Articles, Press, & Press Releases
Coming in 2007 – Downloadable Articles on Telecom Law topics

Articles published by Ed Maldonado May 2006 to August 2007

Anatonmy of FCC Prepaid Calling Card Order
Major Points of FCC Order & New Rules On Prepaid Calling Cards by Ed Maldonado
Chronology of Events by Ed Maldonado
Actual Copies of FCC Orders (click to download)
• FCC Report and Order on the Regulation of Prepaid Calling Cards 6/30/06
• FCC IP In the Middle Order 4/21/04
• FCC AT&T Enhanced Prepaid Calling Card Order w/ Fines
• FCC Argument on AT&T Appeal in Federal Court of Appeals Case 05-1096 (DC Circuit)
• Brand X Nineth Circuit Court of Appeals Opinion
• Supreme Court Opinion

December 15th, 2005 Republic of Haiti Sues Aristide reported by Ed Maldonado

The Legal Line
By Ed Maldonado
August 15th 2007 Legal Line
August 15th 2007 Regulatory Rundown
July 18th 2007 Legal Line
July 18th 2007 Regulatory Rundown
June 15th 2007 Legal Line
June 15th 2007 Regulatory Rundown
May 15th 2007 Legal Line
April 16th 2007 Legal Line
March 16th 2007 Legal Line
February 15 2007 Legal Line
January 17th 2007 Legal Line
December 15th, 2006 The Legal Line
November 15th, 2006 The Legal Line
October 16th, 2006 The Legal Line
September 15th, 2006 The Legal Line
August 15th, 2006 The Legal Line
June 15th, 2006 The Legal Line
May 15th, 2006 The Legal Line
April 15th, 2006 The Legal Line
March 15th, 2006 The Legal Line
February 14th, 2006 The Legal Line
January 16th, 2006 The Legal Line
December 15th, 2005 The Legal Line

Articles Prior to 2006

Phone+ Magazine published on 3/2004
What Resellers May Not Know About 214 Authority by Edward A. Maldonado, Esq.

State of Illinois Press Releases on Passing Phone Card Fraud Act and consultation
by Attorney Ed Maldonado in Drafting and Passage
Article I State of Illinois Press Release
Article II State of Illinois Press Release
Article III State of Illinois Press Release

Maldonado Law Group Regulatory Advisory August 2007

From the Desk of Edward A. Maldonado, Esq.

Prepaid Calling Card Legislative Advisory August 2007 Congressional HR 3402

Since the first subpoenas were served in the 2007 IDT Unfair Trade Practices Civil Lawsuit, Prepaid Calling Card Providers and Distributors named and un-named to the lawsuit have eagerly watched for what the increased attention created by lawsuit would produce. The results have been swift.

In late July, the State of Florida Attorney General launched an investigation into the disclosures associated with prepaid calling card rates and surcharges that has initially implicated ten prepaid calling card providers. This was followed on August 3rd 2007 with the introduction of HR 3402 “Calling Card Consumer Protection Act'' by Representative Eliot L. Engel of New York. The Bill mandates specific disclosures required for both Calling Card Provider and Distributors alike:

A required disclosure of the total value in dollars or the number of calling minutes available of the prepaid telephone calling card or service at the time of purchase.
A required disclosure or description of any and all terms and conditions pertaining to, and associated with, the use of the prepaid telephone calling service and prepaid telephone calling card, including all fees, limitations on the use of minutes available, and surcharges and applicable policies relating to refund, recharge, decrement, and expiration.
A required disclosure of the actual name of the prepaid telephone calling service provider.
A required disclosure of the prepaid telephone calling service provider's customer service telephone number and hours of service.
A requirement that disclosures on cards shall be printed in plain English language in a clear and conspicuous location on the prepaid telephone calling card or its packaging or if the card is enclosed in opaque packaging, such disclosures shall be printed on the outside packaging of the card.
A requirement that disclosures for online prepaid calling services that consumers access and purchase via the Internet that the disclosures be displayed in plain English language in a clear and conspicuous location on the Internet site that the consumer must access prior to purchasing such service.
A requirement that advertising and other promotional materials disclosures be printed on any signs for display by retail merchants; be incorporated in any promotional emails, be present on any Internet site used to promote such card or service, and on any other promotional material.
A requirement that if a language other than English is predominantly used on a prepaid telephone calling card, its packaging, or in point of sale advertising, or promotional material of a prepaid telephone calling card or prepaid telephone calling service, then the disclosures required be disclosed in that language on the card, packaging, advertisement, or promotional material.

