1

State of California / Public Utilities Commission
San Francisco
M E M O R A N D U M

Date:August 17, 2017

To:The Commission

(Meeting of August 24, 2017)

From:Helen M. Mickiewicz

Assistant General Counsel

Felix Robles

Program and Project Supervisor, Communications Division

Subject: FCC’s Request for Comments on Second Further Notice of Proposed Rulemaking re: Rural Call Completion

RECOMMENDATION: The CPUC should file comments in response to the Federal Communications Commission’s (FCC) Second FurtherNotice of Proposed Rulemaking (NPRM) adopted onJuly 13, 2017.[1] In the Second Further NPRM, the FCC seeks comment on proposed changes pertaining to whether it should adopt new rules that, consistent with industry best practices, would require covered providers 1) to monitor the rural call completion performance of their intermediate providers, and 2) to hold those intermediate providers accountable for their performance.As described below, the CPUC should support the FCC’s proposal to implement these measures.

The FCC also seeks comments on its proposal to eliminate the existing rural call completion data collection and reporting rules, which the FCC contends may be rendered unnecessary by the adoption of the proposed new rules intended to more directly and proactively address rural call completion issues. The CPUC should also support this proposal in part, with certain conditions. The Second Further Notice relies on information and recommendations in the FCC Wireline Competition (WC) Bureau’s Rural Call Completion Data Report, issued on June 22, 2017.

On July 27, 2017, the Federal Register published a Public Notice summary of the Second Further NPRM. Comments are due August 28, 2017and reply comments are due September 25, 2017.

Background: On February 6, 2012, the FCC’s Wireline Competition Bureau issued a Declaratory Ruling to clarify the scope of the FCC’s prohibition on blocking, choking, reducing or restricting telephone traffic, in response to a pattern of call completion and service quality problems associated with long distance calls to rural areas. In the Declaratory Ruling, the FCC stated that “[c]all completion problems appear to be occurring particularly in rural areas served by rate-of-return carriers where the costs that long distance providers incur to complete calls are generally higher than in non-rural areas. To minimize call termination charges, long distance providers often use third-party ‘least-cost routers’”for the intermediate call path between the call origination and termination, which may result in carriers providing degraded service to certain areas.[2]

The Declaratory Ruling asserted that carriers should ensure that, in routing calls through intermediate providers,[3] such providers are not engaging in unjust or unreasonable practices, as doing so would compromise the reliability of the Public Switched Telephone Network (PSTN) and the effectiveness of interconnected networks. Based on the conclusions in its Declaratory Ruling, the FCC proposed a Rulemaking to address rural call completion issues. Subsequent to issuing the Declaratory Ruling, the FCC conducted five rural call completion enforcement actions, which resulted in a series of settlements and consent decrees.[4]

Following issuance of the Declaratory Ruling, on February 4, 2013 the FCC issued a Notice of Proposed Rulemaking (NPRM)seeking comment on rules to address rural call completion issues, such as reporting and data retention requirements that would allow it to review a long distance provider’s call performance to specific areas, while also minimizing the burden of compliance with the proposed rules, particularly for originating providers whose call-routing practices did not appear to be causing significant call completion problems. The NRPM also requestedcomment on remedies for low call completion rates and poor call quality in rural areas.

The CPUC submitted comments in response to the 2013NPRMin which the CPUCidentified rural call completion data the CPUC had received from late 2012 through early February 2013, citing a number of reported interstate and intrastate call completion failures, further stating “[a]lthough the problem may not be as acute in California as in some of the other states with higher access charges, it is clear that the problem does indeed exist in California.”

Therefore, in its 2013 comments, the CPUC supported the FCC’s proposal to require facilities-based originating long-distance voice services providers to collect and report to the FCC detailed data on call answer rates; urged the FCC to act as soon as possible in the effort to enforce its rules; and requested that the FCC give states access to carrier date filed with the FCC that is specific to that respective state, so that states could individually work with the FCC to help end this problem. After receiving comments, the FCC adopted recording, retention, and reporting rules in the 2013 Rural Call Completion Order (2013 Order) on October 28, 2013.[5]

After adopting its 2013 Order, the FCC analyzed quarterly data submitted over two years and published a report on June 22, 2017, addressing “the effectiveness of the rules, [including] whether data collection and reporting should be reduced or eliminated for certain providers or classes of providers.” The June 22nd report found that the aggregate call answer rate in rural areas was slightly lower than in non-rural areas, and there was wide variation in covered provider performance in rural as well as non-rural areas. The FCC’s report declined to draw firm conclusions from the data because of quality and consistency issues, including variations in how covered providers reported data.[6]

