Updating the Intercarrier Compensation Regime To Eliminate Access Arbitrage, 47673-47688 [2022-16237]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 87, Number 149 (Thursday, August 4, 2022)]
[Proposed Rules]
[Pages 47673-47688]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16237]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 61, and 69

[WC Docket No. 18-155; FCC 22-54; FR ID 98377]


Updating the Intercarrier Compensation Regime To Eliminate Access 
Arbitrage

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Commission seeks comment on proposed amendments to prevent 
companies from attempting to evade its existing access stimulation 
rules, harming customers, and imposing unwarranted costs on America's 
telecommunications networks.

DATES: Comments filed in response to this Further Notice of Proposed 
Rulemaking are due September 6, 2022. Reply comments are due October 3, 
2022.

ADDRESSES: Federal Communications Commission, 45 L St. NW, Washington, 
DC 20554.

FOR FURTHER INFORMATION CONTACT: Lynne Engledow, FCC Wireline 
Competition Bureau, at 202-418-1520 or via email at 
[email protected]. For additional information concerning the 
proposed Paperwork Reduction Act information collection requirements 
contained in this document, send an email to [email protected] or contact 
Nicole Ongele at 202-418-2991.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking adopted on July 14, 2022, and 
released on July 15, 2022. A full-text copy of this document may be 
obtained at the following internet address: https://www.fcc.gov/document/fcc-proposes-updated-rules-eliminate-access-arbitrage-0.

Background

    1. The access charge regime was originally designed to compensate 
carriers for the use of their networks by other carriers. It also 
helped ensure that people living in rural areas had access to 
affordable telephone service through a system of implicit subsidies. 
The key to this system was the charges IXCs were required to pay to 
LECs for access to their networks--particularly the high charges IXCs 
had to pay rural LECs to terminate calls to rural customers. In 1996, 
Congress directed the Commission to eliminate these implicit 
subsidies--a process the Commission has pursued by steadily moving 
access charges to a bill-and-keep framework. As part of the ongoing 
transition to bill-and-keep, the Commission has capped most access 
charges and moved terminating end-office charges and some tandem 
switching and transport charges to bill-and-keep.
    2. Arbitrage schemes take advantage of relatively high access 
charges, particularly for the remaining terminating tandem switching 
and transport services that have not yet transitioned to bill-and-keep. 
Switched access charges were originally established based on the costs 
of providing service and normal call volumes. These rates were 
subsequently capped and are no longer based on actual costs or actual 
usage and therefore no longer decrease when traffic volumes increase. 
Some LECs devised business plans to exploit this fact by artificially 
stimulating terminating call volumes through arrangements with entities 
that offer high-volume calling services. The resulting high call 
volumes generate revenues that far exceed the costs that the 
terminating tandem switching and tandem switched transport charges are 
designed to cover.
    3. ``Free'' conference calling, chat lines, and certain other 
services accessed by dialing a domestic telephone number are all types 
of calling services that can be, and are, used to artificially increase 
call volumes. The terminating switched access charges, however, were 
intended to allow LECs to recover the costs of operating their 
networks, not to allow LECs to subsidize ``free'' conference calling, 
chat line, and similar ``free'' services offered by the LECs' end-user 
customers. IXCs nonetheless have no choice but to carry traffic to 
these high-volume calling services and pay the tariffed access charges 
to the terminating LECs or the Intermediate Access Providers the LECs 
choose, inefficiently transferring revenues from IXCs to the traffic 
stimulators that greatly exceed the cost these termination charges are 
intended to cover. As a result, terminating tandem switching and tandem 
switched transport charges that these high-volume calls generate are 
shared by all

[[Page 47674]]

of the IXC's customers, who collectively fund the ``free'' services 
offered by high-volume calling service providers, whether the IXC 
customers use those services or not.
    4. In the 2011 USF/ICC Transformation Order, the Commission adopted 
rules identifying rate-of-return LECs and competitive LECs engaged in 
access stimulation and requiring that such LECs lower their tariffed 
access charges. The 2011 rules defined ``access stimulation'' as 
occurring when two conditions are satisfied: (1) the rate-of-return LEC 
or competitive LEC has entered into an access revenue sharing agreement 
that, ``over the course of the agreement, would directly or indirectly 
result in a net payment to the other party;'' and (2) one of two 
traffic triggers is met: either an interstate terminating-to-
originating traffic ratio of at least 3:1 in a calendar month, or more 
than a 100 percent growth in interstate originating and/or terminating 
switched access minutes of use in a month, compared to the same month 
in the preceding year. At the same time, the Commission began moving 
terminating, end-office switched access charges to bill-and-keep.
    5. Parties engaged in access stimulation adapted to these rules by 
taking advantage of tandem switching and transport access charges that 
had not yet transitioned to bill-and-keep, namely, the terminating 
tandem charges for rate-of-return and competitive LECs. As a result, 
new access arbitrage schemes forced IXCs to pay high tandem switching 
and tandem switched transport charges to access-stimulating LECs or to 
Intermediate Access Providers that may be chosen by those access-
stimulating LECs. And although the direct cost to IXCs of access 
stimulation dropped because of the rules adopted in 2011, the number of 
access-stimulated minutes did not. Indeed, arbitrageurs openly promoted 
``opportunities to get paid for generating minutes by dialing telephone 
numbers owned by access stimulator LECs.''
    6. In 2019, the Commission responded to the new access arbitrage 
schemes that had sprung up after 2011 by broadening the scope and reach 
of its Access Stimulation Rules. Most significantly, the Commission 
found that requiring ``IXCs to pay the tandem switching and tandem 
switched transport charges for access-stimulation traffic is an unjust 
and unreasonable practice'' that was prohibited pursuant to section 
201(b) of the Communications Act of 1934, as amended (the Act). The 
Commission then adopted rules making access-stimulating LECs--rather 
than IXCs--financially responsible for the tandem switching and tandem 
switched transport service access charges associated with the delivery 
of traffic from an IXC to an access-stimulating LEC serving end users 
at its end office or its equivalent. The Commission adopted these 
changes to reduce carriers' incentives to artificially inflate traffic 
volumes by routing traffic inefficiently to maximize access charge 
revenues. The Commission also found that combatting such arbitrage 
reduces call congestion and service disruptions. The Commission 
recognized that arbitrage may occur even when there is no revenue 
sharing agreement, so it modified the definition of access stimulation 
to include two alternative traffic ratio triggers (one applicable to 
competitive LECs and one applicable to rate-of-return LECs) that do not 
require a revenue sharing component.
    7. Since these rules took effect, parties have advised Commission 
staff of new efforts by access stimulators to evade the updated rules 
by integrating into the call flow IP enabled (IPES) Providers. For 
example, some parties described concerns that access stimulators are 
``converting traditional CLEC [(competitive LEC)] phone numbers to IPES 
numbers in order to claim that the [Access Arbitrage Order] is 
inapplicable'' because the traffic is bound for telephone numbers 
obtained by IPES Providers and not bound for LECs serving end users.
    8. USTelecom and its members allege that a substantial and growing 
portion of traffic that previously terminated through access-
stimulating LECs now terminates through IPES Providers. AT&T and 
Verizon allege that certain LECs are attempting to evade the 
Commission's Access Stimulation Rules by, for example, having an IPES 
Provider take the place of the LEC delivering calls to an end user. As 
a result, IXCs allege, certain LECs claim the Access Stimulation Rules 
do not apply because the IPES Provider--and not the LEC--is responsible 
for delivering calls to the end user. In such a scenario, it is alleged 
that because the call flow does not include an access-stimulating LEC 
serving end users, such LECs continue to bill IXCs for the termination 
of access-stimulated traffic. Thus, IXCs and their long-distance 
customers continue to bear the costs of these calls to high-volume 
calling services. Inteliquent and Lumen describe a different call flow 
scheme in which the traffic does not pass through a LEC. In this call 
flow, an Intermediate Access Provider (tandem service provider) 
transmits long-distance traffic directly to an IPES Provider. USTelecom 
explains that some IPES Providers claim that the Access Stimulation 
Rules do not apply to traffic terminating to ``IPES numbers,'' and 
therefore the IPES Providers are not responsible for the costs of 
tandem switching and transport, ``regardless that their traffic 
patterns qualify as access stimulation under the Commission's rules.''

Discussion

    9. In this Further Notice, we propose to eliminate perceived 
ambiguity in our rules that the record shows companies are seeking to 
leverage to force IXCs and their long-distance customers to continue to 
bear the costs of high-volume calling services by incorporating IPES 
Providers into the call path. This is an increasingly important issue 
because IPES Providers are prevalent in today's networks. As a result, 
we propose that when traffic is delivered to an IPES Provider by a LEC 
or an Intermediate Access Provider and the terminating-to-originating 
traffic ratios of the IPES Provider exceed the triggers in the Access 
Stimulation Rules, the IPES Provider will be deemed to be engaged in 
access stimulation. In such cases, we propose that the Intermediate 
Access Provider would be prohibited from imposing tariffed terminating 
tandem switching and transport access charges on IXCs sending traffic 
to the IPES Provider or the IPES Provider's end-user customer.
    10. The rules we propose will serve the public interest by reducing 
carriers' incentives and ability to send traffic over the Public 
Switched Telephone Network (PSTN) solely for the purpose of collecting 
tariffed tandem switching and transport access charges from IXCs to 
subsidize high-volume calling services, which the Commission has found 
to be an unjust and unreasonable practice. Consistent with the 
Commission's previous efforts to eliminate this conduct, our proposals 
seek to reduce the routing of artificially high volumes of calls to 
places where above-cost access charges continue to exist. Our proposals 
will reduce the ability to apply access charges to those calls, the 
costs of which are ultimately borne by consumers, most of whom do not 
even use high-volume calling services.

