Updating the Intercarrier Compensation Regime To Eliminate Access Arbitrage, 35743-35764 [2023-10661]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Rules and Regulations]
[Pages 35743-35764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10661]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51, 61, and 69

[WC Docket No. 18-155; FCC 23-31; FRS 138334]


Updating the Intercarrier Compensation Regime To Eliminate Access 
Arbitrage

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Federal Communications Commission (Commission) adopts 
rules to eliminate further exploitation of the access charge system by 
access-stimulating entities, which ultimately causes IXCs and end-user 
customers to bear costs for services they don't use.

DATES: The amendments adopted in this document are effective July 3, 
2023, except for the additions of Sec.  51.914(d) and (g) at 
instruction number 3, which are delayed indefinitely. The Commission 
will publish a document announcing the effective date for Sec.  
51.914(d) and (g).

ADDRESSES: Federal Communications Commission, 45 L Street NE, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Lynne Engledow, Wireline Competition 
Bureau, Pricing Policy Division via email at [email protected] or 
via phone at (202) 418-1540. 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 Second 
Report and Order adopted on April 20, 2023, and released on April 21, 
2023. A full-text copy of this document may be obtained at the 
following internet address: https://www.fcc.gov/document/fcc-adopts-rules-prevent-gaming-its-access-stimulation-rules.

Synopsis

    1. For over a decade, the Commission has combated abuse of its 
access charge regime. Such regulatory arbitrage has taken several forms 
over the years, all of which center around the artificial inflation of 
the number of telephone calls for which long-distance carriers 
(interexchange carriers or IXCs) must pay tariffed access charges to 
the local telephone companies (local exchange carriers or LECs) that 
terminate the telephone calls to their end users. Some local telephone 
companies, often in areas of the country with high access charges, 
partner with high-volume calling service providers, such as ``free'' 
conference calling or chat line services, to inflate the number of 
calls terminating to the LEC and, in turn, inflate the amount of access 
charges the LEC can bill IXCs. This practice is inefficient because it 
often introduces unnecessary entities or charges into a call flow, 
perverts the intended purpose of access charges (i.e., to cover the 
LECs' cost of providing the service), and raises costs for IXCs, and 
ultimately their customers, whether they use the high-volume calling 
service or not.
    2. Despite multiple orders and investigations making clear the 
Commission will not tolerate access

[[Page 35744]]

arbitrage, some providers continue to manipulate their call traffic or 
call flows in attempts to evade our rules. Recently, LECs have inserted 
Internet Protocol Enabled Service (IPES) Providers into call paths as 
part of an ongoing effort to evade our rules and to continue to engage 
in access stimulation. After inserting an IPES Provider into the call 
flow, the LEC then claims that it is not engaged in access stimulation 
as currently defined in our rules. The insertion of an additional 
provider (or providers) into the call flow is inefficient and is aimed 
at preserving the LEC's ability to charge IXCs terminating switched 
access charges on access-stimulation traffic--the very practice the 
Commission found unlawful in 2019.
    3. Today, we take additional steps to deter arbitrage of our access 
charge system. In this Order, we adopt rule revisions to close 
perceived loopholes in our Access Stimulation Rules that are being 
exploited by opportunistic access-stimulating entities whose actions 
ultimately cause IXCs' end-user customers to continue to bear costs for 
services they do not use.

Background

    4. The access charge regime was designed to compensate carriers for 
use of their networks by other carriers. Interexchange carriers are 
required to pay LECs for access to their networks, and in the case of 
calls to customers located in rural areas, IXCs historically had to pay 
particularly high access charges to rural LECs to terminate those 
calls. These higher access charges implicitly subsidized rural LECs' 
networks to help defray the higher costs those LECs incurred in serving 
less densely populated areas. In 1996, Congress directed the Commission 
to eliminate implicit subsidies--a process the Commission has pursued 
by establishing the Universal Service Fund and by steadily moving 
access charges to a bill-and-keep framework.
    5. Some LECs took advantage of technological advances to undermine 
the Commission's access charge regime by engaging in ``access 
arbitrage.'' These LECs exploited high access charges in rural areas by 
artificially stimulating terminating ``call volumes through 
arrangements with entities that offer high-volume calling services.'' 
The resulting high call volumes with no requirement that such LECs 
reduce their tariffed switched access rates ``almost uniformly ma[d]e 
the LEC's interstate switched access rates unjust and unreasonable 
under section 201(b) of the Act.''
    6. In the 2011 USF/ICC Transformation Order, the Commission adopted 
rules to identify rate-of-return LECs and competitive LECs engaged in 
access stimulation and required that such LECs lower their tariffed 
access charges. The rules adopted in 2011 defined ``Access 
Stimulation'' as occurring when two conditions were satisfied: (1) a 
rate-of-return LEC or competitive LEC had 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 was 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 many terminating end-office switched 
access charges to bill-and-keep.
    7. Parties that wanted to continue to engage in access stimulation 
adapted to these rules by interposing Intermediate Access Providers, 
that arguably were not subject to the access stimulation rules adopted 
in 2011, into the call flow because many of these providers were still 
able to charge tariffed tandem switching and transport charges. 
Interexchange carriers still had to send traffic to LECs serving high-
volume calling service providers and pay tariffed tandem switching and 
transport access charges, that were not transitioning to bill-and-keep, 
to the terminating LECs or the Intermediate Access Providers the LECs 
chose. As a result, IXCs and their customers were subsidizing the 
``free'' services offered by high-volume calling service providers, 
whether IXC customers used those services or not.
    8. In response to this ongoing arbitrage, the Commission adopted a 
Notice of Proposed Rulemaking on the subject. The record received in 
response to the Access Arbitrage Notice confirmed that access arbitrage 
continued even after adoption of the 2011 rules. Therefore, in 2019, 
the Commission adopted the Access Arbitrage Order, broadening the scope 
of its Access Stimulation Rules by adopting two additional definitions 
of ``Access Stimulation'' unrelated to the existence of a revenue 
sharing agreement between parties. Competitive LECs with a terminating-
to-originating traffic ratio of at least 6:1, absent a revenue-sharing 
agreement, and rate-of-return LECs with a terminating-to-originating 
traffic ratio of at least 10:1, absent a revenue-sharing agreement, 
would be found to be engaged in access stimulation under the rules 
adopted in 2019. Most significantly, the Commission also found that 
requiring ``IXCs to pay the tandem switching and tandem switched 
transport charges for access-stimulation traffic is an unjust and 
unreasonable practice'' prohibited by section 201(b) of the 
Communications Act of 1934, as amended (the Act). The Commission 
addressed this unjust and unreasonable practice by adopting 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's end office or its equivalent. The 
Court of Appeals for the District of Columbia Circuit upheld the Access 
Arbitrage Order.
    9. After the rules adopted in 2019 took effect, parties advised 
Commission staff that access stimulators had adopted new practices 
designed to evade the updated rules, primarily by inserting IPES 
Providers into the call flow. For example, some providers began 
``converting traditional CLEC telephone numbers to [IPES] numbers in 
order to claim that the 2019 [Access] Arbitrage Reform Order is not 
applicable'' to the resulting traffic because the calls were bound for 
telephone numbers obtained by IPES Providers, rather than to LECs 
serving end users, as required by our rules. LECs and IPES Providers 
may obtain telephone numbers directly from numbering authorities, 
indirectly from a LEC partner, or indirectly via a commercial or 
leasing arrangement. All companies receiving telephone numbers directly 
from numbering administrators are assigned a unique Operating Company 
Number (OCN) that identifies the provider associated with each 
telephone number.
    10. In a 2021 enforcement order against competitive LEC Wide Voice, 
LLC (Wide Voice), we found that Wide Voice ``inserted a VoIP [(Voice 
over Internet Protocol)] provider into the call path for the sole 
purpose of avoiding the financial obligations that accompany the 
Commission's access stimulation rules.'' Then, in July 2022, we adopted 
a Further Notice of Proposed Rulemaking seeking comment on proposals to 
prevent companies from leveraging perceived ambiguities in our rules to 
continue to engage in access arbitrage. In the Further Notice, we 
sought comment on sample call flows and proposed several definitions 
relevant to our Access Stimulation Rules, as well as rule revisions 
making clear ``that an

[[Page 35745]]

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 [access-stimulation] ratios in Sec. Sec.  61.3(bbb)(1)(i) 
or 61.3(bbb)(1)(ii) of our Access Stimulation Rules.''
    11. The following diagrams, which were also included in the Further 
Notice, illustrate sample call flows. Diagram 1 represents a call flow 
that includes both a LEC and an IPES Provider between an Intermediate 
Access Provider and an end user that is a high-volume calling service 
provider. Diagram 2 provides an example of a call where the LEC has 
been removed from the call flow and there is only an IPES Provider 
between the Intermediate Access Provider and the high-volume calling 
service provider that is the end-user recipient of the call.
[GRAPHIC] [TIFF OMITTED] TR01JN23.008

    Diagram 1: Showing a hypothetical call path including a LEC and 
an IPES Provider--to facilitate discussion throughout the remainder 
of this Order. ``POP'' refers to point of presence.
[GRAPHIC] [TIFF OMITTED] TR01JN23.009

    Diagram 2: Showing a hypothetical call path where the 
Intermediate Access Provider sends traffic directly to the IPES 
Provider--to facilitate discussion throughout the remainder of this 
Order. ``TDM (time division multiplexing) to IP'' refers to a 
transition that occurs during the transfer of a telephone call 
between the technologies used by the entities involved in the call 
flow.

    12. In response to the Further Notice, we received widespread 
support for further action to stem access arbitrage. USTelecom confirms 
that, after the reforms adopted in the 2019 Access Arbitrage Order 
became effective, entities manipulated their business models to 
continue charging IXCs terminating tandem switching and transport 
access charges for calls delivered to access stimulators. USTelecom 
suggests that the ``primary difference between the new scheme and the 
old scheme is not the concept, but the regulatory classification of the 
entities in the call stream, purposely inserted by arbitrageurs to 
claim these arrangements are beyond the Commission's reach.'' Verizon 
agrees that ``access stimulation has not materially decreased, only 
changed form.'' AT&T explains that its long-distance network now 
terminates approximately 400 million minutes of use (MOU) to IPES 
Providers per month, which is ``essentially twice'' the MOU it 
terminated to IPES Providers prior to the 2019 Access Arbitrage Order. 
Thus, the record strongly suggests that instead of ceasing access-
stimulation activity--or taking responsibility for paying certain 
access charges, as required by our Access Stimulation Rules--some 
providers chose to exploit a perceived loophole in those rules. 
Commenters also suggested several revisions to the proposed rule 
language to further strengthen our Access Stimulation Rules and prevent 
ongoing arbitrage.

Discussion

    13. We are compelled to act again to fight regulatory arbitrage of 
the Commission's access charge regime. In this Order, we eliminate any 
perceived ambiguity in our Access Stimulation Rules that results in 
parties attempting to circumvent those rules simply by inserting IPES 
Providers into the call path. This practice directly contravenes the 
Commission's orders, policies, and Access Stimulation Rules. We adopt 
narrow and focused changes to our rules that are designed to prevent 
entities from evading responsibility for their access-stimulation 
activity. The rules and revisions strike an appropriate balance between 
addressing harmful access-stimulation conduct on the part of certain 
entities and avoiding negative effects on providers that are not 
engaged in such activity. We find these rule revisions will serve the 
public interest by reducing carriers' incentives and ability to send 
traffic over the Public Switched Telephone Network (PSTN) for the 
purpose of collecting inflated, tariffed terminating tandem switching 
and transport access charges from IXCs, thereby artificially increasing 
costs to IXCs and harming their end-user customers.

A. Limiting the Imposition of Access Charges When IPES Providers Are 
Engaged in Access Stimulation

    14. We find significant support in the record for our proposal to 
prohibit

[[Page 35746]]

