As our firm previewed in an earlier Client Advisory, on October 25, 2019, the Federal Communications Commission issued a declaratory ruling that emergency service charges (911 fees & surcharges) imposed by state, local and tribal governments on VoIP-based, voice communications services can NOT exceed the fees/surcharges applicable to traditional telephone lines. The ruling is generally viewed as a win for telecom service providers that have been litigating in courts in a number of jurisdictions and for several years over state & local government allegations that VoIP service providers have under-collected 911 fees.
In the unanimous ruling, the FCC said 911 fees charged by state, local and tribal governments to VoIP services must match up with the outbound calling capacity those subscribers have, rather than on a per-telephone-number basis. In other words, the actual amount of emergency calls a VoIP subscriber could make at one time should be the determining factor.
As intimated in our firm’s earlier advisory, the FCC’s declaratory ruling is certainly a “win” for some providers of VoIP services; but it may not be a “win” for everyone. In a nutshell, here’s why.
It all boils down to the meaning of the term “Access Line” and what services are considered to be “Interconnected VoIP” or “Outbound Only VoIP” by each state, local and tribal government across the nation. If a Carrier sells a SIP Trunk over which a VoIP service is provided, and the Carrier has, historically, only assessed one (1) 911 fee per SIP Trunk (on the belief a single SIP Trunk equals a single “Access Line”), the hypothetical Carrier in this example could find itself exposed to significant underpayments of 911 fees following the FCC’s declaratory ruling. How? If a relevant jurisdiction considers the Carrier’s SIP Trunk to be a VoIP service covered by the FCC’s ruling, and the SIP Trunk allows 10 concurrent outbound calls, then the number of 911 fees owed by the hypothetical Carrier would likely increase by a factor of 10!
Seek Legal Counsel to Fully Understand Impact of FCC Ruling on Your Company
Every Company and every Company’s product catalog of services is unique. In terms of the FCC’s declaratory ruling to end discriminatory 911 fee assessments, the following incomplete list of factors can influence the outcome for your Company:
- How your Company classifies each of its services for regulatory compliance purposes (i.e., how revenue is being reported to governmental bodies, such as the Universal Service Administrative Company (USAC))?
- How your Company describes its services on customer invoices?
- How your Company sells its services to Customers and its knowledge of Customer use (i.e., selling independently and separately from an Over the Top VoIP provider (Cloud PBX, Hosted Call Center, etc.) may influence outcomes)?
- How your Company “mapped” its product/service catalog to its Billing System (BSS) and any associated Tax Calculation Engine software (such as Avalara, CCH SureTax, Vertex, etc.)?
- And more…
If you have any questions regarding the information contained in this Advisory and how it may impact your company, please contact the attorney assigned to your account or Allison D. Rule at firstname.lastname@example.org / 703-714-1312.
For Advice on 911 Fees and Other Communications Taxes & Regulatory Fees, Ask Our Experts!
Allison is co-chair of Marashlian & Donahue, PLLC’s Communications Taxes & Fees practice. Her practice encompasses all elements of regulatory fees and communications taxes, including 911. For example:
- Represented clients involved in the multi-jurisdictional 911 litigation and intimately familiar with issues underlying FCC’s declaratory ruling;
- Assists clients with “Operational Best Practices,” including on-boarding and optimization of OSS/BSS & tax calculation engine software or content:
- Regulatory Classification Analyses: To determine applicable classification and impact assessments based thereon;
- Tax & Fee Billing Optimizations: To identify tax & fee mitigation opportunities available under applicable law;
- Tax & Fee “Mapping”: To map product/service catalogs to tax calculation engines, such as Avalara and CCH SureTax;
- Invoice Testing: To validate output prior to passing taxes and fees to customers;
- Invoice Presentation: To align visual manifestation of service offering to consumer and governmental agents with the most desirous and applicable regulatory classification (in support of “optimization”/”fee mitigation” guidance); and
- Regulatory and tax audit representation.