Proposed Rules When IPES Providers' Traffic Ratios Exceed the Access 
Stimulation Triggers

    11. We seek comment on call paths involving Intermediate Access 
Providers, LECs, and IPES Providers. As an initial matter, we seek 
comment on whether the following diagram accurately illustrates how 
calls are delivered to high-volume calling service

[[Page 47675]]

providers by IPES Providers that receive those calls from LECs. If not, 
how should the diagram be modified to make it more accurate? We 
encourage commenters to submit diagrams and explanations in the record 
to provide a more comprehensive and clearer understanding of the flow 
of traffic to high-volume calling service providers when an IPES 
Provider is inserted into the call flow. We strongly encourage parties 
to submit simple diagrams showing all providers in the call path to 
illustrate and help clarify the various calling scenarios that our 
proposals to combat access stimulation should target.
[GRAPHIC] [TIFF OMITTED] TP04AU22.020

    12. We also seek information on the providers' services (tariffed 
and non-tariffed) and the access charges involved in routing these 
calls. When traffic is routed from an Intermediate Access Provider to a 
LEC as in Diagram 1, is that LEC at times the same entity that serves 
as the Intermediate Access Provider? In what circumstances? Commenters 
should enumerate each of the services provided by the Intermediate 
Access Provider, the LEC, and IPES Provider along this call path and 
which entities are charged for each service. For instance, when the LEC 
sends calls to the IPES Provider in the call path, is the LEC providing 
transport or other services? If the LEC delivers these calls to the 
IPES Provider, is the LEC providing any end-office functionality? When 
traffic is exchanged between the LEC and the IPES Provider, how is 
compensation, if any, handled between the two entities? What other 
services does the LEC charge for? Does the IPES Provider charge any 
entity in the call path for any services? If so, what services are 
provided by the IPES Provider, and which entity does the IPES Provider 
charge? Parties should provide any additional information that will 
enhance our understanding of how calls are routed and billed for along 
the hypothetical call path in Diagram 1, so we can better assess 
whether entities are meeting their financial responsibilities when they 
route traffic in this manner.
    13. The record suggests that there are call flows that do not 
include a LEC between the Intermediate Access Provider and the IPES 
Provider (or the end user), as pictured in Diagram 2 below. In this 
scenario, the Intermediate Access Provider (tandem provider) delivers 
calls directly to an IPES Provider without an intermediate LEC. We seek 
comment on the existence of such call flows. Does Diagram 2 below 
accurately depict such call flows? If not, what adjustments need to be 
made to the diagram to make it more accurate?
[GRAPHIC] [TIFF OMITTED] TP04AU22.021

    14. IPES Providers are not ``LECs'' and thus parties may argue that 
our Access Stimulation Rules do not apply to them, whether traffic they 
terminate to high-volume calling service providers is received directly 
from Intermediate Access Providers or from LECs. This argument, 
however, leaves IXCs, who are captive to the routing decisions of IPES 
Providers that may choose Intermediate Access Providers solely to 
receive traffic they then deliver to the high-volume calling service 
provider, having to bear the cost of those routing decisions. These 
costs are ultimately passed onto the IXCs' customers. These schemes are 
similar to those that existed before the Access Arbitrage Order was 
adopted, where access-stimulating LECs had no incentive to make 
economical routing decisions because the cost implications of those 
decisions would be borne by IXCs who would pass the resultant inflated 
costs on to their customer bases.
    15. For example, in response to the Access Arbitrage Order, one 
competitive LEC, Wide Voice, modified its business to no longer offer 
service to end users, and instead only functions as a competitive 
tandem provider and sends call destined for a high-volume calling 
service to HD Carrier (an IPES provider),

[[Page 47676]]

which then terminates calls to the end user. The Commission found that 
Wide Voice's actions resulted in it continuing to unlawfully bill IXCs 
for tandem services contrary to section 201(b) of the Act. Commenters 
should describe additional real-world examples of calls being routed 
from an Intermediate Access Provider directly to an IPES Provider (or 
indirectly through a LEC) that then terminates those calls to a high-
volume calling service provider. Does this routing scheme impose 
unlawful costs on IXCs? We seek additional detail on this practice and 
specific proposals as to how best it should be addressed. Parties 
should explain what charges are being assessed, what entity is billing 
for what services, and which parties are being charged in these 
situations. Commenters should likewise describe any other aspects of 
this call flow that might provide additional opportunities for 
arbitrage and suggest ways our rules might be revised to foreclose 
those opportunities.
    16. Proposal. We propose to clarify that an Intermediate Access 
Provider shall not charge an IXC tariffed charges for terminating 
switched access tandem switching and switched access tandem transport 
for traffic bound to an IPES Provider whose traffic exceeds the ratios 
in sections 61.3(bbb)(1)(i) or 61.3(bbb)(1)(ii) of our Access 
Stimulation Rules. We seek comment on this proposal, including the 
question of whether it is appropriate to apply to IPES Providers the 
3:1 terminating-to-originating traffic ratio plus revenue sharing 
agreement trigger in section 61.3(bbb)(1)(i), and the 6:1 terminating-
to-originating traffic ratio trigger, absent a revenue sharing 
agreement, in section 61.3(bbb)(1)(ii). Commenters should consider that 
although we intend to reduce or eliminate arbitrage opportunities, we 
do not want the financial consequences of our Access Stimulation Rules 
to apply to LECs or IPES Providers that are not engaged in harmful 
arbitrage schemes.
    17. Under our proposal, the IPES Provider would be responsible for 
calculating its traffic ratios and for making the required 
notifications to the Commission and affected carriers, just as LECs are 
responsible for these activities under the current rules. This proposal 
is consistent with other reporting requirements imposed on VoIP 
providers, such as the obligation to report certain information on FCC 
Forms 477 and 499. Similar to the approach the Commission took in the 
Access Arbitrage Order, we do not propose a specific format for the 
notification an access-stimulating IPES Provider would provide to 
affected carriers and the Commission. After the rules adopted in the 
Access Arbitrage Order became effective, some carriers satisfactorily 
notified the Commission that they were stopping their access 
stimulation activities by filing letters in docket 18-155.
    18. Under our proposal, if the IPES Provider's traffic ratios 
exceed the applicable rule triggers, it would have to notify the 
Intermediate Access Provider, the Commission, and affected IXCs. The 
Intermediate Access Provider would then be prohibited from billing IXCs 
tariffed rates for terminating switched access tandem switching or 
terminating switched access transport charges. Instead, the 
Intermediate Access Provider could recover the costs from the IPES 
Provider, or the IPES Provider's LEC partner. Thus, the entities 
choosing the call path--the IPES Provider or its partner--should only 
be willing to generate traffic that creates more value than the costs 
these tariffed access charges are intended to recover. As a result, 
they would have an economic incentive to make efficient call routing 
decisions and little, if any, incentive to artificially stimulate 
traffic. Do commenters agree with our view that this proposal, 
reflected in the amended rules, will help ``ensure that the entities 
choosing what network to use . . . have appropriate incentives to make 
efficient decisions''? If commenters disagree, they should explain what 
other, or additional, actions we should take to ensure that service 
providers have the proper incentives.
    19. As an alternative to imposing a requirement that the IPES 
Provider calculate its traffic ratios for purposes of our Access 
Stimulation Rules, we could require that the Intermediate Access 
Provider calculate the IPES Provider's traffic ratios. Under this 
alternative, if the Intermediate Access Provider cannot perform this 
calculation, or the IPES Provider will not share relevant traffic ratio 
information with the Intermediate Access Provider, we would create a 
presumption that the IPES Provider's traffic exceeds the Access 
Stimulation Rule ratios. In that case, the Intermediate Access Provider 
would not be able to charge IXCs terminating switched access tandem 
switching or terminating switched access transport charges. Would such 
an approach be more effective than the rule modifications described 
above and proposed? Commenters are encouraged to propose possible rule 
language to codify this presumption.
    20. We propose to use the same framework for determining when an 
IPES Provider that was engaged in access stimulation no longer is 
considered to be engaged in access stimulation that we currently use 
for competitive LECs that have engaged in access stimulation. Thus, for 
example, if an IPES Provider is engaged in access stimulation because 
it exceeds the 6:1 traffic ratio in section 61.3(bbb)(1)(ii) of the 
Commission's rules, we propose that it would no longer be considered to 
be engaged in access stimulation if its traffic ratio falls below 6:1 
for six consecutive months and it does not engage in Access Stimulation 
as defined in section 61.3(bbb)(1)(i). Additionally, once such an IPES 
Provider no longer meets those criteria, it would be required to notify 
the Commission and any affected Intermediate Access Providers and IXCs 
that it is no longer engaged in access stimulation. We seek comment on 
these proposals. Do commenters consider the proposals to be over-
inclusive or unnecessary? If so, are there ways to moderate the 
proposals to effect the same objective?
    21. Calculations. We propose that IPES Providers would be 
responsible for calculating traffic ratios. Parties should describe any 
possible challenges that may affect the ability of an IPES Provider to 
perform the calculations needed to determine whether it meets the 
triggers established by the Access Stimulation Rules. Commenters should 
also explain if any of those challenges are so significant as to make 
our proposal unworkable. If so, we ask those commenters to propose 
alternatives that pose fewer challenges but still achieve our goals of 
removing the incentives for entities to engage in wasteful arbitrage 
and the imposition of unlawful charges on IXCs and their customers.
    22. The Access Stimulation Rules currently require traffic ratios 
to be calculated on the basis of traffic ``in an end office'' for the 
purposes of determining whether the 6:1 and 10:1 traffic ratios are 
exceeded. We propose rule modifications to apply this same method to 
the 3:1 traffic ratio and when IPES Providers calculate traffic ratios 
for purposes of the Access Stimulation Rules. Would there be a benefit 
to making the Access Stimulation Rules uniform between LEC obligations 
and IPES Provider obligations? For example, does the inconsistent 
application of the ``in an end office'' requirement in the current 
rules cause confusion or opportunities for arbitrage? We also propose 
that the traffic ratios in our Access Stimulation Rules all be based on 
terminating-to-originating traffic measured ``in an end office or 
equivalent.'' To apply these requirements to an IPES Provider, what 
guidance should we provide as to what would be considered 
``equivalent'' to a

[[Page 47677]]