Intermediate Access Providers from charging IXCs tariffed terminating 
tandem switching and transport access charges for traffic bound for 
IPES Providers engaged in access stimulation as defined in Sec.  
61.3(bbb) of our rules. Therefore, we adopt rules providing 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 meet or exceed the triggers in the existing Access 
Stimulation Rules, the IPES Provider will be deemed to be engaged in 
access stimulation. In this case, ``any entity that provides 
terminating switched access tandem switching or terminating switched 
access tandem transport services between the final Interexchange 
Carrier in a call path and'' an access stimulator is considered an 
Intermediate Access Provider and shall not impose tariffed terminating 
tandem switching and transport access charges on IXCs sending traffic 
to the IPES Provider or the IPES Provider's end-user customer. The 
Intermediate Access Provider may seek compensation from the IPES 
Provider for charges the Intermediate Access Provider cannot bill to 
IXCs. The IPES Provider, if it chooses, may seek reimbursement for 
these access charges from its end-user customer(s).
    15. Commenters widely agree with our proposal to use the same 
terminating-to-originating traffic ratio triggers for IPES Providers 
that we currently use for LECs. Thus, we apply to IPES Providers the 
3:1 terminating-to-originating traffic ratio plus revenue-sharing 
agreement trigger in Sec.  61.3(bbb)(1)(i), and the 6:1 terminating-to-
originating traffic ratio trigger, absent a revenue-sharing agreement, 
in Sec.  61.3(bbb)(1)(ii). We find no need, based on the record, to 
reconsider the existence of revenue-sharing arrangements between 
parties in the context of our rules. At the same time, we do not apply 
to IPES Providers the 10:1 terminating-to-originating traffic ratio 
applicable to rate-of-return carriers. IPES Providers' rates are not 
subject to rate-of-return regulation and no commenters suggested that 
their network configurations or call flows are in any way similar to 
rate-of-return regulated LECs' networks or call flows. No commenter 
suggested applying the 10:1 ratio to IPES Providers, and no information 
in the record justifies expanding the applicability of the 10:1 ratio 
in such a manner.
    16. We reject Teliax's unsupported assertion that price-cap 
incumbent LECs should be subject to the same traffic ratio reporting 
requirements as competitive LECs, rate-of-return LECs, and IPES 
Providers. The Commission has previously explained that ``complaints 
regarding access stimulation activities have not directly involved 
price cap carriers.'' The record in this proceeding provides no 
evidence that this has changed. Nor is there any evidence that supports 
Teliax's assertion that any price-cap LECs are engaged in access 
stimulation. Even if Teliax's proposal had merit, it is beyond the 
scope of this current rulemaking as we did not seek comment on 
expanding our Access Stimulation Rules to encompass price-cap LECs. For 
these reasons, we lack any basis for expanding our Access Stimulation 
Rules as Teliax proposed.
    17. According to HD Carrier, an IXC or its wireless affiliate has 
an incentive to send traffic over TDM, and then assert that it does not 
need to pay access charges by claiming a provider later in the call 
path is engaged in access stimulation. HD Carrier provides no support 
for its claims, however. To the contrary, HD Carrier's arguments rely 
on several incorrect assumptions which we correct here: (a) IXCs cannot 
unilaterally enter in to interconnection agreements and for that 
reason, they may still have to use the tariffed, TDM path to terminate 
traffic; (b) the terminating carrier, not the originating carrier, 
dictates the call path possibilities at the terminating end of the 
call, and any Intermediate Access Providers, through call routing 
instructions detailed in the LERG Routing Guide (LERG); and (c) not all 
wireless companies have IXC affiliates.
    18. The record confirms that the rules we adopt serve the public 
interest because they are essential to deterring access stimulation. 
These new rules, similar to those adopted in the Access Arbitrage 
Order, will prohibit Intermediate Access Providers and LECs from 
requiring IXCs to pay tandem switching and tandem transport charges for 
access-stimulation traffic that the Commission has found to be unjust 
and unreasonable in violation of section 201(b) of the Act. Under the 
rules we adopt, an IPES Provider will be responsible for calculating 
its traffic ratios at each end office or end office equivalent and 
providing the required notifications of access-stimulation activity to 
the Commission and affected entities. These rules are consistent with 
other public interest requirements imposed on VoIP providers, such as 
universal service, E911, and other reporting obligations.
    19. Some commenters ask us to go a step further, and not only apply 
the access-stimulation triggers and notification requirements to IPES 
Providers, but also impose on IPES Providers the same financial 
responsibility for access-stimulation traffic as LECs have under the 
current rules. Bandwidth, for example, proposes that, ``[r]ather than 
stating an IPES Provider `may' pay for terminating switched access 
tandem switching and terminating switched access tandem transport 
services where the IPES Provider is engaged in access stimulation, the 
rule should require the IPES Provider . . . to assume financial 
responsibility for the services.''
    20. Although our Access Stimulation Rules require access-
stimulating LECs to assume financial responsibility for tandem services 
used to deliver access-stimulation traffic, as proposed in the Further 
Notice, we decline to impose the same mandatory condition on access-
stimulating IPES Providers. Instead, the IPES Provider ``may'' assume 
financial responsibility. We do, however, make clear that IXCs shall 
not be billed by Intermediate Access Providers for terminating tandem 
and transport charges to deliver traffic to an IPES Provider engaged in 
access stimulation. Under the rules we adopt here, an Intermediate 
Access Provider will have an option and may seek compensation from an 
access-stimulating IPES Provider, or it shall seek compensation from 
the IPES Provider's LEC partner (if that LEC had directly assigned 
numbers that it transferred to the IPES Provider that then used those 
numbers to receive access-stimulated traffic) for the tariffed 
terminating tandem switching and transport access charges related to 
traffic bound for an IPES Provider engaged in access stimulation. In 
short, Intermediate Access Providers, LECs, and IPES Providers may 
determine their own billing arrangements among themselves when an IPES 
Provider is engaged in access stimulation but tariffed terminating 
switched access charges may not be imposed on IXCs in those situations. 
We find that this approach recognizes the difference in regulatory 
treatment between LECs and IPES Providers while also advancing our goal 
of curbing access stimulation. And under this approach, if access is 
being stimulated and an IXC is unlawfully charged for tariffed 
terminating tandem switching or transport, the IXC may file a complaint 
against the LEC if the stimulated traffic is being sent to numbers that 
were directly assigned to the LEC, or it may bring a court action 
against the IPES Provider if the stimulated traffic is being sent to 
numbers that were directly assigned to the IPES Provider.

[[Page 35747]]

    21. In addition, we decline Bandwidth's request to expand the 
Access Stimulation Rules to ``require [a]ccess [s]timulators to pay any 
tariffed charges associated with stimulated originating and terminating 
traffic.'' Bandwidth suggests that its proposal would prevent access-
stimulating entities from charging any originating access charges and 
would make them, instead of IXCs, financially responsible for all 
tandem service charges--including dedicated tandem charges--for both 
terminating and originating traffic heading to or from access 
stimulators and argues that not incorporating its proposal would create 
a loophole in our Access Stimulation Rules.
    22. As AT&T acknowledges, however, we did not seek comment on 
expanding the current Access Stimulation Rules to encompass originating 
traffic or dedicated tandem service charges. Although Bandwidth 
correctly points out that the Further Notice included certain questions 
regarding originating 8YY traffic, we only asked about ``issues 
regarding the treatment of originating 8YY traffic for purposes of 
calculating the traffic ratios related to the triggers in our Access 
Stimulation Rules.'' Those questions were focused on whether we needed 
to refine the existing methodology for calculating traffic ratios used 
to determine whether an entity is engaged in terminating access 
stimulation. They were not designed to elicit comments about potential 
reforms to our originating access or 8YY access charge rules, and we 
thus lack a full record on which to consider such reforms. Indeed, any 
changes to our rules governing originating traffic would have far-
reaching implications that are best addressed in other docketed 
proceedings, such as the 8YY Access Charge Reform and Intercarrier 
Compensation reform dockets.
    23. Bandwidth and AT&T also raised concerns about the potential 
practice of carriers imposing additional, improper access charges on 
IXCs to make up for tandem switching and switched access transport 
revenue which terminating carriers lost as a result of the rules 
adopted in the Access Arbitrage Order and the 8YY Access Charge Reform 
Order. To the extent there are any concerns that providers may be 
imposing charges for terminating switched access tandem switching or 
terminating switched access transport services that are precluded by 
our Access Stimulation Rules, we find that our existing rules 
adequately address that issue. The definition of ``tandem-switched 
transport and tandem charge'' in Sec.  69.111 of our rules includes 
charges for the following services: tandem switched transport facility, 
common transport multiplexing, tandem switched transport termination, 
and tandem switching. Thus, pursuant to our Access Stimulation Rules, 
Intermediate Access Providers and LECs are not permitted to charge IXCs 
tariffed rates for any of those four rate elements or services, if the 
LEC (under either the current rules or the new and revised rules) or 
the IPES Provider (under the new and revised rules) is engaged in 
access stimulation. Our rules apply to access-stimulating entities that 
provide tariffed services with rate elements that are equivalent to 
those described here, even if they are offered under different names. 
We will scrutinize any tariff modifications filed by LECs or 
Intermediate Access Providers that improperly attempt to shift recovery 
of precluded terminating switched access tandem switching or 
terminating switched access transport costs to other charges in a 
provider's tariff. We will also be vigilant in looking for any attempts 
carriers may make to impose tariffed charges for functions they do not 
actually perform.
    24. Definition of ``End Office Equivalent.'' We adopt our proposal 
that IPES Providers be required to calculate their traffic ratios in 
each end office or equivalent at which they receive traffic for 
purposes of determining whether they meet or exceed the traffic ratios 
in our Access Stimulation Rules. Contrary to claims in the record, this 
is consistent with how the Access Stimulation Rules have been applied. 
First, however, we dispel concerns in the record that IPES Providers 
may attempt to evade responsibility for calculating their traffic 
ratios by claiming their traffic should not be counted because it does 
not transit an ``end office or equivalent,'' as the present rules 
require.
    25. To make clear how providers' traffic ratio calculations should 
be made, we adopt two new rules. We add a definition of ``End Office 
Equivalent'' to our rules to ensure that our Access Stimulation Rules 
are specifically applicable to IPES Providers that do not have a 
traditional ``end office,'' as well as to LECs that do have an ``end 
office.'' We also adopt a rule that clarifies the methodology that IPES 
Providers and other providers are required to use in calculating their 
access-stimulation traffic ratios.
    26. The term ``end office'' is already defined in our rules and is 
a common term used to mean ``the telephone company office from which 
the end user receives exchange service.'' We now adopt a new term, 
``End Office Equivalent,'' as Sec.  61.3(fff), solely for purposes of 
our Access Stimulation Rules, which is defined as follows:

    End Office Equivalent. For purposes of this part and Sec. Sec.  
51.914, 69.3(e)(12)(iv), and 69.4(l) of this chapter, an End Office 
Equivalent is the geographic location where traffic is delivered to 
an IPES Provider for delivery to an end user. This location shall be 
used as the terminating location for purposes of calculating 
terminating-to-originating traffic ratios, as provided in this 
section. For purposes of the Access Stimulation Rules, the term 
``equivalent'' in the phrase ``end office or equivalent'' means End 
Office Equivalent.

    27. AT&T expresses concern that arbitrageurs might ``claim[] that 
certain IP terminating arrangements do not transit an end office 
`equivalent' at all.'' In response, Bandwidth argues that IPES 
Providers with authority to receive direct numbering assignments do, in 
fact, have an end office equivalent in which they can determine their 
terminating-to-originating traffic ratios for purposes of our Access 
Stimulation Rules. The new definition we adopt requires a geographic 
location. In addition, as Bandwidth suggests, a possible geographic 
location for an ``End Office Equivalent'' applicable to IPES Providers 
could be a switch POI (point of interconnection) CLLI (Common Language 
Location Identifier). Bandwidth explains that both an end office and 
switch POI CLLI are associated with a geographic rate center making the 
switch POI CLLI the equivalent of an end office. We do not specify that 
an IPES Provider must use a switch POI CLLI as the geographic location 
of termination for the calculation of traffic ratios, but the 
definition of ``End Office Equivalent'' we adopt acknowledges that 
every IPES Provider has one or more End Office Equivalent locations and 
that each one shall be used as a terminating location for purposes of 
calculating traffic ratios under our Access Stimulation Rules. 
Therefore, the definition of ``End Office Equivalent'' makes clear 
that, for purposes of our Access Stimulation Rules, the definition of 
``Access Stimulation'' in Sec.  61.3(bbb) unquestionably applies to 
IPES Providers.
    28. Calculating Traffic Ratios. We also adopt a rule that 
incorporates our proposal that IPES Providers be required to calculate 
their terminating-to-originating traffic ratios and provides the 
methodology for how such traffic ratios should be calculated for 
purposes of our Access Stimulation Rules. Most commenters agree that 
the IPES Provider is in the best position to calculate its own traffic 
ratios, because it ``necessarily has visibility into its own

[[Page 35748]]

access traffic,'' is ``the entity that chooses how it will send or 
receive its traffic,'' and tracks its calls for billing purposes. 
Accordingly, we decline to adopt our alternative proposal that would 
have required Intermediate Access Providers to calculate IPES 
Providers' traffic ratios. We agree with commenters that such a 
requirement would unduly burden Intermediate Access Providers and is 
unworkable because Intermediate Access Providers do not possess the 
information needed to compute the relevant traffic ratios. We find that 
requiring IPES Providers to count their own traffic for purposes of the 
access-stimulation triggers is necessary to thwart the latest efforts 
to evade our Access Stimulation Rules by inserting IPES Providers into 
the call flow. As a result of the actions we take today, entities will 
no longer be able 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.''
    29. At the same time, in response to concerns raised in the 
comments, it is important for us to provide a clear methodology of how 
IPES Providers and LECs should calculate their terminating-to-
originating traffic ratios. Otherwise, there may be confusion that 
could lead to the miscalculation of traffic ratios, disputes between 
providers, or potential new arbitrage opportunities. Above we detail 
where traffic should be calculated (for LECs at each of their end 
offices, and for IPES Providers at each of their ``End Office 
Equivalents'') for purposes of our Access Stimulation Rules. Here we 
detail how a LEC or IPES Provider must calculate its traffic ratios; 
that is, based on MOU to and from telephone numbers directly assigned 
to that LEC or IPES Provider, respectively. Presently, certain 
commenters explain, when an Intermediate Access Provider delivers 
traffic to an IPES Provider (for delivery to telephone numbers leased 
or bought by the IPES Provider from a LEC that then indirectly assigns 
those numbers to the IPES Provider), those calls are still counted in 
the LEC's traffic ratios because LECs calculate their ratios on traffic 
to and from telephone numbers directly assigned to their OCNs, 
including when a LEC provides those telephone numbers to another entity 
via indirect assignment.
    30. Given the ongoing attempts by some entities to misapply or 
exploit perceived loopholes in our current Access Stimulation Rules and 
concerns expressed in the record, we agree that we must specify how 
carriers calculate their traffic ratios for purposes of our Access 
Stimulation Rules. Accordingly, we adopt a new rule, consistent with 
how LECs in the industry already count traffic, for compliance with our 
Access Stimulation Rules, requiring each competitive LEC, rate-of-
return LEC, or IPES Provider to include in its terminating-to-
originating traffic ratio, to be counted separately at each end office 
or End Office Equivalent, all traffic ``going to and from any telephone 
number associated with an Operating Company Number that has been 
issued'' to such LEC or IPES Provider. Under this rule, IPES Providers 
will be required to include in their traffic ratios all calls made to 
and from telephone numbers they receive directly from a numbering 
administrator, but not calls made to and from telephone numbers 
obtained indirectly from a LEC.
    31. Similarly, in the case where one LEC supplies another LEC with 
telephone numbers (indirectly assigning numbers to the second LEC), the 
first LEC that was directly assigned the telephone numbers by a 
numbering administrator is required to calculate its ratios by counting 
the calls to and from those directly assigned telephone numbers, even 
though that first LEC has assigned those telephone numbers to a second 
LEC. The clarity this rule provides will prevent confusion and 
potential double-counting of calls--once by the LEC that was assigned 
the numbers directly and again by the IPES Provider, or LEC, that 
received those numbers indirectly from a LEC.
    32. We also reject other methods for calculating traffic, 
particularly by state, specific end user, or Intermediate Access 
Provider, or some other manner, instead of at the end office or End 
Office Equivalent. There was some discussion in the record about 
calculating traffic ratios at the state level. Calculating traffic 
ratios at the state level would make traffic manipulation easier--a 
result or potential loophole we do not want to allow. Several other 
parties suggested alternative ways to calculate traffic, such as at the 
network or aggregate level. None of these parties provided sufficient 
support for these suggestions, however, and we find these proposals 
would allow for even easier traffic manipulation contrary to our goal 
of deterring access stimulation. For example, if traffic were counted 
in the aggregate, as some parties suggest, access-stimulating LECs or 
IPES Providers could send terminating traffic to one or a few end 
offices, or End Office Equivalents, of an unrelated LEC or IPES 
Provider such that the original LEC's or IPES Provider's ratios over 
the totality of their network, would not meet or exceed the traffic 
ratio triggers in the rules, meaning IXCs would have to pay for all 
terminating access charges even though if the traffic had not been 
shifted the traffic ratio triggers would have been met. Under our new 
rules, traffic ratio calculations must be made at each end office or 
End Office Equivalent for telephone numbers directly assigned to the 
provider's OCN. As under the current rules applicable to LECs, if an 
IPES Provider is deemed to be engaged in access stimulation because it 
meets or exceeds the traffic ratio triggers in an End Office 
Equivalent, then it must comply with the Access Stimulation Rules and 
IXCs would not be charged for terminating tandem switching or 
transport. This takes into account the possibility that entities have 
more than one end office or End Office Equivalent and will discourage 
traffic manipulation, whether between end offices or End Office 
Equivalents of the same provider, or between different companies' end 
offices or End Office Equivalents, to stay under the traffic ratio 
triggers.
    33. We find that the methodology we adopt--calculating a provider's 
traffic ratios at each end office or End Office Equivalent based on 
calls to and from telephone numbers assigned to that provider's OCN--
provides a simple-to-administer, bright-line test that eliminates 
confusion in determining which entity is responsible for counting 
traffic and will deter potential future access-stimulation arbitrage. 
Counting traffic based on which entity is assigned a particular 
telephone number not only identifies the responsible entity, it also 
ensures that all calls are accounted for in calculating the access-
stimulation traffic ratios and that no calls are double-counted. In 
addition, even though the networks of IPES Providers and LECs may route 
traffic differently, the common denominator of our methodology is that 
providers have a bright-line test for calculating ratios on the basis 
of calls routed to and from telephone numbers associated with an end 
office or equivalent and an OCN that identifies that provider.
    34. We conclude that the benefits of this methodology overcome any 
potential risks it may pose to a LEC that sells or leases telephone 
numbers to IPES Providers or to other LECs. It is true that, under new 
Sec.  61.3(bbb)(5), a LEC, for example, is held responsible if it has 
directly assigned numbers that it then indirectly assigns to an IPES 
Provider that uses those telephone numbers it receives from that LEC to 
stimulate traffic, even though the LEC may have limited visibility 
into, or control over, the IPES Provider's traffic flow. The 
relationship by which a LEC indirectly assigns numbers to an IPES

[[Page 35749]]

Provider, however, is a business arrangement that the parties enter 
into voluntarily. As such, each party can contractually protect itself 
from the possibility that one of them may engage in access stimulation 
and can, for example, require that each party hold the other harmless 
from any financial responsibility for such activities and expressly 
provide that such numbers will not be used to violate our Access 
Stimulation Rules. Under the new rule we adopt today, LECs ``would have 
a strong incentive to take corrective steps to avoid being deemed an 
access stimulator--up to and including ending the relationship with the 
stimulating customer.'' Indeed, competitive LECs took such steps to 
terminate their agreements with providers shortly after the Commission 
adopted rules in 2019 to make access-stimulating LECs, rather than 
IXCs, financially responsible for tandem switching and transport 
service access charges in the delivery of traffic.
    35. In cases where an IPES Provider obtains telephone numbers from 
a LEC, the LEC that indirectly assigns numbers to the IPES Provider 
will include calls to those numbers in the LEC's own ratio 
calculations. Thus, IXCs can easily ascertain from LERG databases, 
available to the public, which telephone numbers are assigned to which 
provider (the LEC or the IPES Provider) to evaluate the traffic ratios 
based on the OCN associated with any particular group of telephone 
numbers. Otherwise, as Inteliquent explains, IXCs:

will have no visibility into the identity of this provider or 
providers because the associated traffic will not be assigned to the 
provider(s) OCNs in the LERG. Without a public record demonstrating 
which phone numbers belong to the provider, the interexchange 
carrier[s] will have no visibility as to their inbound or outbound 
traffic, meaning that there will be no independent or objective way 
to evaluate the traffic ratios of the party using numbers supplied 
to it by a LEC.

Without the use of public databases, it would be easier for a LEC, 
possibly one that is presently deemed an access stimulator under the 
current rules, to evade responsibility for stimulated traffic by 
claiming the traffic is the responsibility of the other provider.
    36. To conclude, our new rule 61.3(bbb)(5) makes explicit that a 
competitive LEC, rate-of-return LEC, or an IPES Provider is required to 
calculate its traffic ratios on calls that traverse its end office or 
End Office Equivalent and go to and from telephone numbers directly 
assigned to that provider's OCN. And if that LEC or IPES Provider meets 
or exceeds the relevant traffic ratio trigger, then an IXC shall not be 
charged terminating access charges for the delivery of that traffic. 
Thus, the addition of this rule will minimize providers' ability to 
skirt responsibility for access stimulation.
    37. Notification Requirements. We next amend our rules to require 
that an IPES Provider notify Intermediate Access Providers, IXCs, and 
the Commission if it is engaged in access stimulation as defined in our 
revised rules, similar to the obligations that already apply to LECs. 
An IPES Provider engaged in access stimulation as defined in Sec.  
61.3(bbb)(1)(i) and (ii) of our rules shall satisfy its notice and 
reporting requirement to the Commission by filing a record of its 
access-stimulating status in WC Docket No. 18-155 on the same day that 
it issues such notice to affected IXCs and Intermediate Access 
Providers. We find that these requirements are necessary to enable 
Intermediate Access Providers to determine whether they can lawfully 
charge IXCs tariffed rates for interstate and intrastate terminating 
tandem services in connection with calls terminating to, or through, an 
IPES Provider, and to help IXCs determine if the charges are 
appropriate.
    38. We disagree with Bandwidth's proposal to change the present 
notice and reporting requirements. Bandwidth suggests that a ``more 
prominent, public disclosure'' is necessary, and that the Commission 
should publish public filings in its Daily Digest to ``provide all IXCs 
(and consumers) with notice of where access stimulation occurs.'' The 
Commission has already established a disclosure requirement that is 
both well understood by the industry and available to the public 
through the Commission's Electronic Comment Filing System. There is no 
indication that the present filing procedure is insufficient for 
providing effective notice of access-stimulation activity to all 
affected or interested parties.
    39. We take seriously concerns that IXCs may be using improper 
self-help to withhold payment for services they have obtained pursuant 
to tariffs. We caution IXCs against improperly using our rules to 
engage in the wrongful withholding of payments. We continue to 
discourage providers from engaging in self-help except to the extent 
that such self-help is consistent with the Act, our rules, and 
applicable tariffs. Moreover, we would expect and encourage any IXC 
with evidence of unlawful conduct on the part of a LEC or Intermediate 
Access Provider to bring a complaint proceeding under section 208 of 
the Act for damages to deter such conduct in the future.
    40. We decline to adopt Verizon's proposal that we add a rule 
defining the financial liability of an IPES Provider that engages in 
access stimulation but fails to provide timely notice of that activity 
to affected parties. Verizon requests that we amend Sec.  51.914 of our 
rules ``to make clear that, where an IPES [P]rovider does not timely 
self-identify and the Commission or a court later holds that the IPES 
[P]rovider should have self-identified . . . the obligation to bear 
tandem switching and transport charges applies retroactively to when 
the IPES [P]rovider should have self-identified'' and that the IPES 
Provider ``must then reimburse long-distance carriers for any amounts 
improperly billed.'' We find that such a rule is unnecessary to achieve 
its intended purpose.
    41. Under the rules we adopt today, an IPES Provider that meets or 
exceeds the access-stimulation triggers but fails to provide the proper 
notice would violate our rules. If a LEC or an IPES Provider is engaged 
in access stimulation and fails to notify the Intermediate Access 
Provider or IXC, for whatever reason, an IXC's recourse is against the 
LEC or IPES Provider, not the Intermediate Access Provider. Our rules 
and the Act permit an IXC to bring proceedings before the Commission or 
the courts and recover full damages, including any retroactive damages, 
if the IXC is improperly billed by another carrier. Complaints 
involving IPES Providers, which are not common carriers, may be brought 
in the courts for adjudication.
    42. The determination of liability and the award of specific 
damages involving access-stimulation traffic is a fact-intensive 
inquiry requiring analysis of the functions of multiple carriers in 
transmitting, and billing for, calls in a particular call path. Thus, 
the Commission or a court, in an adjudicatory proceeding, is best 
suited to determine issues of liability and damages, including whether, 
based on the facts at hand, ``the obligation to bear tandem switching 
and transport charges applies retroactively to when the IPES [P]rovider 
should have self-identified.'' Indeed, Verizon's proposed rule could 
have the unintended effect of inappropriately pre-judging liability and 
damages.
    43. When an IPES Provider Is No Longer Engaged in Access 
Stimulation. We received no comments regarding our proposal that IPES 
Providers conform to the same requirements as LECs for determining when 
an IPES Provider that was engaged in access stimulation is no longer 
deemed to be engaged in access stimulation. Thus, we adopt our proposal 
to extend those same requirements to IPES Providers.

[[Page 35750]]

Accordingly, if an IPES Provider has an access charge revenue-sharing 
agreement and is engaged in access stimulation because it meets or 
exceeds the 3:1 interstate terminating-to-originating traffic ratio at 
an end office or equivalent in a calendar month, as described in Sec.  
61.3(bbb)(1)(i) of our rules, it would no longer be deemed to be 
engaged in access stimulation if it terminates all revenue sharing 
agreements and its traffic ratio is below 6:1. In the case of an IPES 
Provider that has no revenue-sharing agreement and is engaged in access 
stimulation because it meets or exceeds the 6:1 traffic ratio 
established by Sec.  61.3(bbb)(1)(ii) of our rules, it would no longer 
be deemed to be engaged in access stimulation if its traffic ratio 
falls below 6:1 for six consecutive months, similar to the current rule 
applicable to competitive LECs. Additionally, once an IPES Provider 
terminates its engagement in access stimulation, it would be required 
to notify the Commission and any affected Intermediate Access Providers 
and IXCs of its changed status, similar to the current rule applicable 
to LECs.
    44. Implementation and Effective Dates. In the Further Notice, we 
proposed that providers should be required to comply with the new and 
revised rules adopted in this Order within 45 days following their 
effective date. This is the same timeframe that the Commission found to 
be reasonable when it adopted the current Access Stimulation Rules. We 
asked parties if this timeframe posed any challenges or difficulties. 
We did not receive any comments in response and have no reason to 
believe this timeframe is insufficient, as there have been no 
complaints about this timeframe since it was first adopted for the 
existing rules. Thus, we give providers 45 days to come into compliance 
with our new and revised rules once they become effective. The 
effective date of the rules that do not require Paperwork Reduction Act 
(PRA) review is 30 days after publication in the Federal Register. 
Several of the rules we adopt may require Office of Management and 
Budget (OMB) review pursuant to the PRA. A separate notice will be 
published in the Federal Register detailing the effective dates and 
compliance dates for those rules.

