, the wholesaler is technically compliant, and been told, the wholesaler is technically compliant, and that the provider will cooperate with CALEA requests that the provider will cooperate with CALEA requests from law enforcement agenciesfrom law enforcement agencies

Better to do it now before you receive a CALEA warrant Better to do it now before you receive a CALEA warrant and the FBI asks why you’re not in the FCC’s databaseand the FBI asks why you’re not in the FCC’s database

What if I run an Asterisk box? Well, good luckWhat if I run an Asterisk box? Well, good luck

CPNICPNI Fine, what does it even stand for?Fine, what does it even stand for?

Customer Proprietary Network Information… Huh?Customer Proprietary Network Information… Huh? Information regarding to whom, where, when, how

long a customer places or receives a call- CDRs The types of service offerings to which the customer

subscribes The extent to which a customer uses a service CPNI does not consist of subscriber list information;

customer name, address and phone number; or aggregate customer information

CPNICPNI Certification of compliance due March 1 every Certification of compliance due March 1 every

yearyear Wholesalers can and do certify that they are Wholesalers can and do certify that they are

compliantcompliant Retail providers must certify that they have Retail providers must certify that they have

not had any CPNI breaches and otherwise not had any CPNI breaches and otherwise properly guard the dataproperly guard the data

In 2009, FCC proposed penalties of $20K to In 2009, FCC proposed penalties of $20K to more than 700 companies for failure to file on more than 700 companies for failure to file on timetime

FCC Form 477FCC Form 477 All Facilities-based Broadband and VoIP providers must All Facilities-based Broadband and VoIP providers must

report their deployment numbers on Form 477 twice a report their deployment numbers on Form 477 twice a year, March 1year, March 1stst and September 1 and September 1stst

Renewed emphasis on broadband and competition Renewed emphasis on broadband and competition mapping could result in greater scrutinymapping could result in greater scrutiny

Why did the Enforcement Bureau issue a notice on Why did the Enforcement Bureau issue a notice on December 16, 2011 reminding providers of the December 16, 2011 reminding providers of the obligation?obligation?

““What Are the Penalties that Apply? Companies are What Are the Penalties that Apply? Companies are reminded that failure to comply with the Form 477 reminded that failure to comply with the Form 477 reporting requirements may subject them to monetary reporting requirements may subject them to monetary forfeitures of up to $150,000 for each violation or each forfeitures of up to $150,000 for each violation or each day of a continuing violation, up to a maximum of day of a continuing violation, up to a maximum of $1,500,000. False statements or misrepresentations to $1,500,000. False statements or misrepresentations to the Commission may be punishable by fine or the Commission may be punishable by fine or imprisonment under Title 18 of the U.S. Code. “imprisonment under Title 18 of the U.S. Code. “

Other IssuesOther Issues

Regulatory fees for de minimis carriers: LNP, TRS, FCC Regulatory fees for de minimis carriers: LNP, TRS, FCC annual regulatory feeannual regulatory fee

Please don’t throw those bills away…Please don’t throw those bills away… FCC annual handicap accessibility certification FCC annual handicap accessibility certification States and localities up next, especially state and local States and localities up next, especially state and local

taxation of VoIP—Illinois 7%, Pennsylvania 6%taxation of VoIP—Illinois 7%, Pennsylvania 6% State registration for VoIP providers– California and State registration for VoIP providers– California and

IllinoisIllinois E911 fees from every size governmental entityE911 fees from every size governmental entity FCC outage reporting; access to numbersFCC outage reporting; access to numbers Everybody has an Open Internet Principles Statement Everybody has an Open Internet Principles Statement

posted on their website, right?posted on their website, right?

What Can LoKT Do About It?What Can LoKT Do About It?

A small pitch, just because I get teased for being A small pitch, just because I get teased for being too subtle in my marketingtoo subtle in my marketing

$1000 flat fee to ensure compliance$1000 flat fee to ensure compliance Assistance with 499-AAssistance with 499-A Assistance with CALEA, FCC Form 445Assistance with CALEA, FCC Form 445 Filing CPNI Compliance Statement, Employee Filing CPNI Compliance Statement, Employee

Manual, and Employee Training WebinarManual, and Employee Training Webinar Assistance with FCC Form 477Assistance with FCC Form 477 Preparation of Open Internet Principles StatementPreparation of Open Internet Principles Statement Assistance with state requirementsAssistance with state requirements

Ostriches Don’t Really Put Their Heads in the Sand,Ostriches Don’t Really Put Their Heads in the Sand,Only People Do. Stay Alert!Only People Do. Stay Alert!

Kris TwomeyKris TwomeyLaw Office of Kristopher E. Twomey, P.C.Law Office of Kristopher E. Twomey, P.C.

1725 I Street, NW1725 I Street, NWSuite 300Suite 300

Washington, DC 20006Washington, DC 20006202 681-1850202 681-1850kris@lokt.netkris@lokt.net