LEC's end office? For example, when an IPES Provider is inserted in the 
call flow, should wherever the Intermediate Access Provider sends 
traffic be considered the ``end office or equivalent''? Does the 
Commission's holding in the VoIP Symmetry Declaratory Ruling that a 
VoIP provider will be providing end office functionality ``equivalent'' 
to a LEC when it provides the physical connection to the end user have 
any application here?
    23. Alternatively, should IPES Providers be required to calculate 
their traffic ratios based on the traffic the IPES Provider terminates 
in a specific state or to a specific end user? Is there some other 
method of calculation that would better aid us in identifying access 
stimulation for the purposes of our Access Stimulation Rules? Should 
IPES Providers calculate their traffic ratios in a manner that mirrors 
the geographic area served by the LEC's end office, or by specific 
LATAs? Should we require IPES Providers to calculate their traffic 
ratios based on the traffic they receive from a specific Intermediate 
Access Provider? Are there other alternatives we should consider? Which 
approach would best support the effectiveness of our Access Stimulation 
Rules, ensure that all providers in a call flow have the proper 
economic incentives to promote efficiency, and eliminate harmful 
arbitrage opportunities? Commenters should submit any data they have 
that support a particular approach or that show the relative benefits 
of one approach versus another.
    24. We also seek comment on any challenges related to our 
alternative proposal of requiring that the Intermediate Access Provider 
calculate the IPES Providers' traffic ratios. Would an Intermediate 
Access Provider know, or have access to, the information necessary to 
determine the terminating-to-originating traffic ratios of IPES 
Providers to which it delivers and from which it receives traffic? 
Would tracking the originating and terminating traffic of individual 
IPES Providers be unduly burdensome for Intermediate Access Providers? 
What if the Intermediate Access Provider delivers traffic along 
multiple call paths and needs to calculate the traffic ratios for an 
IPES Provider for each call path? For example, do providers send 
originating and terminating traffic on different call paths when they 
partner with multiple LECs or other IPES Providers? Does an IPES 
Provider designate different traffic routes in the Local Exchange 
Routing Guide (LERG), such that it may select one LEC for the purposes 
of receiving local traffic, but receives long-distance traffic from a 
different access tandem to avoid having incoming long-distance and 
local traffic traverse the same LEC's facilities? Are there reasons, 
other than promoting access arbitrage, for an IPES Provider to use more 
than one route for terminating traffic? If so, we ask commenters to 
explain those specific reasons.
    25. Implementation. What implementation issues do our proposals 
raise? How much time would providers need to comply with the proposed 
rule changes? In the Access Arbitrage Order, the Commission gave 
carriers 45 days to come into compliance with the newly effective 
rules. Anticipating that IPES Providers would not need longer to comply 
than carriers did, we also propose a 45-day period for compliance after 
the effective date of the revised rules. Is this sufficient? Do 
interested parties foresee difficulties that would affect the time it 
will take to comply with the revised rules? Commenters should include 
suggested timeframes for implementation and an explanation of any 
challenges or concerns relating to coming into compliance with our 
proposed rules within a 45-day period. If 45 days are insufficient, how 
long should the transition period last, what steps would it include, 
and why is more time necessary now than was needed at the time the 
Commission adopted the Access Arbitrage Order? If proposing an 
alternative timeframe, we remind interested parties to balance any 
proposed implementation period with the fact that the longer the 
implementation period lasts, the longer these forms of wasteful access 
arbitrage continue.
    26. Revenue Sharing. The reforms adopted in the 2011 USF/ICC 
Transformation Order focused on revenue sharing agreements between the 
terminating LEC and end users or other providers along the call path 
that provided incentives for improper behavior. In the 2019 Access 
Arbitrage Order, the Commission adopted rules to identify and address 
access stimulation arrangements that did not include a revenue sharing 
component. As we work to further strengthen our rules to combat ongoing 
arbitrage, we seek comment on whether revenue sharing agreements exist 
in the call routing scenarios described above. For example, do IPES 
Providers share revenue with common carriers that transmit traffic to 
the IPES Providers or their customers? Do Intermediate Access Providers 
share their revenues with IPES Providers, high-volume calling service 
providers, or the high-volume calling service providers' end users?
    27. Conversely, do high-volume calling service providers (or their 
end users) share revenue with LECs, Intermediate Access Providers, or 
IPES Providers? In any alternative call paths commenters describe in 
response to our questions in this Further Notice, we ask commenters to 
specify which entities, if any, could be or are sharing revenues with 
other entities. We are particularly interested in what makes certain 
call paths--or call path manipulations--attractive to those involved. 
For example, what entities are sharing revenues right now? What 
functions do those entities serve in completing calls, and whose 
revenues are being shared with others? We propose modifying the 
existing definition of Access Stimulation in section 61.3(bbb) to 
include IPES Providers with or without access revenue sharing 
agreements, similar to the approach that currently applies to 
competitive LECs. Are ongoing revenue sharing arrangements covered 
effectively by the current Access Stimulation Rules? If not, what 
additional rule revisions are needed to capture today's revenue sharing 
arrangements? Is there specific rule language commenters would propose 
to address revenue sharing arrangements that may not be covered by our 
current rules?

Other Proposed Rule Changes

    28. We seek comment on several additional rule change proposals. 
Are the proposed rule changes below necessary, or helpful, to the goal 
of eliminating harmful arbitrage? Would they, in concert with the other 
rule changes proposed in this Further Notice, help to comprehensively 
address arbitrage of our intercarrier compensation system?
    29. End User and End Office Language. AT&T suggests that 
clarifications to the ``end user'' and ``end office'' language in the 
existing rules will prevent LECs from evading financial responsibility 
for access-stimulation traffic when an IPES Provider is inserted into 
the call path. First, AT&T suggests that we clarify the meaning of 
``end user'' in section 61.3(bbb)(1) of our rules, which defines when 
carriers engage in access stimulation, by adding the italicized 
language, as follows.
    A Competitive Local Exchange Carrier serving end user(s) engages in 
Access Stimulation when it satisfies either paragraph (bbb)(1)(i) or 
(ii) of this section; and a rate-of-return local exchange carrier 
serving end user(s) engages in Access Stimulation when it satisfies 
either paragraph (bbb)(1)(i) or (iii) of this section. For purposes of 
this

[[Page 47678]]

section, a Local Exchange Carrier is serving end users when it provides 
service to a called or calling party, either directly or through 
arrangements with one or more VoIP providers or other entities that 
serve called or calling parties. For purposes of this section, a Local 
Exchange Carrier is not serving end users when it is an Intermediate 
Access Provider as defined in paragraph (ccc) of this section, i.e., 
when it is not the first or last LEC in the routing of a call to a 
called or calling party.
    30. We seek comment on this proposed amendment to our existing 
rule. Would the proposed language effectively remedy any perceived 
ambiguity that parties have sought to exploit in our current rules? 
Would the proposed language lead to any potentially unintended 
consequences that we should consider? Do commenters propose any 
revisions to this language? Would this rule modification successfully 
prevent LECs from avoiding financial responsibility for access-
stimulation traffic when IPES Providers are in the call path? Are there 
considerations that would weigh against such a rule modification or in 
favor of some other modification(s) to this rule? Are the proposed rule 
modifications sufficient to address the concerns that AT&T intends to 
address with this proposed rule change? Alternatively, should we delete 
the ``serving end user(s)'' phrase from section 61.3(bbb)(1) of our 
rules? Would doing so be a simpler approach to address this perceived 
ambiguity? Or, should we add the phrase ``serving end users'' to 
sections 61.3(bbb)(2) and 61.3(bbb)(3)? Would there be a benefit to 
making the rules consistent? Would there be any detrimental effects 
from doing so?
    31. Secondly, AT&T proposes that we modify section 61.3(bbb)(1)(ii) 
of our existing rules to remove the reference to traffic calculations 
``in an end office'' and revise how the access-stimulation traffic 
ratio is computed for LECs that provide numbers or interconnection to 
IPES Providers, as follows. The italicized language represents what 
would be added.
    A Competitive Local Exchange Carrier has an interstate terminating-
to-originating traffic ratio of at least 6:1 in a calendar month. For 
any Competitive Local Exchange Carrier that provides numbers or 
interconnection to a VoIP provider, the LEC is engaged in access 
stimulation for purposes of that VoIP provider's traffic when that VoIP 
provider has an interstate terminating-to-originating traffic ratio of 
at least 6:1 in a calendar month.
    32. Should we adopt this proposal? Would removing the language ``in 
an end office'' better accomplish our goal of providing clarity and 
understanding of our rules? Does the deletion of ``in an end office'' 
recognize, as AT&T suggests, that arbitrage schemes no longer target 
end office charges? Under this proposed approach, should the LEC be 
responsible for calculating the traffic ratios of the IPES Provider? If 
the LEC delivers traffic to multiple IPES Providers, should the LEC 
calculate a traffic ratio for each individual IPES Provider separately? 
Alternatively, should we maintain the ``in the end office'' language in 
section 61.3(bbb)(1)(ii) and (iii), and add it to section 
61.3(bbb)(1)(i)? Would making the rules consistent in this manner 
reduce the opportunity for continued arbitrage of the ICC system?
    33. Treat IPES Providers as LECs for Purposes of the Access 
Stimulation Rules. We also seek comment on a proposal submitted by 
Inteliquent and Lumen, suggesting that the Commission could, as an 
alternative to adopting new rules, ``issue a declaratory ruling 
clarifying that IPES providers are treated as LECs for the purpose of 
the access stimulation rules.'' Inteliquent and Lumen argue that ``[t]o 
the extent an IPES provider's ratio of terminating to originating 
traffic meets the triggers, it should be deemed to be engaged in access 
stimulation just like a traditional LEC,'' because ``the IPES provider 
both functions like a LEC for the purposes of the access stimulation 
rules and necessarily has visibility into its own access traffic.'' 
According to Inteliquent, a LEC that provides interconnection to an 
IPES Provider serves only as a conduit for delivery of local traffic 
and has no insight into the IPES Provider's long-distance traffic 
volumes. Therefore, Inteliquent contends, it would be inappropriate to 
make the LEC responsible for the IPES Provider's traffic volumes. We 
seek comment on this suggestion. How relevant are other situations in 
which the Commission has applied certain regulations to VoIP providers? 
IPES Providers have the ability to obtain direct access to numbers. 
Could the Commission condition the ability of an IPES Provider to 
obtain direct access to numbers on an agreement by the provider to 
voluntarily subject itself to our Access Stimulation Rules? How would 
doing so affect our efforts to eliminate access arbitrage?
    34. What rule changes would be necessary were we to decide to 
implement the proposal to issue a declaratory ruling to treat IPES 
Providers as LECs for purposes of the Access Stimulation Rules? For 
example, would we need to add a definition of ``LEC'' to our Access 
Stimulation Rules that would include IPES Providers solely for the 
purpose of compliance with the Access Stimulation Rules? Are the 
proposed rules sufficient to address Inteliquent and Lumen's concerns 
that IPES Providers are being used to avoid the application of the 
Access Stimulation Rules and to allow the continued unlawful charging 
of IXCs? If not, what specific language do commenters suggest to help 
address these concerns or further the Commission's goal of eliminating 
harmful access arbitrage?
    35. As an addition or alternative to their declaratory ruling 
proposal, Inteliquent and Lumen suggest that ``the Commission could 
declare that it is an inherently unjust and unreasonable practice for a 
party to attempt to evade the access arbitrage rules by moving LEC end 
office traffic to an affiliated IPES provider, where the traffic in 
question otherwise would have caused the LEC to be engaged in access 
stimulation under the rules.'' We seek comment on this idea. What are 
the relevant considerations of such an approach? Would such an approach 
be overly broad? Would this approach efficiently capture improper 
behavior? The Commission has repeatedly resisted an outright ban on 
access stimulation. Would doing as Inteliquent and Lumen suggest 
effectively be a ban on access stimulation?
    36. Interstate/Intrastate Language. The Commission made clear in 
the 2019 Access Arbitrage Order that the rules adopted to combat access 
stimulation were intended to prohibit access-stimulating entities from 
unlawfully billing IXCs for intrastate terminating switched access 
tandem switching or terminating switched access transport, bound for 
access-stimulating LECs, in addition to such interstate traffic. 
However, that language was not reflected in the text of the rules, only 
in the text of the Order. We now propose to codify, in sections 
69.4(l), and 69.5(b) of our rules that IXCs shall not be billed for 
interstate or intrastate terminating switched access tandem switching 
or terminating switched access transport. Would making these amendments 
facilitate enforcement of our Access Stimulation Rules? Are there other 
benefits in making these changes? Are any other amendments to these or 
other sections of our rules needed to fully and accurately capture the 
text of the Access Arbitrage Order?
    37. IPES Provider Definition. We propose to define an ``IPES 
Provider,'' for purposes of our Access Stimulation Rules, as:
    IPES Provider means, for purposes of this part and Sec. Sec.  
51.914, 69.4(l) and

[[Page 47679]]

69.5(b) of this chapter, a provider offering a service that: (1) 
enables real-time, two-way voice communications; (2) requires a 
broadband connection from the user's location or end to end; (3) 
requires internet Protocol-compatible customer premises equipment 
(CPE); and (4) permits users to receive calls that originate on the 
public switched telephone network and to terminate calls to the public 
switched telephone network or that originate from an internet Protocol 
service and terminate to an internet Protocol service or an internet 
Protocol application.
    38. Parties have suggested using the term ``IPES Provider'' when 
referring to the provider being inserted in the place of the ``LEC 
serving end users'' as used in the Access Stimulation Rules. For 
example, Inteliquent suggests that IPES is ``an industry term commonly 
used for VoIP providers that have received direct access to numbers, 
and it originates from the company code (OCN) type assigned to these 
providers by NECA [(National Exchange Carrier Association)].'' AT&T 
suggests that ``IPES providers are entities that, among other things, 
provide or facilitate Over the Top VoIP calling services, including `2-
stage' International calling services.'' Do commenters agree with 
either of these definitions? We also seek comment on the definition 
proposed above, which is limited in its application to the Access 
Stimulation Rules. USTelecom suggests that our proposed ``IPES 
Provider'' definition not require two-way calling or the termination of 
calls. Do commenters agree that we should modify the proposed 
definition as USTelecom suggests? Are there other alternative 
definitions of ``IPES Provider'' that commenters would suggest we use 
for purposes of our Access Stimulation Rules? What are the important 
functions or concepts this definition should capture? Would limiting 
our definition of ``IPES Providers'' to providers that have received 
direct access to numbers, as Inteliquent suggests, limit the 
effectiveness of the Access Stimulation Rules? Would commenters suggest 
using an existing definition to describe these IPES Providers who are 
being inserted into the call path, such as ``IP-enabled voice service'' 
provider, as defined in section 615b(8) of the Act?
    39. Alternatively, should we refer to these providers as 
``interconnected VoIP'' providers, as defined in section 9.3 of our 
rules? Are there meaningful distinctions among these terms that would 
make one defined term better than another for purposes of the Access 
Stimulation Rules? We propose a definition of ``IPES Provider'' to be 
used solely in the context of our Access Stimulation Rules. Despite our 
attempts to limit the use of this defined term, do we need to be 
concerned about potential confusion with other, similar, terms defined 
elsewhere in our rules? Will the proposed definition capture all 
providers that could be used to try to circumvent the Access 
Stimulation Rules?
    40. Intermediate Access Provider Definition. An Intermediate Access 
Provider currently is defined in our rules as ``any entity that carries 
or processes traffic at any point between the final Interexchange 
Carrier in a call path and a local exchange carrier engaged in Access 
Stimulation.'' Pursuant to our current Access Stimulation Rules, 
neither the Intermediate Access Provider nor the access-stimulating LEC 
shall bill an IXC for tariffed terminating switched access tandem 
switching and terminating switched access tandem transport charges for 
traffic between the Intermediate Access Provider and the access-
stimulating LEC. In keeping with our other proposed rule modifications, 
we propose to amend the definition of Intermediate Access Provider to 
include any entity that ``provides terminating switched access tandem 
switching and terminating switched access tandem transport services 
between the final Interexchange Carrier in a call path and: (1) a local 
exchange carrier engaged in Access Stimulation, as defined in paragraph 
(bbb) of this section; or (2) a local exchange carrier delivering 
traffic to an IPES Provider engaged in Access Stimulation, as defined 
in paragraph (bbb) of this section; or (3) an IPES Provider engaged in 
Access Stimulation, as defined in paragraph (bbb) of this section, 
where the Intermediate Access Provider delivers calls directly to the 
IPES Provider.''
    41. We seek comment on this proposed change to our definition of 
``Intermediate Access Provider.'' Inteliquent and Lumen state that 
``IPES providers designate a Hosting LEC for purposes of receiving 
local traffic'' and that ``[t]his designation does not apply to long 
distance traffic, which is the traffic subject to the Access Arbitrage 
Order.'' Therefore, we seek input on whether the part of our proposed 
definition above that includes ``a local exchange carrier delivering 
traffic to an IPES Provider engaged in Access Stimulation'' is 
necessary or how this part of the definition would otherwise be 
affected by what Inteliquent and Lumen describe in their filing. Do 
commenters suggest any other modifications to the definition? Are there 
services, other than terminating switched access tandem switching or 
terminating switched access tandem transport, that an Intermediate 
Access Provider might provide? If so, what are these services and who 
should be financially responsible for them?
    42. Conforming Edits to Our Rules. Section 51.914(a)(2) of our 
rules presently states that a LEC shall designate, ``if needed,'' the 
Intermediate Access Provider that will provide certain terminating 
access services to the LEC. This designation is applicable in cases 
where an Intermediate Access Provider is different than the end office 
LEC. We therefore propose changing ``if needed'' to ``if any,'' so that 
the rule denotes a LEC shall designate an Intermediate Access Provider 
when and ``if any'' such designation is required. Not only is the ``if 
any'' language more accurate, but removing the ``if needed'' provision 
prevents any misconception that a LEC may otherwise subjectively decide 
on its own when such designation is needed. Regarding the designation 
of an Intermediate Access Provider by an IPES Provider, are there any 
instances when an IPES Provider is not required to designate an 
Intermediate Access Provider or when proposed sections 51.914(c)(1) and 
(d) would not be necessary?
    43. Section 69.4(l) of the Commission's rules requires that a LEC 
engaged in access stimulation ``may not bill'' IXCs terminating 
switched access tandem switching or terminating switched access tandem 
transport charges for access-stimulation traffic. Yet, in the Access 
Arbitrage Order, the Commission made clear that it is unlawful for a 
LEC engaged in access stimulation to charge an IXC terminating switched 
access tandem switching or terminating switched access tandem transport 
charges. We propose edits to section 69.4(l) of our rules to make this 
rule consistent with the Commission's intent adopted in the Access 
Arbitrage Order; that a LEC engaged in access stimulation ``shall not 
bill'' IXCs for terminating switched access tandem switching or 
terminating switched access tandem transport charges on access-
stimulation traffic. Similarly, we also propose to correct an error in 
section 69.5(b)(2) of the Commission's rules that excluded the word 
``not,'' change the word ``may'' to ``shall'' to be consistent with 
other uses in these rules, and make clear that it is ``IXCs'' and not 
``local exchange carriers'' that are not being charged.
    44. We also seek comment on whether any rule changes proposed in 
this Further Notice introduce new opportunities for unlawful arbitrage. 
Would our proposed rule modifications

[[Page 47680]]

accomplish our objectives of sending accurate pricing signals to 
customers by prohibiting Intermediate Access Providers that deliver 
traffic to IPES Providers that trigger the Access Stimulation Rules 
from charging IXCs for such calls? Would adopting our proposed rule 
changes create unintended consequences? For example, would any of the 
proposals introduce unnecessary complexity and present practical 
implementation challenges? If so, we seek comment on what exactly are 
the perceived complexities and implementation challenges related to the 
proposals in this Further Notice. Are there other types of access 
arbitrage happening today that are not described in this Further 
Notice? For example, are services that allow consumers to make long-
distance calls to a domestic number and listen to foreign radio 
stations unfairly exploiting our access charge regime, as USTelecom 
suggests? Would these type of services be covered by our proposed 
rules? Or are they ``one-way,'' as USTelecom argues? If so, what 
additional actions, if any, should we take to ensure our proposed rules 
address these types of services? We ask commenters to provide any other 
proposed actions, alternatives, and rule additions or modifications we 
should consider. Are there any other conforming rule changes that 
commenters consider necessary? Are there any conflicts or 
inconsistencies between existing rules and those we propose? Finally, 
we propose several non-substantive edits, to, among other things, 
enhance readability and ensure compliance with rule drafting guidelines 
applicable to the Code of Federal Regulations.

Clarifying or Interpreting Current Access Stimulation Rules

    45. Applying the Existing Rules to IPES Providers. As an 
alternative to modifying our rules as proposed, we seek comment on 
whether it would be preferable for the Commission to issue a 
Declaratory Ruling interpreting the existing Access Stimulation Rules 
as applying to traffic routed from the PSTN through a LEC to an IPES 
Provider, or directly to the IPES Provider or to the end user, as 
parties have suggested since the rules first became effective. In the 
Access Arbitrage Order, the Commission explained that the access-
stimulation traffic ratios are based on ``the actual minutes traversing 
the LEC switch.'' Most relevant to the current discussion, the 
Commission clarified that ``all traffic should be counted regardless of 
how it is routed.'' Indeed, the Commission emphasized this point 
several times in the Access Arbitrage Order. These explanations form 
the basis of arguments that ``the Access Arbitrage Order already 
rejects'' claims that traffic routed by LECs through an IPES Provider 
should not be counted for determining access-stimulation ratios. Is 
this a reasonable and accurate interpretation of the Commission's 
decision? Would issuing a declaratory ruling interpreting the Access 
Stimulation Rules as requested above adequately address any perceived 
lack of clarity in the existing rules identified in this Further 
Notice?
    46. Traffic to Be Counted. AT&T argues that the Commission should 
clarify that, when calculating the traffic ratios for the purposes of 
our Access Stimulation Rules, a LEC ``may not include aggregated 
originating 8YY traffic--particularly traffic that it obtains from VoIP 
providers--as part of its traffic ratio'' because of the potential for 
arbitrage and fraud associated with the routing of 8YY traffic. The 
Commission previously identified certain forms of toll free or 8YY 
aggregation as a form of originating arbitrage and took steps to 
minimize that arbitrage. AT&T suggests that if a LEC ``aggregate[s] 8YY 
traffic from VoIP providers that have obtained numbering 
authorization,'' the LEC ``could begin routing access stimulation 
traffic from VoIP providers in the hope that, by engaging in both 
originating 8YY aggregation schemes and terminating access stimulation 
schemes, it could balance its terminating access stimulation traffic 
against its longstanding originating 8YY traffic and avoid hitting the 
Commission's triggers.'' We seek greater detail on this issue, as well 
as comment on the validity of AT&T's concerns. Is this happening in the 
market now? If so, we ask commenters to propose rule revisions to 
address this issue. We also seek comment on any other issues regarding 
the treatment of originating 8YY traffic for purposes of calculating 
the traffic ratios related to the triggers in our Access Stimulation 
Rules. Would excluding such traffic alter carriers' ratios sufficiently 
so as to cause them to trigger our Access Stimulation Rules even though 
they are not engaging in arbitrage? Should a significant increase in a 
carrier's 8YY originating traffic be reported and treated as another 
trigger for our Access Stimulation Rules? Should 8YY traffic be 
included in those ratios? Why or why not? Should originating 8YY 
traffic be treated as terminating traffic for purposes of our Access 
Stimulation Rules?