B. Declining To Adopt Commenters' Proposals That Are Unnecessary or 
Insufficiently Supported

    45. Commenters submitted several additional proposals not addressed 
in the Further Notice that, for the reasons discussed below, we decline 
to adopt. We find that these proposals are duplicative of our existing 
processes, lack sufficient support in the record to allow us to adopt 
them, or have already been rejected by the Commission.
    46. Formally Establish a Rebuttable Presumption and an Access-
Stimulation Specific Complaint Process. We received several comments 
requesting clarification of, or changes to, our current informal and 
formal complaint processes targeted to access stimulation. Because 
these suggestions do not materially differ from our current enforcement 
processes, and are moot with regard to IPES Providers because our Sec.  
208 complaint process does not apply to IPES Providers, we reject them 
as duplicative and unnecessary.
    47. Several commenters request that we make clear that the 
rebuttable presumption process outlined in the USF/ICC Transformation 
Order applies to IPES Providers. These commenters explain that IXCs 
lack access to access stimulators' (and their partners') traffic and 
call routing information. Therefore, these commenters argue that a 
complaining carrier should be permitted to rely on its own internal 
data to show that an IPES Provider's traffic with the complaining 
carrier meets or exceeds the access-stimulation triggers, shifting the 
burden to the IPES Provider or its LEC partner to rebut the presumption 
with its own traffic data. These parties propose that if the LEC or 
IPES Provider is unable to rebut this presumption, or chooses not to 
provide data, then Intermediate Access Providers or LECs could not 
charge IXCs for terminating tandem switching and transport service for 
the delivery of traffic to that LEC or IPES Provider.
    48. We confirm that IXCs remain able to initiate a complaint with 
the Commission by using their traffic data to assert that a LEC is 
engaged in access stimulation, with the burden then shifting to the LEC 
to use its traffic data to confirm or refute the IXC's allegations, and 
that this process will remain in place after this Order takes effect. A 
complaining IXC may rely on its own data, for example data calculated 
at a LEC or IPES Provider's company-wide level, about the traffic it 
exchanges as the basis for filing a complaint or a court action. Lumen 
and USTelecom provide examples of information that may be used to 
support (for example, traffic ratio data calculated at the company-wide 
level rather than in an end office or equivalent) or rebut (for 
example, showing that traffic associated with certain telephone numbers 
should be attributed to an IPES Provider rather than the LEC) a claim 
of access stimulation. We do not dictate the type or amount of 
information that may be effective to support or rebut an IXC's claim of 
access stimulation and acknowledge that a court will manage any 
complaints presented before it as it deems appropriate. The LEC (or 
IPES Provider) would then have the burden of showing that it is not 
engaged in access stimulation by providing the necessary traffic data 
rebutting the IXC's allegation. We rely on the industry to self-police 
this issue, and we find that our current complaint processes or 
appropriate court proceedings have been effective in addressing 
violations of our Access Stimulation Rules. We also expect that the 
rule we adopt today detailing how LECs and IPES Providers are to 
calculate their traffic ratios will, by use of publicly available 
information, provide greater transparency into entities' traffic ratios 
which will help resolve disputes about whether an entity is engaged in 
access stimulation. To the extent commenters request that our 
enforcement process be extended to IPES Providers, IPES Providers are 
not subject to complaints made pursuant to section 208 of the Act 
because IPES Providers are not common carriers under Title II of the 
Act. We therefore must decline proposals to extend our enforcement 
process to IPES Providers.
    49. Verizon offers a similar proposal for streamlining the process 
for bringing access-stimulation complaints, calling for us to establish 
a new ``hybrid informal-formal'' complaint process ``to lower the 
[transaction] costs'' for identifying access stimulators. Verizon 
proposes that we modify our complaint processes to allow an IXC to 
initiate a complaint by presenting sufficient evidence that an alleged 
access stimulator (LEC or IPES Provider) meets or exceeds the traffic 
ratios in our rules. Unlike the current enforcement rules, Verizon 
proposes that the primary burden of producing data would be on the 
entity alleged to be engaged in access stimulation, and that an alleged 
access stimulator could meet that burden by, for example, submitting to 
the Commission its complete switched access call detail records. Under 
this proposal, the responding LEC or IPES Provider would also be 
required to provide ``a certification that the records are complete and 
accurate.'' Then the Commission could conduct an independent evaluation 
of the traffic data. According to Verizon, the Commission's evaluation 
would enable the filing of a formal complaint if the alleged access 
stimulator refuses to self-identify as an access stimulator regardless 
of what the call detail records indicate.
    50. We decline to adopt Verizon's proposal to create a new 
``hybrid''

[[Page 35751]]

process to adjudicate an IXC's claims of access stimulation. Verizon's 
proposal does not differ appreciably from our already-established 
informal and formal complaint processes as applied to Title II 
carriers. For example, as AT&T acknowledges, our rules currently 
require written responses to informal complaints. Although Verizon 
proposes mandating that parties certify that their records are complete 
and accurate, our rules already require parties to respond to discovery 
requests fully in writing under oath or affirmation. Likewise, 
Verizon's proposal that discovery be subjected to an ``independent 
evaluation'' is currently required by section 208(a) of the Act, which 
confirms that it is ``the duty of the Commission to investigate the 
matters complained of in such manner and by such means as it shall deem 
proper.'' Thus, we find that Verizon's proposal is already 
substantially captured by our current enforcement rules and processes. 
For these reasons, we reject proposals that we create a special process 
to resolve access-stimulation complaints.
    51. No Direct Connection Mandate or Sec.  61.26(f) Clarification. 
We next reject Lumen's proposal that we ``should mandate that VoIP 
provider applicants for direct access [to numbers] certify that their 
CLEC partners will allow IXCs to have direct connection in terminating 
switched access routing.'' Aureon opposes this proposal, noting that it 
is outside the scope of this proceeding, and that the Commission has 
already considered and rejected Lumen's proposal. It also explains that 
Lumen's proposal would be ineffective, and cautions that direct 
connections would result in access stimulators moving their traffic, 
leading to stranded costs for LECs and IXCs.
    52. We also reject Lumen's request that we clarify the 
applicability of Sec.  61.26(f) of our rules, which addresses the rates 
a competitive LEC may charge for switched exchange access services, 
because, according to Lumen, there is a ``lack of uniformity in the 
industry when it comes to the billing capability afforded'' by that 
rule. Lumen suggests that this issue is directly within the scope of 
the Further Notice. AT&T argues that such a clarification would be 
contrary to the Commission's goal of transitioning to bill-and-keep by 
expanding ``situations in which access charges could be billed.''
    53. Lumen's proposals are outside the scope of this proceeding, and 
we therefore decline to consider them here. We emphasize, however, that 
the Commission has previously rejected suggestions to mandate direct 
connections, and note that Lumen has not provided good reason for us to 
reconsider that decision. Likewise, any requirement for direct 
connection would be counter to the Commission's long-standing policy 
that parties determine their best means of interconnection. 
Furthermore, we disagree with Lumen's suggestion that Sec.  61.26(f) of 
our rules is unclear or needs modification. Even if we agreed with 
Lumen, we find that its arguments are better addressed in our existing 
proceeding on direct access to numbers, not in the context of 
addressing the access stimulation of terminating switched tandem and 
transport charges, and we note that Lumen has already made similar 
arguments in the Direct Access to Numbers proceeding.
    54. HD Carrier suggests that we ``provide an `access-stimulating' 
IPES the option to offer to connect directly in IP on a bill-and-keep 
basis to the originating service provider to avoid the shifting of 
financial responsibility that may otherwise occur under [the 
Commission's Access Stimulation Rules] if the IPES exceeded certain 
traffic ratios.'' Wide Voice agrees that we have ``other tools at [our] 
disposal, such as IP reciprocal, bill and keep interconnection 
arrangements to stomp out the so-called abuse of access charges.'' As 
discussed here, the Commission has not, and we do not now, mandate how 
entities interconnect for the exchange of traffic--in IP or TDM. If 
parties wish to enter into contractual agreements for the exchange of 
traffic using IP technology at mutually beneficial terms, perhaps bill-
and-keep, they have been, and remain, free to do that; i.e., they have 
the ``option'' to do so. No action we take in this Order affects that 
ability. Consistent with precedent, we expressly limit the requirements 
of IPES Providers, adopted in this Order, to measures targeted to 
address the arbitrage of terminating tandem switching and transport 
switched access charges.
    55. We Do Not Require IPES Providers with Direct Access to Numbers 
to Certify They Will Not Use Numbering Resources to Evade or Violate 
Our Access Stimulation Rules. We reject proposals that we require IPES 
Providers with direct access to numbers to certify annually that they 
will not use numbering resources to evade the Access Stimulation Rules. 
We have already sought comment on this issue in our Direct Access to 
Numbers proceeding. The Direct Access to Numbers docket is a separate 
proceeding with a separate record. To make a decision on this proposal 
here would introduce confusion and unnecessarily complicate the Direct 
Access to Numbers proceeding. Additionally, we received a more 
comprehensive record on the certification proposal in the Direct Access 
to Numbers proceeding where related questions were asked and discussed. 
We therefore decline to adopt an annual certification requirement here 
and leave any final decision on that issue for the Direct Access to 
Numbers proceeding.
    56. Proposals for Which the Commission Has Already Provided a 
Decision. In its comments, Inteliquent describes an arbitrage practice 
whereby calls routed to a LEC or an IPES Provider are blocked or 
otherwise rejected when transmitted via a regulated path to the high-
volume calling service provider served by the terminating LEC or IPES 
Provider. Inteliquent claims that when the calls are rerouted through 
unregulated providers, they are completed. Inteliquent asks that we 
address this issue by clarifying that ``traffic will be attributed to 
the [traffic ratios of the] terminating IPES Provider or LEC whenever 
an IXC attempts to deliver that traffic over the path specified by the 
IPES Provider/LEC in the LERG, but the call is rejected over that 
path,'' so the IPES Provider/LEC is not able ``to escape designation as 
an access stimulating provider'' by diverting some traffic over an 
unregulated path. We decline to act as Inteliquent requests because 
traffic traversing the non-regulated path is outside the scope of our 
Access Stimulation Rules, which are tied to tariffed services. Also, 
the Commission has already explicitly explained that, in the case of 
traffic destined for an access-stimulating LEC, an IXC or Intermediate 
Access Provider may consider its call completion duties satisfied once 
it has delivered the call to the tandem. For similar reasons, such a 
limitation on the scope of call completion duties would be reasonable 
to apply to traffic destined for an access-stimulating IPES Provider in 
the calling scenario Inteliquent describes.
    57. Teliax questions whether ``[a] ratio alone could prove to be 
overly inclusive by encompassing LECs that had realized access traffic 
growth through general economic development--as well as changes in 
technology and markets.'' On the other hand, AT&T and Verizon express 
concerns that because the traffic ratio triggers are bright-line rules, 
then ``traditionally those `triggers are necessarily under-inclusive.' 
'' We have seen no evidence in the industry that our ratios are not 
working as intended, nor, as discussed, is there evidence in the record 
to support establishing

[[Page 35752]]

different traffic ratios to apply to IPES Providers than those in the 
existing rules. Indeed, the Commission purposely decided to err on the 
side of caution and adopted conservative triggers in an effort to avoid 
the chance that a company might be wrongly identified as engaging in 
access-stimulation activity. Further, as is already the case with LECs, 
if an IPES Provider, ``not engaged in arbitrage, finds that its traffic 
will meet or exceed a prescribed terminating-to-originating traffic 
ratio,'' the provider may request a waiver and demonstrate special 
circumstances that warrant a deviation from our rules. The traffic 
ratios in Sec.  61.3(bbb) of our rules are the bright-line tests the 
Commission has established for determining when an entity is engaged in 
access stimulation and for enforcing our rules to prevent it. We do not 
expect our rules to capture any entities that are not actively engaged 
in access stimulation. But we do expect that the rules adopted today 
will capture additional entities engaged in access stimulation, 
strengthen our existing rules, close perceived loopholes, and enhance 
the overall enforceability of our Access Stimulation Rules.

C. Adopting Additional Rule Revisions

1. Definition of ``IPES Provider''
    58. To implement the rules adopted in this Order, we add a 
definition of ``IPES Provider'' in Sec.  61.3(eee) that applies only in 
the context of the Access Stimulation Rules. In the Further Notice, we 
proposed a definition of ``IPES Provider'' based on the existing 
definition of ``Interconnected VoIP service'' in our rules, but we make 
changes to that proposed definition, based on comments we received in 
the record.
    59. First, we remove the proposed requirement that an IPES Provider 
support real-time, ``two-way voice'' communications. We sought comment 
on USTelecom's proposal to remove ``two-way voice'' from the definition 
of ``IPES Provider'' in the Further Notice, and several commenters 
supported this modification, arguing that the definition should be 
broader. For example, Verizon discusses a ``call-to-listen'' service, 
whereby a user can make a long-distance telephone call to listen to a 
radio station. Verizon explains that a ``call-to-listen'' service uses 
only a simplex channel--``one that sends voice communications in one 
direction (to the listener).'' Verizon argues that such services should 
be covered by our Access Stimulation Rules, but is concerned that they 
may not be considered ``two-way voice communications.'' We do not need 
to determine whether a ``call-to-listen'' service, or other similar 
services mentioned in the comments, are two-way services, or one-way 
services. We agree, however, that we should not limit the definition of 
``IPES Provider'' to encompass only entities that provide two-way voice 
services. Instead, we eliminate the phrase ``two-way voice'' from our 
final rule to avoid any ambiguity and close what could have been a 
potential loophole in our definition of ``IPES Provider.'' No commenter 
objected to the removal of ``two-way voice.''
    60. Second, we eliminate language in the proposed ``IPES Provider'' 
definition referring to ``real-time'' communications. In the Further 
Notice, we asked whether the proposed definition of ``IPES Provider'' 
would ``capture all providers that could be used to try to circumvent 
the Access Stimulation Rules.'' One commenter suggested the deletion of 
the requirement for the provision of ``real-time communications.'' We 
are concerned that arbitrageurs could develop services that do not 
provide ``real time'' communications in an effort to evade our Access 
Stimulation Rules. Like our decision to delete the phrase ``two-way 
voice'' from the definition of ``IPES Provider,'' the elimination of 
the term ``real-time'' will also help advance our goal of eliminating 
arbitrage of our access charge regime. Furthermore, similar to our 
decision to eliminate the ``two-way voice'' phrase, we need not 
determine whether a service provides ``real-time'' communications. By 
deleting the term ``real-time'' from the definition of ``IPES 
Provider,'' we eliminate another potential loophole in the proposed 
rules by capturing more providers that may try to circumvent the Access 
Stimulation Rules. No commenter opposed the elimination of the term 
``real-time.'' With this change, and the above change to eliminate the 
phrase ``two-way voice,'' the phrase ``enables real-time two-way voice 
communications'' in the proposed definition of ``IPES Provider'' is 
changed to simply ``enables communications'' in the final definition we 
adopt in this Order.
    61. Third, we define ``IPES Provider'' to include those entities 
that receive terminating traffic, regardless of whether they also 
originate traffic. In the proposed definition of ``IPES Provider,'' the 
requirement to originate traffic was given in the following text: ``a 
provider offering a service that . . . permits users . . . to terminate 
calls to the public switched telephone network or . . . terminate to an 
internet Protocol service or an internet Protocol application.'' 
Commenters objected to the proposed definitional language arguing that 
the inclusion of such language could create potential loopholes in our 
Access Stimulation Rules. For example, commenters asserted that if we 
required an IPES Provider to both originate and terminate traffic, an 
arbitrageur could separate terminating and originating traffic, and 
provide just terminating services and claim that it was not subject to 
the Access Stimulation Rules because it did not also originate traffic. 
We agree. Accordingly, we eliminate the text in the proposed definition 
of ``IPES Provider'' in our Access Stimulation Rules that would have 
applied those rules only to providers that transmit both originating 
and terminating traffic; no commenters requested that we require IPES 
Providers to originate traffic. Additionally, because our definition of 
``IPES Provider'' applies to Sec.  51.914 of our rules, we do not adopt 
proposed Sec.  51.903(q). The sole purpose of proposed Sec.  51.903(q) 
was to define ``IPES Provider'' for Sec.  51.914, but that definition 
is not needed because Sec.  51.914 now references the definition of 
IPES Provider in Sec.  61.3(eee). No commenters addressed proposed 
Sec.  51.903(q).
    62. Finally, both Bandwidth and Inteliquent suggest that the 
definition of ``IPES Provider'' should include a requirement that the 
IPES Provider acquire the telephone numbers it uses directly from a 
numbering administrator. Bandwidth argues that this would provide a 
clear definition and ``capture more potential access stimulators in the 
marketplace.'' Alternatively, Bandwidth proposes that we modify either 
the Access Stimulation definition or the IPES Provider definition in 
our rules to account for possible ``wholesale IPES Providers.'' We find 
that Bandwidth's concerns are better addressed by our rule governing 
the calculation of traffic ratios, rather than in the definition of 
``IPES Provider.'' In our new rule governing the calculation of traffic 
ratios for purposes of our Access Stimulation Rules, we require LECs 
and IPES Providers to include in their ratio calculations all traffic 
going through their end office or equivalent to and from any telephone 
number associated with an Operating Company Number issued to that LEC 
or IPES Provider (that is, numbers directly assigned to that LEC or 
IPES Provider).

