Calif. Agency Could Seek to Tighten VoIP Authority
VoIP providers raised concerns about a possible California rulemaking to consider changes to licensing requirements and other obligations for internet-based voice. Consumer advocates applauded the California Public Utilities Commission for looking into an issue that affects USF support. Commissioners plan to consider the proposed order instituting rulemaking (OIR), plus items on state LifeLine and Starlink eligible telecom carrier status, at their Thursday meeting.
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Interconnected VoIP carriers previously obtained utility identification numbers under an informal registration process in California. Section 285 of the state’s public utility code requires interconnected VoIP carriers to collect and remit surcharges for public purpose programs including state USF. The CPUC labels companies as Section 285 carriers if they're covered by that section but aren’t wireline companies with a certificate of public convenience and necessity (CPCN) or resellers, including CLECs and nondominant interexchange carriers, with a Section 1013 registration.
Since informal registration “is required only for purposes of collecting surcharges, the Commission has not actively regulated this group of VoIP carriers,” said the CPUC’s draft OIR. “The Commission opens this proceeding to consider changes to the treatment of Section 285 Carriers, including any obligations.” A California prohibition on regulating VoIP expired in 2020 after a bill to extend it by 10 years failed (see 1909110016).
The state seems set on regulating the VoIP industry, said Pillsbury Winthrop attorney Glenn Phillips, representing the Voice on the Net (VON) Coalition: “Not really sure what is driving California to do this." VON will oppose actions that could inhibit market entry and may violate federal law, he said.
Most states have respected an FCC regime that preempts state VoIP regulation, with some even explicitly prohibiting it in state law, said Phillips. Most concerning to the VON Coalition is the prospect of licensing, a costly regulatory burden that becomes more so if many states require it, he said. The VoIP attorney questioned the need for the CPUC proceeding. The FCC allows states to collect state USF surcharges from VoIP and California has an informal registration process, which is consistent with other states, he said.
Tightening VoIP rules could lead to better service quality for consumers and a more stable and equitable funding base for state USF, countered Paul Goodman, Center for Accessible Technology legal counsel. The CPUC’s previous hands-off policy “let VoIP providers avoid collecting and remitting surcharges for public purpose programs like LifeLine and” the California Advanced Services Fund, he said. Goodman cited a 2021 CPUC report showing VoIP providers collected less money than traditional wireline providers even though more people subscribe to VoIP. VoIP remitted about $76 million from 7.3 million Californian subscribers in 2020, while the traditional providers remitted about $130 million from about 4 million subscribers, said Goodman: “This is a huge disparity and profoundly unfair.”
“From a consumer standpoint, the proposed CPUC rulemaking raises important questions that need to be fully addressed,” said Regina Costa, The Utility Reform Network telecommunications policy director: “The question of whether all VoIP providers should contribute to universal service funding dovetails with” last week’s FCC report to Congress on the future of USF (see 2208160055).
The CPUC could consider penalties under the draft OIR. “Should a penalty be imposed on Section 285 Carriers that have not reported and remitted surcharges since obtaining their utility ID before approving a wireline operating authority through the CPCN applications or simplified registration processes?” it would ask. “Should a penalty be imposed on carriers who acquire a Section 285 Carrier without first obtaining Commission approval of the transfer? Should carriers who failed to obtain Commission approval for an acquisition of a Section 285 Carrier be permitted to apply for Section 1013 or Section 1001 authority? What information should they be required to disclose in their applications?”
The draft OIR includes questions about nomadic VoIP. The CPUC “intends to examine its authority to regulate nomadic VoIP providers, particularly regarding the Commission’s authority to (a) collect Universal Service Fund (USF) and other surcharges from nomadic VoIP providers and (b) adopt licensing requirements for nomadic VoIP providers,” it said. The draft OIR asks if the CPUC should adopt a separate registration mechanism for collecting surcharges from nomadic VoIP if it doesn’t adopt licensing requirements.
Also at Thursday’s CPUC meeting, commissioners plan to vote on a proposed decision to reduce California LifeLine subsidies when total federal monthly support applied to a LifeLine plan is more than $9.25. The CPUC’s proposal in docket R.20-02-008 is opposed by Lifeline providers but supported by consumer groups (see 2208020033, 2207290007 and 2207280059). Also, the CPUC plans to vote on extending until March 31 a statutory deadline for a proceeding to update state USF contribution in docket 21-03-002 (see 2208150041).
Possible approval of Starlink’s application for a CPCN and eligible telecom carrier designation (docket A.21-03-009) remains on Thursday’s agenda despite the FCC rejecting the company’s long-form application for Rural Digital Opportunity Fund support (see 2208100050). CPUC Administrative Law Judge Seaneen Wilson asked Aug. 10 if Starlink still wanted approval as proposed.