Legal Authority

    47. We tentatively conclude that sections 201, 251, 254 and 256 of 
the Act provide us with the authority needed to adopt the rule changes 
proposed in this Further Notice. We seek comment on this authority, our 
ancillary authority in section 4(i) of the Act, and any other statutory 
authority that may support our proposed actions. We also seek comment 
on any concerns parties might have about our authority to adopt any of 
the proposals made in this Further Notice.
    48. Section 201 of the Act. Our primary authority to adopt our 
proposed changes to the Access Stimulation Rules is section 201(b) of 
the Act. In the Access Arbitrage Order, the Commission determined that 
the imposition of tariffed tandem switching and tandem switched 
transport access charges on IXCs for terminating access-stimulation 
traffic is an unjust and unreasonable practice under section 201(b) of 
the Act. In our view, providers' attempts to continue to assess tandem 
switching or tandem switched transport access charges on IXCs for 
delivering access-stimulation traffic to IPES Providers is unjust and 
unreasonable pursuant to section 201(b) of the Act, and virtually 
indistinguishable from practices the Commission has already found to be 
unjust and unreasonable. We seek comment on this view. Section 201(b) 
of the Act gives us the authority to ``prescribe such rules and 
regulations as may be necessary in the public interest to carry out the 
provisions of this Act.'' We seek comment on whether this language 
provides us with the authority to require IPES Providers to designate 
the Intermediate Access Provider(s) that will provide terminating 
switched access tandem switching and transport services, to calculate 
their traffic ratios, and to notify Intermediate Access Providers, 
IXCs, and the Commission if the IPES Provider is engaged in Access 
Stimulation so that Intermediate Access Providers can determine whether 
they can lawfully charge IXCs for interstate and intrastate tandem 
services (and IXCs can determine if charges are appropriate). We also 
seek comment on our tentative conclusion that section 201(b) provides 
us the authority necessary to prohibit Intermediate Access Providers or 
other LECs from charging IXCs for access stimulation traffic routed 
through an IPES Provider, rather than through a LEC.
    49. Sections 251, 254, and 256 of the Act. Our authority to take 
the actions proposed in this Further Notice is also rooted in other 
sections of the Act on which the Commission relied in the

[[Page 47681]]

Access Arbitrage Order. First, section 251(b)(5) of the Act applies 
because our proposed new and modified rules apply, in large part, to 
exchange access and providers of exchange access that meet the 
definition of a LEC. Second, section 251(g) of the Act provides us with 
the authority to address problematic conduct which is occurring while 
the transition to bill-and-keep is not complete. Third, section 254 of 
the Act provides the Commission with the authority to eliminate 
implicit subsidies. Finally, section 256 of the Act requires the 
Commission to oversee and promote interconnection by providers of 
telecommunications services that is ``efficient.'' We seek comment on 
the applicability of sections 201, 251, 254, and 256 of the Act to give 
us the authority to take the actions proposed herein.
    50. Section 4(i) of the Act. Although we propose to conclude that 
our direct sources of authority identified above provide the basis to 
adopt our proposed rules, we also seek comment on whether our ancillary 
authority in section 4(i) of the Act provides an independent basis to 
adopt limited rules with respect to IPES Providers. We consider the 
proposed requirements to be ``reasonably ancillary to the Commission's 
effective performance of [its] . . . responsibilities.'' Specifically, 
IPES Providers interconnected with the PSTN and exchanging IP traffic 
clearly constitutes ``communication by wire or radio.'' We seek comment 
on whether requiring IPES Providers to comply with our proposed limited 
rules is reasonably ancillary to the Commission's effective performance 
of its statutory responsibilities under sections 201(b), 251, 254, and 
256 as described above.

Costs and Benefits of the Proposals

    51. Our intercarrier compensation regime continues to be an 
important source of funding for certain rural service providers, 
including providers of tandem switching, to ensure all Americans are 
connected. Access arbitrage exploits our intercarrier compensation 
regime to benefit activities and providers that our policies are not 
intended to benefit. This encourages further exploitation of our rules, 
threatening the basic goals of connectivity at just and reasonable 
prices, a cost that alone justifies our action. The excess payments 
made due to arbitrage also operate as an unnecessary tax on end users, 
shrinking the efficient use of telecommunications services. Further, 
because the party that chooses the call path does not pay that tax, it 
has incentives to engage in wasteful actions. Examples of this waste 
include:
     the pursuit of access arbitrage opportunities by routing 
traffic along more expensive call paths;
     artificial stimulation of traffic;
     disputes over questionable demands for payment by access 
stimulators;
     attempts by IXCs to identify the sources of fraudulent 
traffic; and
     time and money spent by parties seeking to protect against 
or reduce access arbitrage opportunities, as in this proceeding.
    52. Costs incurred by these activities are not fully paid for by 
the consumers of high-volume calling services, who often pay nothing 
for these services. If consumers of these services were charged prices 
that wholly recovered the costs of arbitrage, then those who value the 
service less than those prices would decline to purchase the service. 
This would reduce waste or equivalently create value equal to the 
difference between the cost-covering prices and these consumers' 
valuations of the service.
    53. We recognize that any action we take to address ongoing access 
arbitrage may affect the costs and benefits to carriers and their 
customers and the choices they make, as they provide and receive 
telecommunications services. Consumers who enjoy high-volume calling 
services could be adversely affected by regulatory adjustments 
targeting arbitrage. Are there perceived benefits to access arbitrage 
or access stimulation? Would addressing access arbitrage as we propose 
unfairly advantage any competitor or class of competitors? If so, are 
there alternative means to address the arbitrage issues described here 
and presented in the record?
    54. In the USF/ICC Transformation Order, the Commission considered 
direct costs imposed on consumers by arbitrage schemes. The Commission 
also found that access stimulation diverts capital away from more 
productive uses, such as broadband deployment. There is also evidence 
that the staggering volume of minutes generated by these schemes can 
result in call blocking and dropped calls. What has been the effect of 
the 2019 revisions to the Access Stimulation Rules? Are there 
additional, more-recent data available to estimate the annual cost of 
arbitrage schemes to companies, long-distance customers, and consumers 
in general? Likewise, are there data available to quantify the 
resources being diverted from more productive uses because of arbitrage 
schemes? To what degree are consumers indirectly affected by 
potentially inefficient networking or incorrect pricing signals due to 
ongoing access stimulation? Has competition been negatively impacted 
because ``access-stimulation revenues subsidize the costs of high-
volume calling services, granting providers of those services a 
competitive advantage over companies that collect such costs directly 
from their customers?'' Are there other costs or benefits to the 
proposals in this Further Notice that we should consider?

Efforts To Promote Digital Equity and Inclusion

    55. The Commission, as part of its continuing effort to advance 
digital equity for all, including people of color, persons with 
disabilities, persons who live in rural or Tribal areas, and others who 
are or have been historically underserved, marginalized, or adversely 
affected by persistent poverty or inequality, invites comment on any 
equity-related considerations and benefits (if any) that may be 
associated with the proposals and issues discussed herein. 
Specifically, we seek comment on how our proposals may promote or 
inhibit advances in diversity, equity, inclusion, and accessibility, as 
well as the scope of the Commission's relevant legal authority.

Procedural Matters

    56. Filing Instructions. Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
    Filings can be sent by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be

[[Page 47682]]

addressed to 45 L Street NE, Washington, DC 20554.
     Effective March 19, 2020, and until further notice, the 
Commission no longer accepts any hand or messenger delivered filings. 
This is a temporary measure taken to help protect the health and safety 
of individuals, and to mitigate the transmission of COVID-19.
    [cir] During the time the Commission's building is closed to the 
general public and until further notice, if more than one docket or 
rulemaking number appears in the caption of a proceeding, paper filers 
need not submit two additional copies for each additional docket or 
rulemaking number; an original and one copy are sufficient.
    [cir] After COVID-19 restrictions are lifted, the Commission has 
established that hand-carried documents are to be filed at the 
Commission's office located at 9050 Junction Drive, Annapolis Junction, 
MD 20701. This will be the only location where hand-carried paper 
filings for the Commission will be accepted.
    57. People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).
    58. Ex Parte Requirements. This proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must: (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made; and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Rule 1.1206(b). In proceedings governed by 
Rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
    59. Paperwork Reduction Act Analysis. This document contains 
proposed new or modified information collection requirements. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget to comment on the information collection requirements contained 
in this document, as required by the Paperwork Reduction Act of 1995, 
Public Law 104-13. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), we seek specific comment on how we might further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees.
    60. Initial Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act of 1980, as amended (RFA), the Commission 
has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the 
possible significant economic impact on small entities by the policies 
and rules proposed in this Further Notice of Proposed Rulemaking. The 
Commission requests written public comments on this IRFA. Comments must 
be identified as responses to the IRFA and must be filed by the 
deadlines for comments provided on the first page of the Further 
Notice. The Commission will send a copy of the Further Notice, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA). In addition, the Further Notice and the 
IRFA (or summaries thereof) will be published in the Federal Register.

Need for, and Objectives of, the Proposed Rules

    61. For many years the Commission has been fighting efforts to 
arbitrage its system of intercarrier compensation. In the 2011 USF/ICC 
Transformation Order, the Commission adopted rules identifying local 
exchange carriers (LECs) engaged in access stimulation and requiring 
that such LECs lower their tariffed access charges. In 2019, to address 
access arbitrage schemes that persisted despite prior Commission 
action, the Commission adopted the Access Arbitrage Order, in which it 
revised its Access Stimulation Rules to prohibit LECs and Intermediate 
Access Providers from charging interexchange carriers (IXCs) for 
terminating tandem switching and transport services used to deliver 
calls to access-stimulating LECs. The revised rules were adopted to end 
the ability of LECs to engage in arbitrage of the intercarrier 
compensation system by extracting artificially inflated tandem 
switching and transport charges from IXCs to subsidize ``free'' high-
volume calling services.
    62. Since the 2019 rules took effect, the Commission has received 
information about new ways carriers are manipulating their businesses 
to continue their arbitrage schemes in the wake of the new rules. In 
the Further Notice, we seek comment on ways to address perceived 
loopholes in our rules that companies may be exploiting and to 
eliminate these new arbitrage schemes and the harms those schemes 
inflict on consumers. The rules we propose will serve the public 
interest by reducing carriers' incentives and ability to send traffic 
over the Public Switched Telephone Network solely for the purpose of 
collecting tariffed tandem switching and transport access charges from 
IXCs to subsidize high-volume calling services, which the Commission 
has found to be an unjust and unreasonable practice.
    63. We propose to modify our Access Stimulation Rules to address 
access arbitrage that takes place when an internet Protocol Enabled 
Service (IPES) Provider is incorporated into the call flow. We propose 
that when a LEC or Intermediate Access Provider delivers traffic to an 
IPES Provider and the terminating-to-originating traffic ratios of the 
IPES Provider exceed the triggers in the Access Stimulation Rules, the 
IPES Provider will be deemed to be engaged in access stimulation. In 
such cases, we propose prohibiting an Intermediate Access Provider from 
charging an IXC tariffed charges for terminating switched access tandem 
switching and switched access transport for traffic bound to an IPES 
Provider whose traffic exceeds the ratios in sections 61.3(bbb)(1)(i) 
or 61.3(bbb)(1)(ii) of our Access Stimulation Rules. We propose that 
the IPES Provider be responsible for calculating its traffic ratios and 
for making the required notifications to the

[[Page 47683]]

Intermediate Access Provider and the Commission. We likewise propose 
modifying the definition of Intermediate Access Provider to include 
entities delivering traffic to an IPES Provider.
    64. We propose to use the same framework for determining when an 
IPES Provider that was engaged in access stimulation no longer is 
considered to be engaged in access stimulation, that we currently use 
for competitive LECs that have engaged in access stimulation. The 
Access Stimulation Rules currently require traffic ratios to be 
calculated at the end office. We propose rule modifications to apply 
this manner of traffic calculations to IPES Providers as well and that 
any final rules that are adopted will be effective 45 days after 
publication in the Federal Register.

Legal Basis

    65. The legal basis for any action that may be taken pursuant to 
the Further Notice is contained in sections 1, 2, 4(i), 201, 251, 254, 
256, 303(r), and 403 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152, 154(i), 201, 251, 254, 256, 303(r), and 403, and 
section 1.1 of the Commission's rules, 47 CFR 1.1.

Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply

    66. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rule revisions, if adopted. The RFA generally 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small-business concern'' under the 
Small Business Act. A ``small-business concern'' is one which: (1) is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    67. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. Our actions, over time, may affect small entities that 
are not easily categorized at present. We therefore describe here, at 
the outset, three broad groups of small entities that could be directly 
affected herein. First, while there are industry specific size 
standards for small businesses that are used in the regulatory 
flexibility analysis, according to data from the SBA's Office of 
Advocacy, in general a small business is an independent business having 
fewer than 500 employees. These types of small businesses represent 
99.9% of all businesses in the United States, which translates to 32.5 
million businesses.
    68. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 
or less to delineate its annual electronic filing requirements for 
small exempt organizations. Nationwide, for tax year 2020, there were 
approximately 447,689 small exempt organizations in the U.S. reporting 
revenues of $50,000 or less according to the registration and tax data 
for exempt organizations available from the IRS.
    69. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2017 Census of Governments indicate that there 
were 90,075 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 36,931 general purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,040 special purpose governments--independent school 
districts with enrollment populations of less than 50,000. Accordingly, 
based on the 2017 U.S. Census of Governments data, we estimate that at 
least 48,971 entities fall into the category of ``small governmental 
jurisdictions.''
    70. Wired Telecommunications Carriers. The U.S. Census Bureau 
defines this industry as establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired communications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies. Establishments in this industry use the wired 
telecommunications network facilities that they operate to provide a 
variety of services, such as wired telephony services, including VoIP 
services, wired (cable) audio and video programming distribution, and 
wired broadband internet services. By exception, establishments 
providing satellite television distribution services using facilities 
and infrastructure that they operate are included in this industry. 
Wired Telecommunications Carriers are also referred to as wireline 
carriers or fixed local service providers.
    71. The SBA small business size standard for Wired 
Telecommunications Carriers classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that there 
were 3,054 firms that operated in this industry for the entire year. Of 
this number, 2,964 firms operated with fewer than 250 employees. 
Additionally, based on Commission data in the 2021 Universal Service 
Monitoring Report, as of December 31, 2020, there were 5,183 providers 
that reported they were engaged in the provision of fixed local 
services. Of these providers, the Commission estimates that 4,737 
providers have 1,500 or fewer employees. Consequently, using the SBA's 
small business size standard, most of these providers can be considered 
small entities.
    72. Local Exchange Carriers (LECs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to local exchange services. Providers of these services 
include both incumbent and competitive local exchange service 
providers. Wired Telecommunications Carriers is the closest industry 
with a SBA small business size standard. Wired Telecommunications 
Carriers are also referred to as wireline carriers or fixed local 
service providers. The SBA small business size standard for Wired 
Telecommunications Carriers classifies firms having 1,500 or fewer 
employees as small. U.S. Census Bureau data for 2017 show that there 
were 3,054 firms that operated in this industry for the entire year. Of 
this number, 2,964 firms operated with fewer than 250 employees. 
Additionally, based on Commission data in the 2021 Universal Service 
Monitoring Report, as of December 31, 2020, there were 5,183 providers 
that reported they were fixed local exchange service providers. Of 
these providers, the Commission estimates that 4,737 providers have 
1,500 or fewer employees. Consequently, using the SBA's small business 
size standard, most of these providers can be considered small 
entities.
    73. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA have developed a small business size standard 
specifically for incumbent local exchange carriers. Wired 
Telecommunications Carriers is the closest industry with a SBA small 
business size standard. The SBA small

[[Page 47684]]

business size standard for Wired Telecommunications Carriers classifies 
firms having 1,500 or fewer employees as small. U.S. Census Bureau data 
for 2017 show that there were 3,054 firms in this industry that 
operated for the entire year. Of this number, 2,964 firms operated with 
fewer than 250 employees. Additionally, based on Commission data in the 
2021 Universal Service Monitoring Report, as of December 31, 2020, 
there were 1,227 providers that reported they were incumbent local 
exchange service providers. Of these providers, the Commission 
estimates that 929 providers have 1,500 or fewer employees. 
Consequently, using the SBA's small business size standard, the 
Commission estimates that the majority of incumbent local exchange 
carriers can be considered small entities.
    74. Competitive Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to local exchange services. 
Providers of these services include several types of competitive local 
exchange service providers. Wired Telecommunications Carriers is the 
closest industry with a SBA small business size standard. The SBA small 
business size standard for Wired Telecommunications Carriers classifies 
firms having 1,500 or fewer employees as small. U.S. Census Bureau data 
for 2017 show that there were 3,054 firms that operated in this 
industry for the entire year. Of this number, 2,964 firms operated with 
fewer than 250 employees. Additionally, based on Commission data in the 
2021 Universal Service Monitoring Report, as of December 31, 2020, 
there were 3,956 providers that reported they were competitive local 
exchange service providers. Of these providers, the Commission 
estimates that 3,808 providers have 1,500 or fewer employees. 
Consequently, using the SBA's small business size standard, most of 
these providers can be considered small entities.
    75. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA have developed a small business size standard specifically for 
Interexchange Carriers. Wired Telecommunications Carriers is the 
closest industry with a SBA small business size standard. The SBA small 
business size standard for Wired Telecommunications Carriers classifies 
firms having 1,500 or fewer employees as small. U.S. Census Bureau data 
for 2017 show that there were 3,054 firms that operated in this 
industry for the entire year. Of this number, 2,964 firms operated with 
fewer than 250 employees. Additionally, based on Commission data in the 
2021 Universal Service Monitoring Report, as of December 31, 2020, 
there were 151 providers that reported they were engaged in the 
provision of interexchange services. Of these providers, the Commission 
estimates that 131 providers have 1,500 or fewer employees. 
Consequently, using the SBA's small business size standard, the 
Commission estimates that the majority of providers in this industry 
can be considered small entities.
    76. Local Resellers. Neither the Commission nor the SBA have 
developed a small business size standard specifically for Local 
Resellers. Telecommunications Resellers is the closest industry with a 
SBA small business size standard. The Telecommunications Resellers 
industry comprises establishments engaged in purchasing access and 
network capacity from owners and operators of telecommunications 
networks and reselling wired and wireless telecommunications services 
(except satellite) to businesses and households. Establishments in this 
industry resell telecommunications; they do not operate transmission 
facilities and infrastructure. Mobile virtual network operators (MVNOs) 
are included in this industry. The SBA small business size standard for 
Telecommunications Resellers classifies a business as small if it has 
1,500 or fewer employees. U.S. Census Bureau data for 2017 show that 
1,386 firms in this industry provided resale services for the entire 
year. Of that number, 1,375 firms operated with fewer than 250 
employees. Additionally, based on Commission data in the 2021 Universal 
Service Monitoring Report, as of December 31, 2020, there were 293 
providers that reported they were engaged in the provision of local 
resale services. Of these providers, the Commission estimates that 289 
providers have 1,500 or fewer employees. Consequently, using the SBA's 
small business size standard, most of these providers can be considered 
small entities.
    77. Cable Companies and Systems (Rate Regulation). The Commission 
has developed its own small business size standard for the purpose of 
cable rate regulation. Under the Commission's rules, a ``small cable 
company'' is one serving 400,000 or fewer subscribers nationwide. Based 
on industry data, there are about 420 cable companies in the U.S. Of 
these, only five have more than 400,000 subscribers. In addition, under 
the Commission's rules, a ``small system'' is a cable system serving 
15,000 or fewer subscribers. Based on industry data, there are about 
4,139 cable systems (headends) in the U.S. Of these, about 639 have 
more than 15,000 subscribers. Accordingly, the Commission estimates 
that the majority of cable companies and cable systems are small.
    78. Cable System Operators (Telecom Act Standard). The 
Communications Act of 1934, as amended, contains a size standard for a 
``small cable operator,'' which is ``a cable operator that, directly or 
through an affiliate, serves in the aggregate fewer than one percent of 
all subscribers in the United States and is not affiliated with any 
entity or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' For purposes of the Telecom Act Standard, the 
Commission determined that a cable system operator that serves fewer 
than 677,000 subscribers, either directly or through affiliates, will 
meet the definition of a small cable operator based on the cable 
subscriber count established in a 2001 Public Notice. Based on industry 
data, only four cable system operators have more than 677,000 
subscribers. Accordingly, the Commission estimates that the majority of 
cable system operators are small under this size standard. We note 
however, that the Commission neither requests nor collects information 
on whether cable system operators are affiliated with entities whose 
gross annual revenues exceed $250 million. Therefore, we are unable at 
this time to estimate with greater precision the number of cable system 
operators that would qualify as small cable operators under the 
definition in the Communications Act.
    79. All Other Telecommunications. This industry is comprised of 
establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems. Providers of 
internet services (e.g., dial-up ISPs) or voice over internet protocol 
(VoIP) services, via client-supplied telecommunications connections are 
also included in this industry. The SBA small business size standard 
for this industry classifies firms with annual receipts of $35 million 
or less as small. U.S. Census Bureau data for 2017 show that there were 
1,079 firms in this industry that operated for the entire year. Of 
those firms, 1,039 had revenue of less than

[[Page 47685]]

$25 million. Based on this data, the Commission estimates that the 
majority of ``All Other Telecommunications'' firms can be considered 
small.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities

    80. In the Further Notice, we propose and seek comment on rule 
changes that will affect LECs, Intermediate Access Providers, and IPES 
Providers. We propose to modify our Access Stimulation Rules to address 
arbitrage which takes place when an IPES Provider is incorporated into 
the call flow. In the Further Notice, we propose rules to further limit 
or eliminate the occurrence of access arbitrage, including access 
stimulation, which could affect potential reporting requirements. The 
proposed rules also contain recordkeeping, reporting and third-party 
notification requirements for access-stimulating LECs and IPES 
Providers, which may impact small entities. Some of the proposed 
requirements may also involve tariff changes.
    81. We propose that when a LEC delivers traffic to an IPES Provider 
and the terminating-to-originating traffic ratios of the IPES Provider 
exceed the triggers in the Access Stimulation Rules, the IPES Provider 
will be deemed to be engaged in access stimulation. We propose that the 
IPES Provider be responsible for calculating its traffic ratios and for 
making the required third-party notifications. As such, providers may 
need to modify their in-house recordkeeping to comply with the proposed 
rules. Under our proposal, if the IPES Provider's ratios exceed the 
applicable rule triggers, it would have to notify the Intermediate 
Access Provider, the Commission, and affected IXCs. The Intermediate 
Access Provider would then be prohibited from charging IXCs tariffed 
rates for terminating switched access tandem switching or terminating 
switched access transport charges.
    82. Our proposals may also require affected LECs and Intermediate 
Access Providers to file tariff revisions to remove any tariff 
provisions they have filed for terminating tandem switched access or 
terminating switched access transport charges. Although we decline to 
opine on whether our proposals may require carriers to file further 
tariff revisions, affected carriers may nonetheless choose to file 
additional tariff revisions to add provisions allowing them to charge 
access-stimulating LECs or access-stimulating IPES Providers, rather 
than IXCs, for the termination of traffic.
    83. As an alternative to imposing a measurement requirement on the 
IPES Provider, we seek comment on requiring that the Intermediate 
Access Provider calculate the IPES Provider's traffic ratios for 
purposes of our Access Stimulation Rules. If adopted, this proposal 
could impose recordkeeping, reporting, and third-party notification 
requirements on Intermediate Access Providers. Under this alternative 
proposal, if the Intermediate Access Provider cannot perform this 
calculation, or the IPES Provider will not share relevant traffic ratio 
information with the Intermediate Access Provider, the Intermediate 
Access Provider would not be able to charge IXCs terminating switched 
access tandem switching or terminating switched access transport 
charges.
    84. Our proposals may also necessitate that affected carriers make 
various revisions to their billing systems. For example, Intermediate 
Access Providers that serve LECs with access-stimulating IPES Providers 
in the call path (or that deliver traffic directly to an IPES Provider 
when no LEC is in the call path) will no longer be able to charge IXCs 
terminating tandem switched access rates and transport charges. As 
Intermediate Access Providers cease billing IXCs they will likely need 
to make corresponding adjustments to their billing systems.
    85. In the Further Notice, we also seek comment on other actions we 
could take to further discourage or eliminate access arbitrage 
activity. Rules which achieve these objectives could potentially affect 
recordkeeping, reporting, and third-party notification requirements.

Steps Taken To Minimize the Significant Economic Impact on Small 
Entities and Significant Alternatives Considered

    86. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
the establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rules for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities. We expect to consider all of these factors when we 
receive substantive comment from the public and potentially affected 
entities.
    87. In this Further Notice, we invite comment on a number of 
proposals and alternatives to modify our Access Stimulation Rules. The 
Commission has found these arbitrage practices inefficient and to 
ultimately increase consumer telecommunications rates. Therefore, in 
the Further Notice, we propose rules to further limit or eliminate the 
occurrence of access stimulation in turn promoting the efficient 
function of the nation's telecommunications network. We believe that if 
companies are able to operate with greater efficiency this will benefit 
the communications network as a whole, and its users, by allowing 
companies to increase their investment in broadband deployment.
    88. Thus, we propose to adopt rules to address arbitrage which 
takes place when an IPES Provider is incorporated into the call flow. 
We propose that when a LEC delivers traffic to an IPES Provider and the 
terminating-to-originating traffic ratios of the IPES Provider exceed 
the triggers in the Access Stimulation Rules, the IPES Provider will be 
deemed to be engaged in access stimulation. In such cases, we propose 
that the Intermediate Access Provider would be prohibited from imposing 
tariffed terminating tandem switching and transport access charges on 
IXCs sending traffic to an IPES Provider or the IPES Provider's end-
user customer. As an alternative to imposing a measurement requirement 
on the IPES Provider, we could require that the Intermediate Access 
Provider calculate the IPES Provider's traffic ratios for purposes of 
our Access Stimulation Rules. Under this alternative proposal, if the 
Intermediate Access Provider cannot perform this calculation, or the 
IPES Provider will not share relevant traffic ratio information with 
the Intermediate Access Provider, we would create a presumption that 
the IPES Provider's traffic exceeds the Access Stimulation Rule ratios. 
In that case, the Intermediate Access Provider would not be able to 
charge IXCs terminating switched access tandem switching or terminating 
switched access transport charges.
    89. We also seek comment on whether IPES Providers should be 
treated as LECs for the purpose of our Access Stimulation Rules. We 
received a proposal in the record that the Commission should ``issue a 
declaratory ruling clarifying that IPES Providers are treated as LECs 
for the purpose of the access stimulation rules.'' We seek interested 
parties' opinion on whether adopting such a proposal would be more or 
less burdensome on small businesses.
    90. In the Further Notice, we also propose to require carriers to 
comply

[[Page 47686]]

with any adopted rules within 45 days. We seek comment on this time 
period and whether interested parties foresee difficulties that would 
affect the time it will take to comply with the revised rules. We 
expect that time period will allow even small entities adequate time to 
amend their tariffs, if needed, and meet the requirements in the 
proposed rules.
    91. Comment is sought on how best to address access arbitrage 
activities. In the Further Notice, we seek comment on the costs and 
benefits of these proposals. Providing carriers, especially small 
carriers, with options will enable them to best assess the financial 
effects on their operations allowing them to determine how best to 
respond. We invite comment on how our proposals may affect the costs 
and benefits to carriers and their customers and the choices they make, 
as they provide and receive telecommunications services. We invite 
commenters to quantify both the costs and the benefits of our proposals 
and of any alternative approaches to reducing access stimulation 
activities.
    92. We expect to consider the economic impact on small entities, as 
identified in comments filed in response to the Further Notice and this 
IRFA, in reaching our final conclusions and promulgating rules in this 
proceeding. The proposals and questions laid out in the Further Notice 
are designed to ensure the Commission has a complete understanding of 
the benefits and potential burdens associated with the different 
proposed actions.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    93. None.
    94. Contact Person. For further information about this proceeding, 
please contact Lynne Engledow, FCC Wireline Competition Bureau, Pricing 
Policy Division, 45 L Street NE, Washington, DC 20554, 202-418-1520, 
[email protected]

Ordering Clauses

    95. Accordingly, it is ordered, pursuant to sections 1, 2, 4(i), 
201, 251, 254, 256, 303(r), and 403 of the Communications Act of 1934, 
as amended, 47 U.S.C. 151, 152, 154(i), 201, 251, 254, 256, 303(r), and 
403 and section 1.1 of the Commission's rules, 47 CFR 1.1, this Further 
Notice of Proposed Rulemaking is adopted.
    96. It is further ordered that pursuant to applicable procedures 
set forth in sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 
1.415, 1.419, interested parties may file comments on this Further 
Notice of Proposed Rulemaking on or before 30 days after publication of 
this Further Notice of Proposed Rulemaking in the Federal Register, and 
reply comments on or before 60 days after publication of this Further 
Notice of Proposed Rulemaking in the Federal Register.
    97. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects

47 CFR Part 51

    Interconnection; Communications; Communication common carriers; 
Telecommunications; Telephone.

47 CFR Part 61

    Tariffs.
    Communication Common Carriers; Radio; Reporting and recordkeeping 
requirements; Telegraph; Telephone.

47 CFR Part 69

    Access Charges; Communications common carriers; Reporting and 
recordkeeping requirements; Telephone.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Proposed Rules

    For the reasons set forth, the Federal Communications Commission 
proposes to amend 47 CFR parts 51, 61 and 69 as shown below.

PART 51--INTERCONNECTION

0
1. The authority citation for part 51 continues to read as follows:

    Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 225-27, 251-
52, 271, 332 unless otherwise noted.

0
2. Amend Sec.  51.903 by adding paragraph (q) to read as follows:


Sec.  51.903  Definitions.

* * * * *
    (q) IPES Provider has the same meaning as that term is defined in 
Sec.  61.3(eee) of this chapter.
0
3. Amend Sec.  51.914 by revising paragraphs (a) through (e) and adding 
paragraphs (f) and (g) as follows:


Sec.  51.914  Additional provisions applicable to Access Stimulation 
traffic.

    (a) Notwithstanding any other provision of this part, if a local 
exchange carrier is engaged in Access Stimulation, as defined in Sec.  
61.3(bbb) of this chapter, it shall, within 45 days of commencing 
Access Stimulation, or within 45 days of September 6, 2022, whichever 
is later:
    (1) Not bill any Interexchange Carrier for interstate or intrastate 
terminating switched access tandem switching or terminating switched 
access transport charges for any traffic between such local exchange 
carrier's terminating end office or equivalent and the associated 
access tandem switch; and
    (2) Designate the Intermediate Access Provider(s), if any, that 
will provide terminating switched access tandem switching and 
terminating switched access tandem transport services to the local 
exchange carrier engaged in Access Stimulation; and
    (3) Assume financial responsibility for any applicable Intermediate 
Access Provider's charges for such services for any traffic between 
such local exchange carrier's terminating end office or equivalent and 
the associated access tandem switch.
    (b) Notwithstanding any other provision of this part, if a local 
exchange carrier is engaged in Access Stimulation, as defined in Sec.  
61.3(bbb) of this chapter, it shall, within 45 days of commencing 
Access Stimulation, or within 45 days of September 6, 2022, whichever 
is later, notify in writing the Commission, all Intermediate Access 
Providers that it subtends, and Interexchange Carriers with which it 
does business of the following:
    (1) That it is a local exchange carrier engaged in Access 
Stimulation; and
    (2) That it shall designate the Intermediate Access Provider(s) 
that will provide the terminating switched access tandem switching and 
terminating switched access tandem transport services to the local 
exchange carrier engaged in Access Stimulation; and
    (3) That the local exchange carrier shall pay for those services as 
of that date.
    (c) Notwithstanding any other provision of the Commission's rules, 
if an IPES Provider, as defined in Sec.  61.3(eee) of this chapter, is 
engaged in Access Stimulation, as defined in Sec.  61.3(bbb) of this 
chapter, it shall, within 45 days of commencing Access Stimulation, or 
within 45 days of September 6, 2022, whichever is later:
    (1) Designate the Intermediate Access Provider(s), if any, that 
will provide terminating switched access tandem switching and 
terminating switched access tandem transport services to the IPES 
Provider engaged in Access Stimulation; and further

[[Page 47687]]