[[Page 35753]]

2. Definition of ``Intermediate Access Provider''
    63. As proposed in the Further Notice, we amend the definition of 
``Intermediate Access Provider'' in Sec.  61.3(ccc) of our rules to 
include IPES Providers as entities that may receive traffic from an 
Intermediate Access Provider, and to specify the type of service being 
provided by the Intermediate Access Provider. One commenter supported, 
and no commenters opposed, the proposed addition of IPES Providers to 
the definition of ``Intermediate Access Provider.'' As discussed below, 
we incorporate minor edits to the definition that we proposed in the 
Further Notice.
    64. We make a total of four changes to our definition of 
``Intermediate Access Provider'' in Sec.  61.3(ccc). First, as proposed 
in the Further Notice, we amend Sec.  61.3(ccc) to specify two 
additional types of entities that may receive traffic from the final 
IXC in the call path. The amendment we adopt adds the phrase ``IPES 
Provider'' to Sec.  61.3(ccc) in two circumstances: (a) where a LEC 
delivers traffic to an IPES Provider engaged in access stimulation; and 
(b) where an Intermediate Access Provider delivers calls directly to an 
IPES Provider engaged in access stimulation. Second, as proposed in the 
Further Notice (with one exception), we modify the phrase ``any entity 
that carries or processes traffic at any point between the final 
Interexchange Carrier . . .'' in current Sec.  61.3(ccc) to specify the 
access service being provided, as follows: ``any entity that provides 
terminating switched access tandem switching or terminating switched 
access tandem transport services between the final Interexchange 
Carrier . . . .'' This change makes Sec.  61.3(ccc) clearer and more 
consistent with our other Access Stimulation Rules, such as revised 
Sec.  69.4(l).
    65. Third, we amend the list of sections to which the revised 
definition of ``Intermediate Access Provider'' applies. Currently, the 
definition begins with: ``[t]he term means, for purposes of this part 
and Sec. Sec.  69.3(e)(12)(iv) and 69.5(b) of this chapter.'' We now 
add Sec. Sec.  51.914 and 69.4(l) to this list, because they also 
reference ``Intermediate Access Provider.'' We remove the reference to 
Sec.  69.3(e)(12)(iv), because that section does not reference 
``Intermediate Access Provider.'' Thus, the revised definition of 
``Intermediate Access Provider'' begins with ``[t]he term means, for 
purposes of Sec. Sec.  51.914, 69.4(l), and 69.5(b) of this chapter.'' 
Although we did not specifically propose this amendment in the Further 
Notice, we did seek comment on conforming edits and non-substantive 
edits to our rules. These edits to Sec.  61.3(ccc) are conforming or 
non-substantive edits made to ensure consistency in our Access 
Stimulation Rules. Finally, we change the reference to ``Intermediate 
Access Provider'' in the last clause of Sec.  61.3(ccc) in the proposed 
definition in the Further Notice to ``the entity,'' so that the 
definition is not self-referential. We consider this edit also to be a 
conforming or non-substantive edit.
    66. Bandwidth suggests that we go further and broaden the 
definition of ``Intermediate Access Provider'' to include the 
possibility that there may be more than one Intermediate Access 
Provider in a call flow, and to prohibit all Intermediate Access 
Providers in the call flow from imposing any tariffed access charges 
when the LEC (or, with the other rule revisions adopted today, the IPES 
Provider) is engaged in access stimulation. We find that we do not need 
to broaden the definition as Bandwidth suggests, but we take this 
opportunity to emphasize that the definition of ``Intermediate Access 
Provider'' in Sec.  61.3(ccc) of our rules includes any entity ``that 
provides terminating switched access tandem switching or terminating 
switched access tandem transport services between the final 
Interexchange Carrier in a call path'' and the LEC or IPES Provider, as 
discussed above. The reference to ``any entity'' was in Sec.  61.3(ccc) 
prior to the revisions adopted today. Section 61.3(ccc), read in 
combination with Sec. Sec.  51.914, 69.4(1), and 69.5(b), prohibits 
IXCs from being charged for terminating tandem switching or tandem 
transport charges provided by any entity that meets the definition of 
``Intermediate Access Provider'' in the call flow. The definition is 
broad enough to include more than one entity as an Intermediate Access 
Provider in a call flow. Thus, the rule addresses the concerns raised 
by Bandwidth.
    67. Bandwidth also suggests not including references to terminating 
switched access tandem switching or terminating switched access tandem 
transport services in the proposed definition of ``Intermediate Access 
Provider,'' and elsewhere in our Access Stimulation Rules, and 
replacing it with the more general term ``tariffed access services.'' 
Bandwidth argues that these changes are necessary to ensure that 
Intermediate Access Providers do not improperly impose additional 
tariffed charges to make up for access charge revenue they may lose as 
a result of our Access Stimulation Rules. As described above, Sec.  
69.111 of our rules, which defines ``tandem-switched transport and 
termination charge,'' specifies the four rate elements or services that 
will become the financial responsibility of an access-stimulating LEC 
or IPES Provider and addresses Bandwidth's concerns. Accordingly, we 
find no reason to make the additional rule changes Bandwidth proposes 
to address this issue.
    68. Bandwidth also seems to suggest that we should expand the 
definition of ``Intermediate Access Provider'' to include Intermediate 
Access Providers on the originating side of the telephone call by 
adding the phrase ``or the first Interexchange carrier in an 
originating call path'' to the ``Intermediate Access Provider'' 
definition. We decline to consider the changes Bandwidth proposes, as 
they are outside the scope of this proceeding. This proceeding is 
focused on addressing arbitrage of terminating access charges. The 
service providers and charges involved in the arbitrage of originating 
access have been addressed in a separate Commission proceeding.
    69. Finally, we reject Bandwidth's suggestion that we eliminate 
proposed Sec.  61.3(ccc)(2) from the ``Intermediate Access Provider'' 
definition. Bandwidth provides no explanation for this change. The call 
path provided in the rule that Bandwidth seeks to remove corresponds to 
many situations described in the record where a LEC is located in the 
call path between an Intermediate Access Provider and an access-
stimulating IPES Provider. We retain such call paths in the 
Intermediate Access Provider definition to ensure that the definition 
applies to entities in such call paths.
3. Calculating Traffic Ratios at the ``End Office or Equivalent'' and 
the Requirement That an Access Stimulator Serve End Users
    70. End Office or Equivalent. As proposed in the Further Notice, we 
amend many of our Access Stimulation Rules to apply to traffic ratios 
counted at the ``end office or equivalent.'' As discussed above, we 
also add a definition of ``End Office Equivalent'' to ensure that our 
Access Stimulation Rules are also specifically applicable to IPES 
Providers.
    71. Some commenters would prefer that we remove the phrase ``end 
office or equivalent'' wherever that phrase currently appears in our 
Access Stimulation Rules. These commenters assert that the phrase ``end 
office or equivalent'' complicates the calculation of traffic ratios. 
None of these commenters provide any examples or explanations of how 
our amendments

[[Page 35754]]

would complicate the relevant calculations, nor do they explain what 
alternative location should be used for purposes of calculating traffic 
ratios, if not at each ``end office or equivalent.'' Indeed, the 
commenters do not explain where the calculations are made now.
    72. Commenters also assert that the phrase ``end office or 
equivalent'' could create new potential loopholes in our rules. AT&T, 
USTelecom, and NCTA posit that arbitrageurs could shift traffic between 
end offices to keep from meeting or exceeding the traffic ratio 
triggers in the Access Stimulation Rules. But these commenters do not 
show whether carriers allegedly engaged in access stimulation have more 
than one end office (or an equivalent location, in the case of IPES 
Providers) to move traffic between, or if they are moving traffic to 
another entity, or if there is some other traffic manipulation.
    73. In sum, we include the phrase ``end office or equivalent'' in 
new Sec.  51.914(c) and add it to Sec.  61.3(bbb)(1)(i)(B), 
(bbb)(1)(ii) and (iii), and (bbb)(2) and (3) for consistency, to make 
the rules applicable to both LECs and IPES Providers equally, and to 
clearly designate where the traffic ratio calculations shall be made. 
We add the definition of ``End Office Equivalent'' as new Sec.  
61.3(fff) to avoid any ambiguity about the meaning of the word 
``equivalent'' in the phrase ``end office or equivalent,'' as that 
phrase is used in our Access Stimulation Rules.
    74. Serving End User(s). As proposed in the Further Notice, we 
retain the phrase ``serving end user(s)'' in the rule defining when a 
LEC, and now an IPES Provider, engages in Access Stimulation. We also 
add the phrase ``serving end user(s)'' to the rules defining when a LEC 
and, now, an IPES Provider will be deemed to continue to be engaging in 
Access Stimulation. Although AT&T expresses concern that this language 
may hinder enforcement of our Access Stimulation Rules, AT&T did not 
provide any explanation supporting these concerns, and acknowledged 
that ``[i]f IPES Providers are brought directly within the [Access 
Stimulation Rules], then this language may in theory become less 
problematic.'' The other rule revisions we make today bring IPES 
Providers within our Access Stimulation Rules.
    75. We also decline to adopt AT&T's proposed language to define the 
meaning of ``serving end users'' on which we sought comment in the 
Further Notice. AT&T had proposed that we define a LEC to be ``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,'' except if the 
LEC is an Intermediate Access Provider. Bandwidth suggested edits to 
AT&T's proposed rule language, but also acknowledged that ``bringing 
IPES [P]roviders with direct numbering resources within the scope of 
the [Access Stimulation Rules] may make the `serving end users' 
language unnecessary.'' AT&T also acknowledged that the inclusion of 
the phrase ``serving end user(s)'' in our Access Stimulation Rules 
indicates that it is not appropriate to calculate ratios of 
``originating-to-terminating traffic for a LEC or IPES entity that 
includes aggregated originating traffic placed by end users not served 
by the LEC or IPES [P]rovider.'' This practical result would deter 
arbitrage and provides another reason to retain and add, where 
appropriate, the phrase ``serving end user(s)'' to our Access 
Stimulation Rules. No other commenters specifically addressed our 
proposed uses of the phrase ``serving end user(s).'' We find that the 
changes to our rules will allow for greater consistency in the Access 
Stimulation Rules. We also find that AT&T's and Bandwidth's proposed 
revisions are rendered moot by the other reforms we adopt in this 
Order. Accordingly, we adopt the proposed modifications and reject 
other proposals to define our use of the term ``serving end user(s).''
4. Interstate/Intrastate Language
    76. As proposed in the Further Notice, we amend Sec. Sec.  
51.914(a)(1), 69.4(l), and 69.5(b)(1) and (2) of our rules to include 
the phrase ``interstate or intrastate'' to reflect language in the 
Access Arbitrage Order making clear that the rules adopted in that 
Order apply to the charges for both interstate and intrastate access 
services. We also include the phrase ``interstate or intrastate'' in 
new Sec.  51.914(e) (which is the new designation for current Sec.  
51.914(c), because other sections have been added above it). No 
commenter objected to these proposed changes.
    77. In the Access Arbitrage Order, the Commission made clear that 
the rules it was adopting to combat access stimulation were intended to 
prohibit providers of tandem switching and transport from billing IXCs 
for interstate and intrastate terminating switched access tandem 
switching or terminating switched access tandem transport, for traffic 
bound for access-stimulating LECs. The Commission explained that 
applying the rules ``equally to interstate and intrastate traffic will 
discourage gamesmanship related to the geographic classification of the 
traffic; i.e., carriers creating ways to move access-stimulation 
schemes to intrastate service.'' The reference to intrastate traffic 
was not reflected in the text of the rules, however. As proposed in the 
Further Notice, we now amend Sec. Sec.  51.914(a)(1), 69.4(l), and 
69.5(b)(1) and (2) of our rules to make clear that competitive LECs, 
rate-of-return LECs, and Intermediate Access Providers shall not charge 
IXCs for interstate or intrastate terminating switched access tandem 
switching and terminating switched access tandem transport when the 
terminating traffic is destined for a competitive LEC, rate-of-return 
LEC, or IPES Provider engaged in access stimulation, as defined in 
Sec.  61.3(bbb) of our rules.
    78. We reject, however, Bandwidth's suggestion that we add the term 
``intrastate'' to the definition of ``Access Stimulation'' in Sec.  
61.3(bbb) of our rules or delete references to ``interstate'' 
throughout that section. Bandwidth briefly comments that this will make 
the section ``consistent with [the] proposal [in the Further Notice] 
that [the] rules address intrastate access.'' We disagree. Bandwidth's 
proposed changes would result in providers having to include both 
interstate and intrastate traffic in calculating their ratios of 
terminating traffic to originating traffic. That is not consistent with 
our intent in this Order or with the Commission's actions in the Access 
Arbitrage Order. Bandwidth is correct that we proposed rule amendments 
reflecting language in the Access Arbitrage Order indicating that when 
a LEC or IPES Provider is engaged in access stimulation, the IXC shall 
not be charged interstate or intrastate terminating switched access 
tandem switching and terminating switched access tandem transport 
charges. That is different, however, than requiring that both 
intrastate and interstate traffic be included in the traffic ratio 
calculations described in Sec.  61.3(bbb) of our rules. Not only is 
Bandwidth's proposal contrary to the language in the Access Arbitrage 
Order and Further Notice, but Bandwidth does not provide any 
justification for us to adopt this significant change to our Access 
Stimulation Rules. We therefore reject Bandwidth's proposed 
modifications to Sec.  61.3(bbb) of our Access Stimulation Rules.
5. Conforming Edits to Our Rules
    79. We amend Sec. Sec.  51.914(a)(2) and (b)(2), 69.4(l), and 
69.5(b)(1) and (2) of our rules to eliminate inconsistencies among 
sections of the Access Stimulation Rules that are meant to be 
consistent. We received no comment opposing these proposed rule 
revisions