The June 22nd report also recommended discontinuance of the required data reporting, and requested comments on eliminating the recording, retention, and reporting rules established in the 2013 Order, and replacing these rules with new rules for covered providers to more directly address rural call completion issues. Finally, the report recommended replacing carrier reporting rules with new rules the FCC anticipated would more effectively address rural call completion problems

On May 15, 2014, in Investigation (I.)14-05-012, the CPUC began its own review of intrastate call completion problems in California, particularly call completion failures in rural areas. The Investigation requested comments to better understand causes of rural call completion failures, and proposed a “coordinated effort among the CPUC, its counterparts in neighboring states, and the Federal Communications Commission (FCC), so that all Californians can send and receive phone calls without discrimination or delay.”

The CPUC issued D.16-12-066 to address intrastate call completion issues, and among other things, directed Communications Division (CD) staff to analyze large gaps between attempted calls and completed calls to or from California, based on FCC data. The CPUC also directed CD staff to recommend appropriate action to ensure that calls are completed consistent with California law.[7] As part of this effort, CD obtained through the FCC’s Form 480 call completion data specific to California,evaluated eight quarters of the data, and found the results inconclusive.[8]

Discussion AND RECOMMENDATIONS: On July 13, 2017, the FCC issuedthis FNPRMon rural call completion issues, in which the FCCproposes to adopt “new rules that would be consistent with industry best practices, require covered providers to monitor the rural call performance of their intermediate providers, and hold those intermediate providers accountable for their performance.” The FCC acknowledges that rural call completion “is a continuing problem and that continued focus on the issues is warranted,” but that the rate of complaints is declining and the ongoing transition to “bill and keep” is reducing the incentive structure to not complete calls.[9]

The FNPRM also proposes to “eliminate the existing call completion data collection and reporting rules which may be rendered unnecessary by the adoption of new rules intended to more directly and proactively address rural call completion problems.” After reviewing the data and conclusions of the June 22 report,the FCC concluded that the existing recording, retention, and reporting rules are not an effective way to ensure that carriers are providing safe and reliable service. The FCC wants to improve its ability to monitor rural call completion problems and aid in the enforcement action in connection with providers’ call completion practices as necessary. The FCC believes that the existing recording, retention and reporting requirements should be eliminated because the provided data cannot be consistently relied upon to accurately identify where problems are happening and what exactly is causing the problem due to data reporting consistency issues.

Similar to the approach taken in other recent dockets, in this FNPRMthe FCC provides clear indication of the rules it proposes to remove, but does not simultaneously offer new rules it might adopt in lieu of those eliminated. The draft proposed rules are unclear, and leave wide room for varying interpretations that would make monitoring and enforcement problematic. Instead, the FNPRMposes detailed questions about what the rules should be. Staff recommends that any CPUC comments should urge that continued monitoring is necessary andconsistent with our previous comments.

Staff recommends that the CPUC file comments on the following specific issues raised in the FNPRM.

  1. New Rural Call Completion Requirements for Covered Providers
  1. The FNPRMproposes to hold covered providers responsible for monitoring rural call completion performance by maintaining the accountability of intermediate providers in the event of poor performance, obviating the need for recording, retention, and reporting rules. The notice questions the ongoing utility of the data collection requirements, believing that monitoring intermediate providers is an improvement on the current data collection methodology, and seeks comment on this proposal and how best to implement it.[10]

Recommendation:

Having reviewed eight contiguous quarters of FCC data from approximately fifty carriers and finding the data inconclusive, staff recommends that this requirement be discontinued. Staff notes that in a Declaratory Ruling[11] defining the signal codes for each category of call attempt “answered”, “busy”, “ring no answer”, and “unassigned number”, the FCC clarified that explanatory notes describing call attempts are intended to serve as examples rather than excusive definitions, and reiterated that providers should, as part of the required quarterly reports submission, explain the method used to identify call attempt categories. Over time, the clarification did not appear to make the overall call completion results any more conclusive. Staff also notes that the California-specific data provided for the same eight quarters is equally inconclusive, and likewise establishes no detectable trend.

  1. The FCC proposes to retain its existing definition of “covered provider” as cited in statute[12]and seeks comment on this proposal.