HR 4302 then defines as series unlawful conduct related to the operation of a prepaid telephone calling card. This includes:

HR 4302 then defines as series unlawful conduct related to the operation of a prepaid telephone calling card. This includes:1.That it is unlawful for any prepaid telephone calling service provider or prepaid telephone calling card distributor to assess any fee associated with the prepaid telephone calling card or prepaid telephone calling service, or impose any charge for any permitted use of the prepaid telephone calling card or prepaid telephone calling service if such fee or charge is not disclosed as required.
That it is unlawful for any prepaid telephone calling service provider to provide fewer minutes than the number of minutes promoted or advertised on any prepaid telephone calling card, any point of sale material relating to such card or the other advertising related to any prepaid telephone calling card or service. Any limitation on the period of time for which the displayed, promoted, or advertised minutes will be available to the customer shall be conspicuously displayed on the card, packaging, and promotional material that lists the minutes, consistent with required Disclosures.
That it is unlawful for any prepaid telephone calling card distributor to distribute any prepaid telephone calling card that the distributor knows that the prepaid telephone calling card provides fewer minutes than the number of minutes promoted or advertised on any prepaid telephone calling card, any point of sale material relating to such card, any voice prompt indicating the number of minutes available, or other advertising relating to any prepaid telephone calling card or service. Any limitations on the period of time for which the displayed, promoted, or advertised minutes will be available to the customer shall be conspicuously displayed on the card, packaging, and promotional material that lists the minutes, consistent with required Disclosures.
That it is unlawful for any prepaid telephone calling service provider to provide fewer minutes than the number of minutes promoted or advertised through any voice prompt given to a customer at the time the customer places a call to a dialed destination with the prepaid telephone calling card or service.
That it is unlawful for any prepaid telephone calling card distributor to distribute prepaid telephone calling cards that it knows provide fewer minutes than the number of minutes promoted or advertised through any voice prompt given to a customer at the time the customer places a call to a dialed destination with the prepaid telephone calling card or service.
Unless a different expiration date is clearly disclosed pursuant to the disclosure requirements under required Disclosures, it is unlawful for any prepaid telephone calling service provider or prepaid telephone calling card distributor to provide, issue, resell, or distribute a prepaid telephone calling card or service that expires:
1. After a period of less than 1 year from the date on which such card or service is first used; or
2. In the case of a prepaid telephone calling card or service that permits the consumer to purchase additional usage minutes or add additional value to the card or service, after a period of less than 1 year from the date on which the consumer last purchased additional usage minutes or added additional value to the card or service.
That it is unlawful for any prepaid telephone calling service provider or service to assess any fee or charge for any unconnected telephone call, a telephone call not being considered connected if the person placing the call receives a busy signal, or, if the call is unanswered.

The Bill then nullifies the avoidance of these practices by any provider or distributor through a declaration or agreement by adhesion stating that the displayed, promoted, or advertised minutes are subject to fees or charges, or by utilizing other disclaimers or limitations. The end result is that should HR 3402 pass, prepaid calling card disclosures requirements would no longer be a patchwork of state laws causing calling card providers to vary disclosures and marketing materials on a state-by-state basis. Another result is it will now be unlawful to charge unclear rates; deliver less than advertised minutes of service; charge for transporting any intrastate; interstate or international calls that result in a busy signal or do not connect; maintain specific software and network systems to provide real-time accounting functionality for disclosure of actual minutes when voice prompts are used; or distribute any calling card service that knowingly delivers less that advertised minutes.

Perhaps most problematic from a legal construction perspective is Section 6 of the HR 3402 which in effect divests the Federal Communications Commission (FCC) and State Public Utility/Service Commissions (PUCs) from traditional enforcement authority over prepaid telecommunications services, and reinvests them into the Federal Trade Commission (FTC) and offices of State Attorney Generals (AGs). Violations under this proposed Bill would in effect be violations of unfair or deceptive act or practice and not implicate the Communications Act of 1934, as amended, when came to any disparity between the rates charged the consumer for telecommunications services rendered on a prepaid calling card or similar service. While HR 3402 shows an obvious Congressional sentiment of “no-confidence” in the expertise the FCC and State PUCs in the arena of telecommunications, telephony rates and charges, surcharges, and telephony billing disclosures, Congress will now need to re-equip the FTC to handle and analyze prepaid calling card disclosures and billing practices. This will obviously come at a price to taxpayers and the Prepaid Calling Card Industry. It also represents a major shift in rulemaking power from the State PUCs, who have traditionally set rules as to what must be disclosed and what must be charged within their borders, to the FTC and State Attorney General Offices.