[[Page 35755]]

and therefore adopt the rules as proposed. New Sec.  51.914(c)(1) and 
(d)(2) are consistent with our amendments to Sec.  51.914(a)(2).
    80. We amend Sec.  51.914(a)(2) of our rules to remove any 
ambiguity about its mandatory requirement. The unrevised Sec.  
51.914(a)(2) requires that an access-stimulating LEC shall designate, 
``if needed,'' the Intermediate Access Provider that will provide 
certain terminating access services to the LEC. This designation 
applies in cases where an Intermediate Access Provider is different 
from the end office LEC. However, the current wording may lead to a 
misconception that a LEC may subjectively decide on its own when this 
designation is needed. Therefore, as we proposed in the Further Notice, 
we change the phrase ``if needed'' to ``if any.'' We similarly use the 
phrase ``if any'' in new Sec.  51.914(c)(1) and (d)(2) which apply to 
an access-stimulating IPES Provider and its designation of an 
Intermediate Access Provider. We received no comment about ensuring 
that new Sec.  51.914(c)(1) and (d)(2) conform with the proposed edit 
to Sec.  51.914(a)(2), and we adopt the rule language as proposed. We 
also amend Sec.  51.914(b)(2) by adding the phrase ``if any'' and 
similarly require the designation of an Intermediate Access Provider 
``if any'' that will provide service to an access-stimulating LEC. This 
addition is a conforming edit intended to ensure consistency in our 
Access Stimulation Rules.
    81. We amend current Sec.  51.914(d), which applies when traffic is 
bound for a LEC engaged in access stimulation, to also apply when 
traffic is bound for an IPES Provider engaged in access stimulation, 
consistent with our intent to conform our Access Stimulation Rules to 
apply equally to IPES Providers, as well as to LECs, and redesignate 
the section as 51.914(f). We do not add the phrase ``or receives 
traffic from an Intermediate Access Provider destined for an IPES 
Provider engaged in Access Stimulation,'' as we proposed in the Further 
Notice, because we find it redundant and unnecessary. We received no 
comments addressing specific terms in this proposed rule. The rule is 
now Sec.  51.914(f), because other rules were added that precede it.
    82. We amend Sec.  69.4(l) of our rules to ensure that the 
requirement to not bill certain carriers is mandatory. Section 69.4(l) 
currently 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. However, 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. As we proposed in 
the Further Notice, we change the phrase ``may not bill'' to ``shall 
not bill,'' in Sec.  69.4(l) to eliminate any ambiguity that a LEC 
engaged in access stimulation ``shall not bill'' IXCs terminating 
switched access tandem switching or terminating switched access tandem 
transport charges for access-stimulation traffic.
    83. We also make consistent where appropriate in the Access 
Stimulation Rules the references to ``terminating switched access 
tandem switching or terminating switched access transport'' services. 
Currently, some of the Access Stimulation Rules refer to ``terminating 
switched access tandem switching or terminating switched access 
transport,'' and some refer to ``terminating switched access tandem 
switching and terminating switched access transport.'' This primarily 
is an inadvertent error which results in an inconsistency in the rules 
that may be exploited by entities engaged in access stimulation or that 
want to engage in access stimulation. For example, with the use of the 
``and'' in Sec.  51.914(b)(2), we are concerned that a LEC engaged in 
access stimulation may claim that it does not use an Intermediate 
Access Provider that provides both tandem switching and transport, and 
argue that it, therefore, does not need to provide the notifications 
required in Sec.  51.914(b)(2). Such an outcome would be contrary to 
our rules and policies against arbitrage. We have indicated our 
intention to remove potential loopholes in our Access Stimulation 
Rules, reduce opportunities for arbitrage, and minimize unintended 
consequences. In furtherance of those goals, we change ``terminating 
switched access tandem switching and terminating switched access 
transport'' to ``terminating switched access tandem switching or 
terminating switched access transport'' in Sec.  51.914(a)(2) and 
(b)(2), and the word ``or'' is used in new Sec.  51.914(c)(1) and 
(d)(2) to make clear that the rules apply to either, or both, 
terminating switched access tandem switching and terminating switched 
access transport.
    84. We adopt our proposed amendments to Sec.  69.5(b)(2) to: (a) 
correct the inadvertent omission of the word ``not''; (b) change the 
word ``may'' to ``shall'' to be consistent with other uses in these 
rules; and (c) make clear that it is ``IXCs'' and not ``LECs'' that are 
not being charged access charges under our Access Stimulation Rules. We 
make similar amendments to Sec.  69.5(b)(1) to be consistent with Sec.  
69.5(b)(2). Thus, we correct ``may not'' to ``shall not.'' We also make 
a wording clarification by adding ``of this part'' to the two 
references to ``Sec.  69.4(b)(5)'' in Sec.  69.5(b)(1) and (2). 
Finally, we edit text in Sec.  69.5(b)(1) and (2), for consistency 
between those sections. Thus, the middle of both sections now refers to 
traffic that is destined ``for a competitive local exchange carrier, or 
a rate-of-return local exchange carrier, or is destined, directly or 
indirectly, for an IPES Provider, where such carrier or Provider is 
engaged in Access Stimulation.'' These are conforming and non-
substantive edits made to ensure consistency in our Access Stimulation 
Rules. These amendments are shown in Appendix A.

D. Legal Authority

    85. We conclude that sections 201, 251, and 254 of the Act provide 
us with the authority needed to adopt the definitions, rule changes, 
and rule additions contained in this Order. Several commenters support 
our tentative conclusion in this regard in the Further Notice and the 
use of ancillary authority pursuant to section 4(i) of the Act. 
Commenters also point out that the rules we adopt in the Order are 
similar to other requirements the Commission has imposed on IP 
providers. Although the Commission has never asserted expansive 
jurisdiction over IP providers, it has consistently adopted rules to 
address specific issues and serve the public interest. The rules we 
adopt today are consistent with that practice. Our new rules directed 
at IPES Providers are narrowly tailored to address specific concerns 
related to access arbitrage. For example, although we require IPES 
Providers to calculate their traffic ratios and comply with the Access 
Stimulation Rules' reporting requirements, we do not require an access-
stimulating IPES Provider to pay an Intermediate Access Provider's 
tandem and transport access charges.
    86. Section 201 of the Act. In the Access Arbitrage Order, the 
Commission determined that imposing 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 rejecting challenges to the Access 
Arbitrage Order, the United States Court of Appeals for the D.C. 
Circuit held that ``[o]n its face, Section 201(b) gives the Commission 
broad authority to define and prohibit practices or charges that it 
determines unreasonable. Fees intentionally accrued by artificially

[[Page 35756]]

stimulating and inefficiently routing calls would appear to fall within 
that wide authority.'' Thus, we find that we have ample authority to 
adopt the limited rule revisions in this Order.
    87. Providers' attempts to assess tandem switching or tandem 
switched transport access charges on IXCs for delivering traffic to 
access-stimulating IPES Providers are virtually indistinguishable from 
practices the Commission has already found to be unjust and 
unreasonable. 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.'' This 
language provides us with the authority to prohibit Intermediate Access 
Providers or other LECs from charging IXCs tariffed tandem switching 
and transport access charges for traffic routed to an access-
stimulating IPES Provider, or an access-stimulating LEC. Furthermore, 
section 201(b) grants us authority to ensure that all charges and 
practices ``in connection with'' a common carrier service are ``just 
and reasonable.'' This authority encompasses a situation, such as here, 
where an IPES Provider is receiving traffic from Intermediate Access 
Providers and/or LECs for the purpose of engaging in access arbitrage. 
Thus, section 201(b) grants us authority to require IPES Providers to 
designate the Intermediate Access Provider(s), if any, that will 
provide terminating switched access tandem switching and transport 
services, and to require IPES Providers to calculate their traffic 
ratios and notify Intermediate Access Providers, IXCs, and the 
Commission if the IPES Provider is engaged in access stimulation. 
Intermediate Access Providers will then be able to determine whether 
they can lawfully charge IXCs for interstate and intrastate tandem 
switching and transport services (and IXCs can determine if such 
charges are appropriate).
    88. Sections 251 and 254 of the Act. Our authority to adopt these 
rule revisions is also rooted in other sections of the Act on which the 
Commission relied in the Access Arbitrage Order. First, section 
251(b)(5) of the Act gives us authority to regulate exchange access and 
providers of exchange access, during the transition to bill-and-keep. 
Indeed, the Commission ``br[ought] all traffic within the section 
251(b)(5) regime'' years ago, as part of the reforms adopted in the 
USF/ICC Transformation Order. Second, section 251(g) of the Act 
provides us with the authority to address problematic conduct that 
occurs during the ongoing transition to bill-and-keep. Third, section 
254 of the Act provides the Commission with the authority to eliminate 
implicit subsidies. To the extent that the access charges paid by IXCs 
for access-stimulation traffic continue to subsidize LEC networks, 
section 254 gives us the authority to adopt the rules in this Order to 
eliminate those implicit subsidies. The rules we adopt are intended to 
encourage terminating LECs and IPES Providers to make efficient 
interconnection choices in the context of access-stimulation schemes 
and are thus consistent with longstanding Commission policy and 
Congressional direction. Accordingly, sections 201, 251, and 254 of the 
Act give us the authority to adopt the rules described in this Order.
    89. Section 4(i) of the Act. Although we conclude that the 
statutory sections identified above provide us sufficient authority to 
adopt our revised rules, we also conclude that our ancillary authority 
pursuant to section 4(i) of the Act provides an additional, independent 
basis to adopt limited rules with respect to IPES Providers. Commenters 
agreed with this conclusion; no commenters disagreed. Section 4(i) of 
the Act gives the Commission the authority to perform acts, adopt 
rules, and issue orders, as necessary in the execution of its 
functions. The D.C. Circuit has determined that the Commission's 
exercise of its ancillary authority is appropriate when `` `(1) the 
Commission's general jurisdictional grant under Title I [of the Act] 
covers the regulated subject and (2) the regulations are reasonably 
ancillary to the Commission's effective performance of its statutorily 
mandated responsibilities.' '' The requirements we adopt today, that 
are applicable to IPES Providers, are ``reasonably ancillary to the 
Commission's effective performance of [its] responsibilities.'' 
Specifically, IPES Providers interconnected with the PSTN and 
exchanging IP traffic clearly provide ``interstate . . . communication 
by wire or radio'' pursuant to section 152(a) of the Act. The rules we 
adopt, that are applicable to IPES Providers, are reasonably ancillary 
to our established authority to deter access arbitrage. For example, 
the Commission has found it to be an unjust and unreasonable practice 
under section 201(b) of the Act for IXCs to pay terminating tandem 
switching and tandem switched transport charges for the delivery of 
access-stimulation traffic. The record indicates that IPES Providers 
have been inserted into the call flow in an effort to evade this 
holding and for parties to continue to engage in access stimulation. 
Therefore, we are justified in asserting our ancillary authority in 
adopting rule revisions applicable to IPES Providers to help deter 
access arbitrage and ensure just and reasonable practices under our 
statutory responsibilities provided in section 201(b) of the Act.
    90. Similarly, as the Commission has repeatedly made clear, it may, 
pursuant to section 251(b)(5), require the transition of access charges 
to a bill-and-keep framework. And, the Commission has recognized that 
section 251(g) grandfathers the historical exchange access system 
``until the Commission adopts rules to transition away from the 
system.'' In the Access Arbitrage Order the Commission found that 
access stimulation arises, ``in significant part, because of ways in 
which the Commission's planned transition to bill-and-keep is not yet 
complete, and in that context, we find it necessary to address 
problematic conduct that we observe on a transitional basis until that 
comprehensive reform is finalized.'' In this Order, we have found that 
IPES Providers are inserted into the call flow for the purpose of 
collecting inflated, tariffed terminating tandem switching and 
transport access charges from IXCs. This practice is contrary to the 
Commission's stated goal of transitioning to bill-and-keep; that is, 
reducing the access charges carriers pay one another. Taking action to 
deter the insertion of IPES Providers into a call flow, in direct 
contravention of Commission precedent, orders and rules, is reasonably 
ancillary to our statutory mission to ensure just and reasonable rates 
and practices under section 201(b) of the Act.
    91. Finally, as relevant here, the Commission has previously 
applied the statutory requirements of section 254 to VoIP providers 
pursuant to its ancillary authority. Specifically, the Commission found 
that its statutory requirement to establish ``specific, predictable and 
sufficient mechanisms . . . to preserve and advance universal service'' 
necessitated that VoIP providers contribute to the Universal Service 
Fund. As discussed above, section 254 also requires the elimination of 
implicit subsidies. Asserting ancillary authority over IPES Providers 
will help ensure that LEC networks are not implicitly subsidized by 
access charges for access-stimulation traffic. This action will help 
close a perceived loophole in our rules that has been exploited by 
those interested in continued arbitrage of our access charge regime and 
the improper use of access charges to fund ``free,'' or no-cost to the 
consumer, high-volume calling services. For these reasons, we conclude 
that requiring IPES Providers,