Recommendation:

Staff has reviewed the definition of “covered provider” defined in 47 CFR § 64.2101, and recommends that the CPUC support FCC retention of that definition addressing minimum number of subscriber lines and types of carrier classification as appropriate in gathering data without placing a burden on smaller carriers. For the purpose of gathering datain rural areas, limiting covered providers to those with a minimum of 100,000 subscriber lines would ensure that a sufficient percentage of total collectable data will be gathered. Staff also notes that the existing definition of “covered provider”does not presuppose that a particular provider does ordoes not have call completion problems.

  1. The FCC recognizes that different ways exist to monitor rural call completion performance of intermediate providers and to hold them accountable for such performance, and seeks comment on how best to do so.[13] Intermediate providers are those whofacilitate and provide a long-distance call path between the originating and terminating service providers.

Recommendation:

Staff agrees that requiring covered providers to monitor rural call completion performance by tracking intermediate provider performance would be a more reliable barometer of overall performance and potential for call completion improvement. Tracking intermediate providers’ performance actually targetswho is responsible for executing the call path and where the call path may have been interrupted. The current monitoring methodology does not require the covered provider making the initial long-distance call path choice to identify least-cost routers along the call path, but the FCC’s proposal to monitor intermediate providers should confine data collection to all least cost routers or intermediate providers involved in the call path. Should the FCC discontinue existing data recording, retention, and reporting requirements, newadopted requirements to monitor intermediate providers may prove more effective in revealing trends and effecting call completion improvements. Therefore, staff recommends that the CPUC support an FCC rule requiring the covered provider making the initial long-distance call path choice to identify each intermediate provider involved in the transmission of each call.

Staff agrees that the FCC should impose metrics for implementing and tracking intermediate provider performance. The FCC should not leave development of metrics to the discretion of covered providers, as this likely would lead to multiple different standards. Staff recommends the CPUC support FCC specification of the form and frequency of the required monitoring with perhaps a shorter review and analysis interval, even if this requiresrequesting additional comments to gain consensus so that a “fair” requirement is developed.

The scope of the required monitoring should leave little room for interpretation because inconsistent data reporting was a problem in the 2013 Order’s data collection. Staff recommends that the FCC should continue to require delineation of calls made to rural OCNs versus non-rural OCNs and that the data be further detailed to account for calls to rural incumbent LECs and competitive LECs.

  1. The FCC seeks comments on whether and how it should clarify the circumstances in which a covered provider must hold one of its intermediate providers accountable for its rural call completion performance. If the FCC adopts metrics to define performance, how should it define “sustained inadequate performance” by an intermediate provider?[14]

Recommendation:

The FCC should establish consensus among the covered providers to develop call completion percentage standardsto be reviewed after an initial (annual) review period, and should order two review periods—reviews at the end of each consecutive year over a two-yearperiod. Consistent with the recommendations above, the review and analysis interval could be abbreviated to one year. By establishing and developing call completion metrics, intermediate providers would be subject to determination of performance measurement after the first year, with those intermediate providersdemonstrating inadequate performance being required,at a minimum, to meet the established metrics during the second year. For those intermediate providers that continue to fail to meet minimum standards after the second year, staff recommends that underperforming intermediate providers be eliminated from routes offered to the covered provider with the exception of call paths for which there are no alternatives routes; in those cases, such information should require reasonable documentation.

  1. The FCC seeks comments regarding whether it can best ensure compliance with the proposed performance monitoring requirements. Is a certification or audit requirement needed to ensure compliance, and if so how should such a requirement be implemented?[15]

Recommendation:

Acertification or audit requirement would put covered providers and intermediate providers on further notice of the importance the FCC attaches to rural call completion. However, such a requirement could be burdensome and costly if the FCC requires quarterly submissions with data. Staff recommends that the CPUC adoptan annual certification or audit, commensurate with and in compliance with an annual FCC analysis and report. The CPUC should recommend that these reports be submitted concurrently to state PUCs so that the states can conduct local analyses.

  1. The FCC seeks comments on additional or alternative proposals. For instance, should it maintain the current recordkeeping and retention rules but not the current reporting requirements?

Recommendation:

Establishing intermediate provider reporting requirements while continuing to require recording and retention rules may be burdensome and to some degree duplicative. Staff recommends that requiring intermediate provider data should, in the long run, prove to be much more significant in establishing who is responsible for executing the call path and where the call path may have been interrupted, rather than what signal code resulted at the receiving end.

  1. Recording, Retention, and Reporting Requirements for Covered Providers
  1. The FCC believes that its existing recording, retention, and reporting rules are not particularly effective, proposes to eliminate those rules for covered service providers, and seeks comment on this proposal.[16]

Recommendation: