The Saga of Interconnected VoIP Services and 911 Charges
March 7, 2019 | by Andrew Regitsky
Comments are due March 28, 2019, in FCC Docket 19-44 regarding competing petitions for Declaratory Ruling filed by BellSouth and a group of 11 Alabama jurisdictions regarding (1) the definition of interconnected VoIP service, and (2) whether states can impose unique charges on certain 911 customers. The Commission’s decisions could have significant ramifications across the country.
The dispute began when the 911 districts for Autauga County, Calhoun County, Mobile County, and the City of Birmingham in Alabama (Districts) filed a lawsuit against BellSouth for allegedly under-billing 911 charges to its business customers under Alabama’s 911 statute, known as the Emergency Telephone Services Act (ETSA).
According to BellSouth and the Districts (which jointly wrote the background section of their petitions):
The Districts allege that BellSouth failed to bill its customers all the 911 charges that the ETSA required and, therefore, failed to collect and remit all the 911 charges the ETSA required. The Districts have not alleged that BellSouth wrongfully retained any of the 911 charges that it collected. Rather, the Districts allege that BellSouth did not bill 911 charges on every “10-digit access number” provided to users of “VoIP or similar service,” as the Districts contend was required by Alabama Code § 11-98-5.1(c). They further claim that BellSouth is liable to the Districts for the amount of 911 charges that BellSouth failed to bill, plus interest. (BellSouth Petition, p. 4, Districts Petition, p. 5.).
The dispute centers around the fact that Alabama requires customers buying time division multiplexed (TDM) services to pay one 911 charge per voice channel, but customers buying VoIP services must pay one 911 charge per telephone number. Because businesses typically obtain many more telephone numbers than voice channels, if a service is defined as interconnected VoIP, that customer with the same outbound calling capacity as a TDM customer would owe much more for 911 service.
As justification for its position, the Districts argue that the FCC should declare that IP customer premises equipment encompasses all equipment that transmits, processes, or receives IP packets located on or within the customer’s or building owner’s premises. Therefore, services that utilize that equipment are properly classified as interconnected VoIP. The Districts are incorrect.
The Districts confuse an interconnected VoIP service (in which the service transforms a call into packets to send the call over the quickest path) from a TDM voice service in which there is no transformation of the voice call. Simply because customer premise equipment can handle IP-formatted traffic does not make a non-transformed voice service into an IP service. At a minimum, for a service to be classified as an interconnected VoIP service, the last mile connection to the end user customer must be in the IP format. In other words, this should be an easy decision for the FCC.
The Commission should also find that BellSouth is correct when it claims that states cannot charge IP customers more in total 911 charges than a similar class of customers using TDM technology. That is because the FCC rules require that “the  fee or charge [to subscribers to interconnected VoIP services] may not exceed the amount of any such fee or charge applicable to the same class of subscribers to telecommunications services.” (Section 615a-1(f)(1)). Moreover, the FCC rules are designed to encourage companies to move to more technologically advanced IP networks. If states are permitted to charge customers served through IP networks more than similar customers served through TDM networks, it would have the perverse effect of discouraging IP adoption. This makes little sense.
The Districts don’t buy this, arguing that section 615 does not impede state rights:
The ability of state and local governments to assess 911 fees for purposes of enabling and coordinating essential public safety services implicates two of the quintessential core functions and powers of state and local government—the ability to assess taxes and the ability to preserve and protect public safety—powers that the Constitution does not permit the federal government to encroach upon absent a clear and unambiguous expression of Congressional intent. Federal law has not encroached upon these powers to limit a state’s ability to impose E911 fees on services that are not interconnected VoIP, commercial radio service, or local exchange service. In particular, [section] 615a-1(f)(1) does not limit Alabama’s ability to impose E911 fees on voice services that may not qualify as “interconnected VoIP” under federal law but qualify as “VOIP or similar services” under Alabama law. (Districts Petition, pp. 25-6.
We disagree. State rights can be preempted by the FCC when it determines a state law could hinder an FCC action. Witness the FCC’s preemption of state net neutrality laws. In this case, it is obvious that a special “tax” on interconnected VoIP service customers is unfair and could slow the transition to IP technology. The Districts' interpretation should be rejected.