    (2) The IPES Provider may assume financial responsibility for any 
applicable Intermediate Access Provider's charges for such services for 
any traffic between such IPES Provider's terminating end office or 
equivalent and the associated access tandem switch, and
    (3) The Intermediate Access Provider shall not assess any charges 
for such services to the Interexchange Carrier.
    (d) Notwithstanding any other provision of the Commission's rules, 
if an IPES Provider, as defined in Sec.  61.3(eee) of this chapter, is 
engaged in Access Stimulation, as defined in Sec.  61.3(bbb) of this 
chapter, it shall, within 45 days of commencing Access Stimulation, or 
within 45 days of September 6, 2022, whichever is later, notify in 
writing the Commission, all Intermediate Access Providers that it 
subtends, and Interexchange Carriers with which it does business of the 
following:
    (1) That it is an IPES Provider engaged in Access Stimulation; and
    (2) That it shall designate the Intermediate Access Provider(s), if 
any, that will provide the terminating switched access tandem switching 
and terminating switched access tandem transport services directly, or 
indirectly through a local exchange carrier, to the IPES Provider 
engaged in Access Stimulation; and
    (3) That the IPES Provider may pay for those services as of that 
date.
    (e) In the event that an Intermediate Access Provider receives 
notice under paragraphs (b) or (d) of this section that it has been 
designated to provide terminating switched access tandem switching or 
terminating switched access tandem transport services to a local 
exchange carrier engaged in Access Stimulation or to an IPES Provider 
engaged in Access Stimulation, directly, or indirectly through a local 
exchange carrier, and that local exchange carrier engaged in Access 
Stimulation shall pay or the IPES Provider engaged in Access 
Stimulation may pay for such terminating access service from such 
Intermediate Access Provider, the Intermediate Access Provider shall 
not bill Interexchange Carriers for interstate or intrastate 
terminating switched access tandem switching or terminating switched 
access tandem transport service for traffic bound for such local 
exchange carrier or IPES Provider but, instead, shall bill such local 
exchange carrier or may bill such IPES Provider for such services.
    (f) Notwithstanding paragraphs (a) and (b) of this section, any 
local exchange carrier that is not itself engaged in Access 
Stimulation, as that term is defined in Sec.  61.3(bbb) of this 
chapter, but serves as an Intermediate Access Provider with respect to 
traffic bound for a local exchange carrier engaged in Access 
Stimulation or bound for an IPES Provider engaged in Access 
Stimulation, or receives traffic from an Intermediate Access Provider 
destined for an IPES Provider engaged in Access Stimulation, shall not 
itself be deemed a local exchange carrier engaged in Access Stimulation 
or be affected by paragraphs (a) and (b) of this section.
    (g) Upon terminating its engagement in Access Stimulation, as 
defined in Sec.  61.3(bbb) of this chapter, the local exchange carrier 
or IPES Provider engaged in Access Stimulation shall provide 
concurrent, written notification to the Commission and any affected 
Intermediate Access Provider(s) and Interexchange Carrier(s) of such 
fact.

PART 61--TARIFFS

0
4. The authority citation for part 61 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 201-205, 403, unless 
otherwise noted.

0
5. Amend Sec.  61.3 by revising paragraphs (bbb) through (ddd), and 
adding paragraph (eee) to read as follows:


Sec.  61.3  Definitions.

* * * * *
    (bbb) Access Stimulation.
    (1) A Competitive Local Exchange Carrier or an IPES Provider 
serving end user(s) engages in Access Stimulation when it satisfies 
either paragraphs (bbb)(1)(i) or (ii) of this section; and a rate-of-
return local exchange carrier serving end user(s) engages in Access 
Stimulation when it satisfies either paragraphs (bbb)(1)(i) or (iii) of 
this section.
    (i) The rate-of-return local exchange carrier, Competitive Local 
Exchange Carrier, or IPES Provider:
    (A) Has an access revenue sharing agreement, whether express, 
implied, written or oral, that, over the course of the agreement, would 
directly or indirectly result in a net payment to the other party 
(including affiliates) to the agreement, in which payment by the rate-
of-return local exchange carrier, Competitive Local Exchange Carrier, 
or IPES Provider is based on the billing or collection of access 
charges from interexchange carriers or wireless carriers. When 
determining whether there is a net payment under this rule, all 
payments, discounts, credits, services, features, functions, and other 
items of value, regardless of form, provided by the rate-of-return 
local exchange carrier, Competitive Local Exchange Carrier, or IPES 
Provider to the other party to the agreement shall be taken into 
account; and
    (B) Has either an interstate terminating-to-originating traffic 
ratio of at least 3:1 in an end office or equivalent in a calendar 
month, or has had more than a 100 percent growth in interstate 
originating and/or terminating switched access minutes of use in a 
month compared to the same month in the preceding year for such end 
office or equivalent.
    (ii) A Competitive Local Exchange Carrier or IPES Provider has an 
interstate terminating-to-originating traffic ratio of at least 6:1 in 
an end office or equivalent in a calendar month.
    (iii) A rate-of-return local exchange carrier has an interstate 
terminating-to-originating traffic ratio of at least 10:1 in an end 
office or equivalent in a three-calendar month period and has 500,000 
minutes or more of interstate terminating minutes-of-use per month in 
the same end office in the same three-calendar month period. These 
factors will be measured as an average over the three-calendar month 
period.
    (2) A Competitive Local Exchange Carrier serving end users or an 
IPES Provider serving end users that has engaged in Access Stimulation 
will continue to be deemed to be engaged in Access Stimulation until: 
For a carrier or provider engaging in Access Stimulation as defined in 
paragraph (1)(i) of this section, it terminates all revenue sharing 
agreements covered in paragraph (1)(i) of this section and does not 
engage in Access Stimulation as defined in paragraph (1)(ii) of this 
section; and for a carrier or provider engaging in Access Stimulation 
as defined in paragraph (1)(ii) of this section, its interstate 
terminating-to-originating traffic ratio for an end office or 
equivalent falls below 6:1 for six consecutive months, and it does not 
engage in Access Stimulation as defined in paragraph (1)(i) of this 
section.
    (3) A rate-of-return local exchange carrier serving end users that 
has engaged in Access Stimulation will continue to be deemed to be 
engaged in Access Stimulation until: For a carrier engaging in Access 
Stimulation as defined in paragraph (1)(i) of this section, it 
terminates all revenue sharing agreements covered in paragraph (1)(i) 
of this section and does not engage in Access Stimulation as defined in 
paragraph (1)(iii) of this section; and for a carrier engaging in 
Access Stimulation as defined in paragraph (1)(iii) of this section, 
its interstate terminating-to-originating traffic ratio falls below 
10:1 for six consecutive months and its

[[Page 47688]]

monthly interstate terminating minutes-of-use in an end office or 
equivalent falls below 500,000 for six consecutive months, and it does 
not engage in Access Stimulation as defined in paragraph (1)(i) of this 
section.
    (4) A local exchange carrier engaging in Access Stimulation is 
subject to revised interstate switched access charge rules under Sec.  
61.26(g) (for Competitive Local Exchange Carriers) or Sec.  61.38 and 
Sec.  69.3(e)(12) of this chapter (for rate-of-return local exchange 
carriers).
    (ccc) Intermediate Access Provider. The term means, for purposes of 
this part and Sec. Sec.  69.3(e)(12)(iv) and 69.5(b) of this chapter, 
any entity that provides terminating switched access tandem switching 
and terminating switched access tandem transport services between the 
final Interexchange Carrier in a call path and:
    (1) A local exchange carrier engaged in Access Stimulation, as 
defined in paragraph (bbb) of this section; or
    (2) A local exchange carrier delivering traffic to an IPES Provider 
engaged in Access Stimulation, as defined in paragraph (bbb) of this 
section or;
    (3) An IPES Provider engaged in Access Stimulation, as defined in 
paragraph (bbb) of this section where the Intermediate Access Provider 
delivers calls directly to the IPES Provider.
    (ddd) Interexchange Carrier. The term means, for purposes of this 
part and Sec. Sec.  69.3(e)(12)(iv) and 69.5(b) of this chapter, a 
retail or wholesale telecommunications carrier that uses the exchange 
access or information access services of another telecommunications 
carrier for the provision of telecommunications.
    (eee) IPES (internet Protocol Enabled Service) Provider. The term 
means, for purposes of this part and Sec. Sec.  51.914, 69.4(l) and 
69.5(b) of this chapter, a provider offering a service that: (1) 
enables real-time, two-way voice communications; (2) requires a 
broadband connection from the user's location or end to end; (3) 
requires internet Protocol-compatible customer premises equipment 
(CPE); and (4) permits users to receive calls that originate on the 
public switched telephone network and to terminate calls to the public 
switched telephone network or that originate from an internet Protocol 
service and terminate to an internet Protocol service or an internet 
Protocol application.
* * * * *

PART 69--ACCESS CHARGES

0
6. The authority citation for part 69 continues to read as follows:

    Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, 
403.

0
7. Amend Sec.  69.4 by revising paragraph (l) to read as follows:


Sec.  69.4  Charges to be filed.

* * * * *
    (l) Notwithstanding paragraph (b)(5) of this section, a local 
exchange carrier engaged in Access Stimulation as defined in Sec.  
61.3(bbb) of this chapter or the Intermediate Access Provider it 
subtends, or an Intermediate Access Provider that delivers traffic 
directly or indirectly to an IPES Provider engaged in Access 
Stimulation as defined in Sec.  61.3(bbb) of this chapter, shall not 
bill an Interexchange Carrier as defined in Sec.  61.3(bbb) of this 
chapter for interstate or intrastate terminating switched access tandem 
switching or terminating switched access tandem transport charges for 
any traffic between such local exchange carrier's or such IPES 
Provider's terminating end office or equivalent and the associated 
access tandem switch.
0
8. Amend Sec.  69.5 by revising paragraph (b) to read as follows:


Sec.  69.5  Persons to be assessed.

* * * * *
    (b) Carrier's carrier charges shall be computed and assessed upon 
all Interexchange Carriers that use local exchange switching facilities 
for the provision of interstate or foreign telecommunications services, 
except that:
    (1) Local exchange carriers shall not assess terminating interstate 
or intrastate switched access tandem switching or terminating switched 
access tandem transport charges described in Sec.  69.4(b)(5) of this 
chapter on Interexchange Carriers when the terminating traffic is 
destined for a local exchange carrier or an IPES Provider engaged in 
Access Stimulation, as that term is defined in Sec.  61.3(bbb) of this 
chapter consistent with the provisions of Sec.  61.26(g)(3) of this 
chapter and Sec.  69.3(e)(12)(iv).
    (2) Intermediate Access Providers shall not assess a terminating 
interstate or intrastate switched access tandem switching or 
terminating switched access tandem transport charges described in Sec.  
69.4(b)(5) of this chapter on Interexchange Carriers when the 
terminating traffic is destined for a local exchange carrier engaged in 
Access Stimulation, or is destined, directly or indirectly, for an IPES 
Provider engaged in Access Stimulation, as that term is defined in 
Sec.  61.3(bbb) of this chapter consistent with the provisions of Sec.  
61.26(g)(3) of this chapter and Sec.  69.3(e)(12)(iv).
* * * * *
[FR Doc. 2022-16237 Filed 8-3-22; 8:45 am]
BILLING CODE 6712-01-P