[[Page 35757]]

as defined for the purposes of our Access Stimulation Rules, to comply 
with our limited revised rules is reasonably ancillary to the 
Commission's effective performance of its statutory responsibilities as 
described above.

E. Cost Benefit Analysis

    92. Harms of Access Arbitrage. Access arbitrage exploits our 
intercarrier compensation regime by requiring the payment of 
terminating switched access tandem switching and switched access 
transport charges for activities and to providers that our policies are 
not intended to benefit. As Bandwidth explains, ``[s]o long as access 
charges exist, . . . parties that originate and terminate traffic have 
an incentive to arbitrage the associated economies for themselves, 
their affiliates, and their carrier partners. The purpose of this 
proceeding is to reduce the arbitrage and fraud based on that 
incentive.'' Parties pursue access arbitrage opportunities by 
artificially stimulating traffic, and then routing that traffic along 
more expensive, and/or less efficient, call paths. We first outline how 
the actions we take today will reduce the various harms caused by 
access arbitrage. We then show that the expected benefits from reducing 
just one of the harms--reducing the burden on IXCs to avoid being 
exploited--exceed the estimated costs of our actions.
    93. The record does not allow us to fully quantify the cost of 
artificial traffic stimulation and inefficient routing, but given that 
tens of millions of dollars of payments are made to access 
arbitrageurs, these costs are likely high. The waste of inefficient 
traffic routing is acute because the party that chooses the call path 
does not pay the relevant intercarrier compensation charges, and 
instead typically gains from them. The costs of access stimulation are 
also likely large because the costs of these traffic-generating 
activities are not fully paid for by the users of the high-volume 
calling services, who often pay nothing for these services. This means 
some consumers use such services even though they value them less than 
the cost of supply. It also means consumers who do not use the high-
volume calling services effectively pay for them when they purchase 
other telecommunications services at rates that are higher because they 
are based on recovering the costs of artificially inflated access 
charges their carriers must pay to deliver access-stimulation traffic. 
These rates unnecessarily and inefficiently curtail demand for those 
other telecommunications services. If providers of high-volume calling 
services were to charge prices that wholly recovered the costs of 
arbitrage (rather than a portion of those costs being borne by 
consumers who do not use high-volume calling services), then purchases 
of the high-volume calling services would decline, leaving only 
purchases where the consumer values the service at more than its cost. 
Every call minute so reduced would help eliminate waste or create value 
equal to the difference between the cost-covering prices and these low-
demand consumers' valuations of the service. At the same time, a 
reduction in the costs paid by other consumers due to a decrease in 
arbitrage would efficiently expand the use of telecommunications 
services, to the benefit of the general public by, for example, 
reducing call congestion and service disruptions caused by access 
stimulation.
    94. Behavior driven by access arbitrage also threatens the 
Commission's mandate to ensure that telecommunications services are 
provided at just and reasonable rates. The telecommunications network 
depends on carriers being able to exchange vast quantities of traffic 
every minute in an efficient and reasonable manner at just and 
reasonable rates absent the artificial inflation of costs due to 
arbitrage. Without the actions we take today, this process of 
exchanging traffic--fundamental to personal and business interactions 
across our nation--would be undermined, thereby threatening the longer-
term viability of the network. We are not able to quantify this harm 
with a specific cost in dollars, but any threat to the long-term 
viability of the nationwide communications network is intolerable and 
subject to our legislative mandate to ensure just and reasonable rates 
and practices for consumers.
    95. Lastly, service providers seeking to avoid being exploited by 
access arbitrageurs must engage in costly defensive measures that would 
be unnecessary in the absence of access arbitrage. Examples of these 
wastes include:
     disputes over questionable demands for payment by tandem 
service providers that send calls to apparent access stimulators;
     attempts by IXCs to identify the sources of traffic that 
appears to have been arbitraged; and
     time and money spent by parties seeking to protect against 
or reduce access arbitrage opportunities, as in this proceeding.
    96. Evidence from AT&T allows us to demonstrate the costs parties 
incur in seeking to avoid being exploited by access arbitrageurs would 
vastly exceed the costs parties would incur as a result of the rules we 
adopt today. For example, AT&T reported spending 15,000 employee-hours 
over three years to identify and combat access stimulation. Applying an 
hourly rate of $50, the annual expense of this labor for AT&T alone 
would come to $250,000. If the Commission takes no action, AT&T would 
incur similar annual costs every year. Even if, being conservative, our 
actions were to save AT&T just half of the costs it may incur in only 
three years, this would be a benefit of approximately $300,000. The 
actual cost savings will be much higher, however: AT&T will save costs 
every year well beyond just a three-year period. In addition, AT&T is 
only one of many IXCs that are harmed by access arbitrage. Every IXC 
that delivers traffic to access stimulators will also realize savings. 
These estimates do not even count the gains from reducing the 
unquantified, but likely much more significant, harms discussed above.
    97. Costs of Our New Rules. When the 2019 Access Arbitrage Order 
was adopted, at least 21 carriers were identified as allegedly engaging 
in access stimulation. At least five former access-stimulating LECs 
have notified the Commission that they have left the access-stimulation 
business. That suggests 16 LECs are engaged in access stimulation 
today. We assume a similar number of IPES Providers engage in access 
stimulation. In that case, our Access Stimulation Rules would impact 
approximately 30 providers. Our existing, modified and new Access 
Stimulation Rules will require those providers to: (1) perform traffic 
studies; (2) calculate traffic ratios to determine if they are engaged 
in access stimulation under the traffic ratios in our Access 
Stimulation Rules; (3) notify Intermediate Access Providers, IXCs, and 
the Commission if they are engaged in access stimulation; and (4) 
notify Intermediate Access Providers, IXCs, and the Commission if they 
are no longer engaged in access stimulation. Those access-stimulating 
providers that file tariffs may also have to: (1) adjust their billing 
systems to no longer bill IXCs; and (2) modify their tariffs to ensure 
that IXCs are not billed for tandem switching or tandem transport 
access charges for calls delivered to access-stimulating LECs or IPES 
Providers. As the Commission did in the 2019 Access Arbitrage Order, we 
estimate that the required effort for each firm (here, a LEC or IPES 
Provider) would be unlikely to exceed 100 hours of work. By applying an 
hourly rate of $100, the present value of the costs that

[[Page 35758]]

all access-stimulating LECs or IPES Providers may incur would not 
exceed $300,000.
    98. The Benefits of Our New and Revised Rules Outweigh Their Costs. 
The rules we adopt today promote the integrity of tariffed rates for 
tandem switching and tandem switched transport services, and hence the 
goal of connectivity--the ability of consumers to connect with each 
other across the entire U.S. telecommunications network--at just and 
reasonable rates. By meeting our legislative responsibility to ensure 
IXCs do not pay tariffed tandem switching and transport rates for 
access-stimulation traffic, which the Commission has found to be an 
unjust and unreasonable practice, we help to protect the policies that 
underlie our intercarrier compensation rules, and the widespread 
willingness of carriers to interconnect and deliver calls across the 
network. Although the bulk of the benefits of maintaining the ability 
to connect with each other cannot be quantified, as we have shown, even 
the quantifiable components are significant and likely are vastly 
greater than $300,000--our present value estimate of the costs of our 
actions.

Procedural Matters

    99. Paperwork Reduction Act Analysis. This document may contain new 
or modified information collection requirements subject to the 
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. All such new 
or modified information collection requirements will be submitted to 
OMB for review under Section 3507(d) of the PRA. OMB, the general 
public, and other Federal agencies will be invited to comment on any 
new or modified information collection requirements contained in this 
proceeding. In addition, we note that pursuant to the Small Business 
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 
3506(c)(4), we previously sought specific comment on how the Commission 
might further reduce the information collection burden for small 
business concerns with fewer than 25 employees.
    100. In this Order, we have assessed the effects of requiring IPES 
Providers to keep necessary records, calculate applicable ratios, and 
provide required third-party disclosure of certain information to the 
Commission, parties they do business with and the public, and find that 
IPES Providers likely keep this information and perform these 
responsibilities in the normal course of business. Therefore, these 
additional requirements should not be overly burdensome. We do not 
believe there are many access-stimulating IPES Providers operating 
today but note that of the small number of access-stimulating IPES 
Providers in existence, most, if not all, will be affected by this 
Order. We believe that access-stimulating IPES Providers are typically 
smaller businesses and may employ fewer than 25 people. We sought 
comment on the potential effects of the information collection rules we 
adopt today in the Further Notice, and we received no comment 
specifically addressing burdens on small business concerns either in 
response to this request or on our Initial Regulatory Flexibility Act 
Analysis. We find the benefits that will be realized by a decrease in 
the uneconomic effects of access stimulation outweigh any burden 
associated with the changes required by this Second Report and Order.
    101. Congressional Review Act. The Commission has determined, and 
the Administrator of the Office of Information and Regulatory Affairs, 
Office of Management and Budget, concurs that these rules are ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The 
Commission will send a copy of this Second Report and Order to Congress 
and the Government Accountability Office pursuant to 5 U.S.C. 
801(a)(1)(A).
    102. Final Regulatory Flexibility Analysis. As required by the 
Regulatory Flexibility Act of 1980 (RFA), as amended, an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the Further 
Notice of Proposed Rulemaking for the access arbitrage proceeding. We 
sought written public comments on the proposals in the Further Notice, 
including comment on the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.

A. Need for, and Objectives of, the Final Rules

    103. For over a decade, the Commission has combatted arbitrage of 
its access charge regime, which ultimately raises the rates consumers 
pay for telecommunications service. 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.
    104. Since the 2019 rules were implemented, the Commission has 
received information about new ways entities are manipulating their 
businesses to continue their arbitrage schemes in the wake of the new 
rules. In this Order, we adopt rule revisions to close perceived 
loopholes in our Access Stimulation Rules that are being exploited by 
opportunistic access-stimulating entities whose actions ultimately 
cause consumers to continue to bear costs for services they do not use.
    105. We 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. When a LEC or 
Intermediate Access Provider delivers traffic to an IPES Provider and 
the terminating-to-originating traffic ratios of the IPES Provider meet 
or exceed the triggers in the Access Stimulation Rules, the IPES 
Provider will be deemed to be engaged in access stimulation. In such 
cases, a LEC or an Intermediate Access Provider will be prohibited 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 meets or exceeds the ratios in Sec.  
61.3(bbb)(1)(i) or (ii) of our Access Stimulation Rules. The IPES 
Provider will be responsible for calculating its traffic ratios and for 
making the required notifications to the affected IXC(s), Intermediate 
Access Provider(s) and the Commission. We likewise modify the 
definition of Intermediate Access Provider to include entities 
delivering traffic to an IPES Provider. The rules we adopt will serve 
the public interest by reducing the incentives and ability to send 
traffic over the Public Switched Telephone Network for the purpose of 
collecting tariffed tandem switching and transport access charges from 
IXCs to fund high-volume calling services, which the Commission has 
found to be an unjust and unreasonable practice.
    106. The reforms adopted in this Order apply the same framework 
that we currently use for competitive LECs that have engaged in access 
stimulation to determine when an IPES Provider that was engaged in 
access stimulation no longer is considered to be engaged in access 
stimulation. The Access Stimulation Rules currently require traffic 
ratios to be calculated at the end office. The rules adopted today 
apply this manner of traffic calculations to IPES Providers as well. 
Affected entities must comply with the final rules no

[[Page 35759]]

later than 45 days after their effective date. The effective date is 30 
days after publication in the Federal Register except for certain rule 
revisions which contain information collection requirements that are 
subject to review by the Office of Management and Budget under the 
Paperwork Reduction Act. The effective date for these latter rules will 
be announced separately by the Commission.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    107. The Commission did not receive comments specifically 
addressing the rules and policies proposed in the IRFA.