While imposition of these requirements, the outlawing of select practices, and enforcement by the FTC and State Attorney General Offices will likely draw the concern from Prepaid Calling Card Providers and Distributors, the question is will it mobilize them to act and lobby. Those providers and distributors have traditionally waited out legislative efforts regarding the industry from the sidelines, however, now they will have to decide whether to act.

The implications for providers and distributors are numerous. Passage of the Act as currently read will mandate that any problem between the prepaid calling card rates charged and rates disclosed will fall under the primary jurisdiction of the FTC and State Attorney General Offices as cases of Unfair Trade Practices and not under issues of truth-in-billing, unlawful rates under the Communications Act, or PUC rules. This will likely equate to increased litigation costs for providers in defending claims, as both the FTC and the State Attorney Generals will experience a learning curve when in comes to telecommunications services and the prepaid calling cards. For larger providers, these costs will be absorbed quickly. For small to mid sized competitive companies, such costs could be disastrous.

The Maldonado Law Group will be organizing clients and interested parties in a lobbying effort to provide Congress with Industry input on HR 3402. For further information, contact Mr. Jorge Rice at info@maldonado-group.com or at (305) 468-1645.

©Maldonado Law Group 2007, Edward A. Maldonado, Esq. Author

Maldonado Law Group: Regulatory Alerts April 2007

From the Desk of Edward A. Maldonado, Esq.

The CPNI Compliance Hammer Falls: FCC fines Carriers for failure to respond.

It has been a year now since the FCC enacted requirements that 214 Common Carriers must certify that they have met their Section 222 and have protected confidentiality of their subscribers’ proprietary information. Most carriers and prepaid providers seeing the extensive press coverage of the initial issue, and FCC’s reaction it, have begun to incorporate the CPNI filing as a regular part of their annual compliance filings. There are those who have thought otherwise and the FCC has responded.

On March 30th 2007, the FCC released a series of Proposed Monetary Forfeitures from the Enforcement Bureau for the “apparently willfully or repeatedly violated a Commission order by failing to respond to a directive of the Enforcement Bureau to provide certain information and documents related to the Bureau’s investigations into carrier protection of customer proprietary network information (“CPNI”)” Common to all carriers in the Enforcement Bureau’s Notice of Apparent Liability Findings was the lack of meaningful response to the Enforcement Bureau’s Letters of Inquiry and attempted requests for information. To stress the point the CPNI and the FCC Enforcement Bureau should not both be ignored, the FCC assessed fine beginning at $4,000.00 and extending to $100,000.00. Among the carriers fined were PHONECO, LP (DA No. 07-1423); 1ST UNITED TEL-COM, INC. (DA No. 07-1417); HABLA COMMUNICACIONES, INC.. (DA No. 07-1421); BURKE'S GARDEN TELEPHONE COMPANY, INC. (DA No. 07-1419); HIAWATHA BROADBAND COMMUNICATIONS, INC. (DA No. 07-1411) KEYSTONE WIRELESS D/B/A IMMIX WIRELESS (DA No. 07-1416); and KEY COMMUNICATIONS, LLC D/B/A WEST VIRGINIA WIRELESS. (DA No. 07-1410).

While the CPNI certifications and filings are viewed by some carriers in the industry as “trivial” in comparison to other aspects the prepaid calling and prepaid cellular business, The message being mandated from the FCC’s Enforcement Bureau on CPNI is clear: if you fail to file the CPNI, and slough us off, expect to be fined. In light of the relatively low costs of compliance, prepaid carriers and cellular providers should take these early examples to heart, and if they have not, file the 2007 CPNI certification immediately.

FCC FOIA and the 499-Q: prying eyes want to know your revenues.

On March 28th 2007, the belief that the revenue data you have requested on your Form 499-Q be kept confidential, is actually confidential, may have been dispelled. The FCC is currently seeking industry comment based upon two Freedom of Information Act (FOIA) requests seeking disclosure of industry wide information taken from the 499-Qs filed in November 2006 under Dockets: DA No. 07-1340 for Wireless Providers; and DA No. 07-1339 for all other Carriers. Oddly enough, the FCC FOIA request come not from consumer advocates or industry associations, or even the “Joe-bag-of-doughnuts” consumer, but from two private companies: Advanced Technologies and Services, Inc (Wireless) and Reston VA based Input, a governmental business market research and analysis company (all telecommunications carriers). While the Notice for comment has just been published, it is not certain whether the major industry players have realized that the FOIA request are out for comment.

