The Front Lines - September 26, 2005

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Advancing The Cause of Competition in the Telecommunications Industry


On August 5, 2005, the FCC announced the adoption of rules extending the application of the Communications Assistance for Law Enforcement Act (CALEA) to providers of certain broadband and other information services. On September 23, 2005, the FCC released the text of its Order and adopted a Further Notice of Proposed Rulemaking.

In its Order, the FCC concludes that CALEA applies to facilities-based broadband Internet access providers and providers of interconnected voice over Internet Protocol (VoIP) service. The FCC stated that its Order is the first critical step to apply CALEA obligations to new technologies and services that are increasingly relied upon by the American public to meet their communications needs.

Of particular note, the FCC found that facilities-based providers of any type of broadband Internet access service, including but not limited to wireline, cable modem, satellite, wireless, fixed wireless, and broadband access via powerline, are subject to CALEA.

The FCC also announced that, "[i]n the coming months, [it] will release another order that will address separate questions regarding the assistance capabilities required of the providers covered by [its] Order pursuant to section 103 of CALEA. This subsequent order will include other important issues under CALEA, such as compliance extensions and exemptions, cost recovery, identification of future services and entities subject to CALEA, and enforcement."

The FCC is taking a two-step approach in order to focus debate on the implementation rather than the applicability of CALEA to providers of broadband Internet access services and VoIP services. By clarifying the applicability of CALEA to these providers now, the FCC's goal is that affected providers will begin planning to incorporate CALEA compliance into their operations. Another FCC goal is to ensure that the appropriate parties become involved in ongoing discussions among the Commission, law enforcement, and industry representatives to develop standards for CALEA capabilities and compliance. Acknowledging that providers need a reasonable amount of time to come into compliance with all relevant CALEA requirements, the FCC established a deadline of 18 months from the effective date of its Order, by which time newly covered entities and providers of newly covered services must be in full compliance.

The FCC also issued a Further Notice of Proposed Rulemaking seeking comment on two aspects of the conclusions reached in its Order. First, with respect to interconnected VoIP, the FCC seeks comment on whether it should extend CALEA obligations to providers of other types of VoIP services, such as "managed" VoIP service. Second, the FCC seeks comment on what procedures, if any, the Commission should adopt to implement CALEA's exemption provision to exempt certain entities or classes of entities from the requirements of its Order.


On September 26, 2005, the FCC released a Public Notice requesting comments on Petitions filed by SBC and VarTec. Both Petitions request clarification regarding the application of access charges to certain providers of wholesale transmission using Internet Protocol (IP). As described below, SBC and VarTec take contrary positions on the issue.

On September 21, 2005, SBC filed a petition for declaratory ruling that wholesale transmission providers using Internet protocol (IP) technology to transport long distance calls are liable for access charges. SBC filed its petition after the United States District Court for the Eastern District of Missouri dismissed without prejudice SBC's claims seeking payment of access charges for long distance calls that were transported using IP technology. The court found it appropriate to defer the issues raised by SBC to the primary jurisdiction of the FCC.

In its Petition, SBC seeks a declaratory ruling that wholesale transmission providers using IP technology to carry long distance calls that originate and terminate on the public switched telephone network (PSTN) are liable for access charges under section 69.5 of the Commission's rules and applicable tariffs. SBC seeks a ruling that providers meeting these criteria are interexchange carriers.

VarTec filed a petition for declaratory ruling on related issues. Specifically, VarTec seeks a declaratory ruling that it is not required to pay access charges to terminating local exchange carriers (LECs) when enhanced service providers or other carriers deliver calls directly to the terminating LECs for termination.

VarTec also seeks a declaratory ruling that such calls are exempt from access charges when they are originated by a commercial mobile radio service (CMRS) provider and do not cross major trading area (MTA) boundaries. VarTec also seeks a declaratory ruling that terminating LECs are required to pay VarTec for the transiting service VarTec provides when terminating LECs terminate intraMTA calls originated by a CMRS provider.

Interested parties may file comments on or before November 10, 2005, and reply comments on or before December 12, 2005.


On August 5, 2005, the FCC announced the adoption of an Order to re-classify wireline broadband Internet access as an "information service," consistent with the Supreme Court's NCTA v. Brand X decision. Generally, this affects Digital Subscriber Line services offered by incumbent local exchange carriers. On September 23, 2005, the FCC released the text of its Order.

A summary of the actions taken in the Order follows:

  • Consistent with the Supreme Court's opinion in NCTA v. Brand X, we determine that facilities-based wireline broadband Internet access service is an information service.

  • Facilities-based wireline broadband Internet access service providers are no longer required to separate out and offer the wireline broadband transmission component (i.e., transmission in excess of 200 kilobits per second (kbps) in at least one direction) of wireline broadband Internet access services as a stand-alone telecommunications service under Title II, subject to the transition explained below. In addition, the Bell Operating Companies (BOCs) are immediately relieved of all other Computer Inquiry requirements with respect to wireline broadband Internet access services.

  • Facilities-based wireline carriers are permitted to offer broadband Internet access transmission arrangements for wireline broadband Internet access services on a common carrier basis or a non-common carrier basis.

  • Facilities-based wireline Internet access service providers must continue to provide existing wireline broadband Internet access transmission offerings, on a grandfathered basis, to unaffiliated ISPs for a one-year transition period.

  • Affirm that neither the statute nor relevant precedent mandates that broadband transmission be a telecommunications service when provided to an ISP, but the provider may choose to offer it as such. Determine that the use of the transmission component as part of a facilities-based provider's offering of wireline broadband Internet access service to end users using its own transmission facilities is "telecommunications" and not a "telecommunication service" under the Act.

The Order also addresses other important areas relating to the provision of broadband Internet access services including:

  • Maintains the status quo for universal service during for a 270-day period pending resolution of the USF Contribution Methodology proceeding.

  • Ensure no adverse impact on public safety through the continued requirement that voice over IP (VoIP) providers using wireline broadband Internet access facilities comply with E911 obligations.

  • Confirm that this Order does not affect disability access obligations the Commission has adopted pursuant to its Title I ancillary jurisdiction, and we will continue to exercise Title I authority, as necessary, to give full effect to the accessibility policy embodied in section 255.

  • Nothing in the Order changes requesting telecommunications carriers' rights to access unbundled network elements (UNEs) under section 251 and related implementing rules.

Finally, the FCC adopted a Notice of Proposed Rulemaking seeking comment on the need for any non-economic regulatory requirements necessary to ensure that consumer protection needs are met by all providers of broadband Internet access service, regardless of the underlying technology.


The Front Lines is a free publication of The Helein Law Group, providing clients and interested parties with valuable information, news, and updates regarding regulatory and legal developments primarily impacting companies engaged in the competitive telecommunications industry.

The Front Lines does not purport to offer legal advice nor does it establish a lawyer-client relationship with the reader. If you have questions about a particular article, general concerns, or wish to seek legal counsel regarding a specific regulatory or legal matter affecting your company, please contact our firm at 703-714-1313 or visit our website:

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Jonathan Marashlian
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