C. Response to Comments by Chief Counsel for Advocacy of the Small 
Business Administration

    108. Pursuant to the Small Business Jobs Act of 2010, which amended 
the RFA, the Commission is required to respond to any comments filed by 
the Chief Counsel of the Small Business Administration (SBA) and to 
provide a detailed statement of any change made to the proposed rule(s) 
as a result of those comments.
    109. The Chief Counsel did not file any comments in response to the 
proposed rule(s) in this proceeding.

D. Description and Estimate of the Number of Small Entities to Which 
the Final Rules Will Apply

    110. 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 rules, 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 that: (1) is independently owned 
and operated; (2) is not dominant in its field of operation; (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    111. 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, 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 Small Business 
Administration's (SBA) 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.
    112. 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.
    113. 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 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.''
    114. 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.
    115. 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.
    116. 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 an 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.
    117. 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

[[Page 35760]]

Telecommunications Carriers is the closest industry with an 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 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.
    118. 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.
    119. 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.
    120. 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.
    121. 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 seven 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.
    122. 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 six 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.
    123. 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

[[Page 35761]]

were 1,079 firms in this industry that operated for the entire year. Of 
those firms, 1,039 had revenue of less than $25 million. Based on this 
data, the Commission estimates that the majority of ``All Other 
Telecommunications'' firms can be considered small.

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

    124. The rule revisions adopted in the Order will affect LECs, 
Intermediate Access Providers, and IPES Providers. This Order modifies 
our Access Stimulation Rules to address arbitrage which takes place 
when an IPES Provider is incorporated into the call flow. In this 
Order, we adopt rules to further limit or eliminate the occurrence of 
access arbitrage, including access stimulation, which could affect 
potential reporting requirements. The adopted 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 requirements may also involve tariff changes.
    125. The rules adopted in the Order require that when an 
Intermediate Access Provider or a LEC delivers traffic to an IPES 
Provider and the terminating-to-originating traffic ratios of the IPES 
Provider meet or exceed the triggers in the Access Stimulation Rules, 
the IPES Provider will be deemed to be engaged in access stimulation. 
In those cases, the IPES Provider will 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 new rules. If the IPES Provider's 
traffic ratios meet or exceed the applicable rule triggers, it must 
notify the Intermediate Access Providers it subtends, the Commission, 
and affected IXCs. The Intermediate Access Provider is then prohibited 
from charging IXCs tariffed rates for terminating switched access 
tandem switching or terminating switched access transport charges.

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

    126. The RFA requires an agency to describe any significant, 
specifically small business alternatives that it has considered in 
reaching its 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 or 
reporting requirements under the rule for such small entities; (3) the 
use of performance, rather than design, standards; and (4) and 
exemption from coverage of the rule, or any part thereof, for such 
small entities.''
    127. The actions taken by the Commission in the Order were 
considered to be the least costly and minimally burdensome for small 
and other entities impacted by the rules. As such, the Commission does 
not expect the adopted requirements to have a significant economic 
impact on small entities. Below we discuss actions we take in the Order 
to minimize any significant economic impact on small entities and some 
alternatives that were considered.
    128. Transition Period To Assist Small Entity Compliance. To 
minimize the impact of changes that may affect entities, we implement 
up to a 45-day transition period for compliance. We expect that 
transition period will allow even small business entities adequate time 
to amend their tariffs and recordkeeping, reporting and third-party 
notification practices, if needed, to meet the requirements in the 
adopted rules. This will also allow time if parties choose to make 
additional changes to their operations as a result of our reforms to 
further reduce access stimulation. To ensure clarity and increase 
transparency, we require that access-stimulating LECs and IPES 
Providers notify affected IXCs, Intermediate Access Providers, and the 
Commission of their access-stimulating status within 45 days of PRA 
approval (or, for an entity that later engages in access stimulation, 
within 45 days from the date it commences access stimulation), and file 
a notice in the Commission's Access Arbitrage docket on the same date 
and to the same effect.
    129. We announced aspects of the transition period in the Further 
Notice, and received no related comments. Such changes are also subject 
to the Paperwork Reduction Act approval process which allows for 
additional notice and comment on the burdens associated with the 
requirements. This process will occur after adoption of this Order, 
thus providing additional time for parties to make the changes 
necessary to comply with the newly adopted rules. Also, being mindful 
of the attendant costs of any reporting obligations, we do not require 
that affected entities adhere to a specific notice format. Instead, we 
allow each responding entity to prepare third-party notice and notice 
to the Commission in the manner they deem to be most cost-effective and 
least burdensome, provided the notice announces the entities' access-
stimulating status and acceptance of financial responsibility. 
Furthermore, by electing not to require carriers to fully withdraw and 
file entirely new tariffs and requiring only that they revise their 
tariffs to remove relevant provisions, if necessary, we mitigate the 
filing burden on affected carriers.
    130. We consider any potential billing system changes to be 
straightforward, but to allow sufficient time for affected parties, 
including small business entities, to make any adjustments. We grant 
small entities the same period from the effective date for implementing 
such changes. Thus, affected Intermediate Access Providers have 45 days 
from the effective date of this rule (or, with respect to those 
entities that later engage in access stimulation, within 45 days from 
the date such entities commence access stimulation) to implement any 
billing system changes or prepare any tariff revisions which they may 
see fit to file. The time granted by this period should help small 
business entities affected make an orderly, less burdensome, 
transition.
    131. These same considerations were taken into account for LECs and 
IPES Providers that cease access stimulation, a change that carries 
concomitant reporting obligations and to which we apply associated 
transition periods for billing changes and/or for tariff revisions 
that, collectively, are virtually identical to those mentioned above.

G. Report to Congress

    132. The Commission will send a copy of this Order, including this 
FRFA, in a report to be sent to Congress pursuant to the Congressional 
Review Act. In addition, the Commission will send a copy of the Order, 
including this FRFA, to the Chief Counsel for Advocacy of the SBA. The 
Order and FRFA (or summaries thereof) will also be published in the 
Federal Register.

Ordering Clauses

    133. Accordingly, it is ordered that, pursuant to sections 1, 2, 
4(i), 201, 251, 254, and 303(r), of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152, 154(i), 201, 251, 254, and 303(r), and 
section 1.1 of the Commission's rules, 47 CFR 1.1, this Second Report 
and Order is adopted.
    134. It is further ordered that, pursuant to sections 1.4, 1.103 
and 1.427 of the Commission's Rules, 47 CFR 1.4, 1.103, 1.427, the 
amendments to the Commission's rules as set forth in Appendix A are 
adopted, effective 30

[[Page 35762]]

days after publication in the Federal Register, except that the 
amendments to Sec.  51.914(d) and (g) of the Commission's rules, 47 CFR 
51.914(d) and (g), which may contain new or modified information 
collection requirements, will not become effective until the Office of 
Management and Budget completes review of any information collection 
requirements that the Wireline Competition Bureau determines is 
required under the Paperwork Reduction Act. Compliance with the 
amendments to the Commission's rules as set forth in Appendix A will be 
required 45 days following the effective date. The Commission directs 
the Wireline Competition Bureau to announce the effective dates and the 
compliance dates for Sec.  51.914(d) and (g) by subsequent Public 
Notice.
    135. It is further ordered that the Office of the Managing 
Director, Performance Evaluation and Records Management, shall send a 
copy of this Second Report and Order, including the Final Regulatory 
Flexibility Analysis, in a report to be sent to Congress and the 
Government Accountability Office pursuant to the Congressional Review 
Act, 5 U.S.C. 801(a)(1)(A).
    136. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center shall send a 
copy of this Second Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 51

    Communications; Communications common carriers; Telecommunications; 
Telephones.

47 CFR Part 61

    Communications common carriers; Reporting and recordkeeping 
requirements; Telephones.

47 CFR Part 69

    Communications common carriers; Reporting and recordkeeping 
requirements; Telephones.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

    For the reasons set forth above, the Federal Communications 
Commission amends parts 51, 61, and 69 of title 47 of the Code of 
Federal Regulations as follows:

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. Revise Sec.  51.914 to read 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 July 3, 2023, 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 or 
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 July 3, 2023, 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), if 
any, that will provide the terminating switched access tandem switching 
or 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, then within 45 days of commencing Access Stimulation, or 
within 45 days of July 3, 2023, whichever is later:
    (1) The IPES Provider shall designate the Intermediate Access 
Provider(s), if any, that will provide terminating switched access 
tandem switching or terminating switched access tandem transport 
services to the IPES Provider engaged in Access Stimulation; and 
further
    (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) [Reserved].
    (e) In the event that an Intermediate Access Provider receives 
notice under paragraph (b) 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, as defined in Sec.  61.3(bbb) of this 
chapter, 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) through (c) 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, 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) [Reserved].

[[Page 35763]]


0
3. Delayed indefinitely, Sec.  51.914 is amended by adding paragraphs 
(d) and (g) to read as follows:


Sec.  51.914  Additional provisions applicable to Access Stimulation 
traffic.

* * * * *
    (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 after [the effective date of this paragraph (d)--which 
will be 30 days after the Commission publishes the notification of OMB 
approval in the Federal Register], 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 
or terminating switched access tandem transport services directly, or 
indirectly through a local exchange carrier, to the IPES Provider 
engaged in Access Stimulation; and
    (3) Whether the IPES Provider will pay for those services as of 
that date.
* * * * *
    (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. Section 61.3 is amended by revising paragraphs (bbb)(1) through (3), 
adding paragraphs (bbb)(5), revising paragraph (ccc), and adding 
paragraphs (eee) and (fff) to read as follows:


Sec.  61.3  Definitions.

* * * * *
    (bbb) * * *
    (1) A Competitive Local Exchange Carrier serving end user(s) or an 
IPES Provider 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.
    (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 user(s), or an 
IPES Provider serving end user(s), 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 (bbb)(1)(i) of this section, it 
terminates all revenue sharing agreements covered in paragraph 
(bbb)(1)(i) of this section and does not engage in Access Stimulation 
as defined in paragraph (bbb)(1)(ii) of this section; and for a carrier 
or provider engaging in Access Stimulation as defined in paragraph 
(bbb)(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 (bbb)(1)(i) of this section.
    (3) A rate-of-return local exchange carrier serving end user(s) 
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 (bbb)(1)(i) of this section, it 
terminates all revenue sharing agreements covered in paragraph 
(bbb)(1)(i) of this section and does not engage in Access Stimulation 
as defined in paragraph (bbb)(1)(iii) of this section; and for a 
carrier engaging in Access Stimulation as defined in paragraph 
(bbb)(1)(iii) of this section, its interstate terminating-to-
originating traffic ratio falls below 10:1 for six consecutive months 
and its 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 
(bbb)(1)(i) of this section.
* * * * *
    (5) In calculating the interstate terminating-to-originating 
traffic ratio at each end office or equivalent under this paragraph 
(bbb), each Competitive Local Exchange Carrier, rate-of-return local 
exchange carrier or IPES Provider shall include in such calculation 
only traffic traversing that end office or equivalent and going to and 
from any telephone number associated with an Operating Company Number 
that has been issued to such Competitive Local Exchange Carrier, rate-
of-return local exchange carrier or IPES Provider. The term 
``equivalent'' in the phrase ``end office or equivalent'' means ``End 
Office Equivalent,'' as defined in this section.
    (ccc) Intermediate Access Provider. The term means, for purposes of 
this part and Sec. Sec.  51.914, 69.4(1), and 69.5(b) of this chapter, 
any entity that provides terminating switched access tandem switching 
or 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

[[Page 35764]]

    (3) An IPES Provider engaged in Access Stimulation, as defined in 
paragraph (bbb) of this section, where the entity delivers calls 
directly to the IPES Provider.
* * * * *
    (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 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 or that originate from an Internet Protocol 
service.
    (fff) End Office Equivalent. For purposes of this part and 
Sec. Sec.  51.914, 69.3(e)(12)(iv) and 69.4(l) of this chapter, an End 
Office Equivalent is the geographic location where traffic is delivered 
to an IPES Provider for delivery to an end user. This location shall be 
used as the terminating location for purposes of calculating 
terminating-to-originating traffic ratios, as provided in this section. 
For purposes of the Access Stimulation Rules, the term ``equivalent'' 
in the phrase ``end office or equivalent'' means End Office Equivalent.

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. Section 69.4 is amended by revising paragraph (l) to read as 
follows:


Sec.  69.4  Charges to be filed.

* * * * *
    (l) Notwithstanding paragraph (b)(5) of this section, a competitive 
local exchange carrier or a rate-of-return local exchange carrier 
engaged in Access Stimulation, as defined in Sec.  61.3(bbb) of this 
chapter, 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 competitive local exchange carrier's, such 
rate-of-return local exchange carrier's, or such IPES Provider's 
terminating end office or equivalent and the associated access tandem 
switch.

0
8. Section 69.5 is amended 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) Competitive local exchange carriers and rate-of-return 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) on Interexchange 
Carriers when the terminating traffic is destined for a competitive 
local exchange carrier, or a rate-of-return local exchange carrier, or 
is destined, directly or indirectly, for an IPES Provider, where such 
carrier or Provider is 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 terminating 
interstate or intrastate switched access tandem switching or 
terminating switched access tandem transport charges described in Sec.  
69.4(b)(5) on Interexchange Carriers when the terminating traffic is 
destined for a competitive local exchange carrier, or a rate-of-return 
local exchange carrier, or is destined, directly or indirectly, for an 
IPES Provider, where such carrier or Provider is 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. 2023-10661 Filed 5-31-23; 8:45 am]
BILLING CODE 6712-01-P