The issue is ripe for debate as the FCC and USAC push for greater accuracy in reporting revenues on the 499-Q. Only recently has the FCC and USAC revised the Form 499-Q and 499-A to address new classifications and reporting requirements of VoIP providers after the June 2006 FCC VoIP-in-the-Middle Order. These new forms are to used in the May 2007 filing deadline or the entire 499-Q report will be rejected. This has left most carriers scrambling to review the new 499-Q, its new classifications, and seek advise on how to report their revenues. Low on the list of priorities is the question of what will be kept confidential and what is subject to an FOIA inquiry. Carriers are advised that if they fail to Comment objections now, what they report in the future may be available to anyone upon a FOIA request. FCC comments can be made electronically at http://www.fcc.gov/cgb/ecfs/ . All Prepaid carriers and providers who have concerns as to the confidentiality of their revenue information are encouraged to do so.

Stored Value

Federal Reserve reports on Stored Value Cards & Money Laundering - A Perfect Storm?

February 2007, the Payment Cards Center of the Federal Reserve Bank of Philadelphia released a white paper report examining the Stored Value (or “Prepaid”) Card market and its potential for Anti-Money Laundering violations and use. The report cited an ever growing concern by law enforcement and the Federal Reserve in the sale of SVC over the Internet that do not comply with anti-money laundering regulation and standards. Of particular interest in the report was the June 2006 online offering of now defunct www.evergreen-cards who promoted a purely anonymous card (“Anonymity, No name and No ID required!”) with ATM capacity, no load limits, and a $5,000.00 per day withdrawal limit for sale to online consumers for only $35.00 USD. While the website did disappear shortly thereafter, it did manage to draw the attention of regulators for its flagrant offering of a SVC product contrary to established Anti-Money Laundering regulations.

The report is balanced in that it notes that: “Some people have stated that these websites offering to sell purely anonymous prepaid cards are scams operated by criminals to obtain funds with no intent to deliver a prepaid card.” The report also cited prosecuted criminal cases where the criminals have abused the prepaid card system. The indictment of the SVC “company” Moola Zoola in the U.S. District Court of Texas was used as an example of how criminal can prey on the industry. Moola Zoola was not an SVC provider, but a distributor of ATM cards, the Defendants in this case originally obtained money by defrauding consumers online using PayPal accounts to charge Moola Zoola cards. These Moola Zoola cards were then used to charge other Moola Zoola cards that were then used to withdraw cash from ATMs from Texas to Russia. Eventually the DEA got wind of the operation and they shut down Moola Zoola.

The Federal Reserve Bank report continues on to show that there are weaknesses in the operation of SVC, in large part because of a lax attitude of the Providers and Resellers them selves. For these in the Stored Value industry, it is work a read thru. The link is found at: http://www.phil.frb.org/pcc/discussion/D2007FebPrepaidCardsandMoneyLaundering.pdf.

FQA Articles:
VoIP and 214 Authority: Should my company obtain Section 214 Authority?

The answer hinges on your services, the way you provide them and to whom. The AT&T Final Divestiture Order of 1983 required that all common carriers of telecommunications services were enjoined to be registered by the FCC and thereafter regulated. This order was later codified in the 1996 Telecommunications Act under 47 United States Code Section 214 (47 USC § 214). This section of the statute directly addresses two areas related to defining what is a Common Carrier: 1.) what is a Private vs. Common Carrier; and 2.) what are Dominant vs. Non-Dominant carriers for purposes of regulation. In regard to common carriers, a more definitive answer is found under both positive and negative definitions.
In general, private networks are telecommunications providers that do not provide their services to the general public, or, provide their services exclusively within a particular company. A good example of this would be Satellite Broadcasters, or inter-office telephone networks between different branches and offices of a national bank. Initially this is the definition, that of a private carrier, was the Section 214 definition that providers using Voice over Internet Protocol (VoIP) technology and transmission techniques rallied behind to exclude their services from federal regulation. While there are some elements of VoIP and Private networks are consistent, most VoIP providers offer and provide their services to the general public and do not fit the regulatory definition of a private network, thereby excluding them as exempt from common carrier requirements and regulation. While much of current federal regulation was conceived in the era of Time Division Multiplex, or TDM, the FCC in 2004 ruled that it has jurisdiction over VoIP as a subject matter for regulation as a telecommunication service. The FCC now has begun the Comment period on an array of VoIP/common carriage issues and extension of modified VoIP common carrier regulations is all but a matter of time.

The difference between Dominant and Non-Dominant carriers has to do with market strength. Dominant carriers are carriers that control more than 30% of the consumer market. Non-Dominant carriers are those that control less than 30%. Most small to mid-sized operations are Non-Dominant. Likewise, more scrutiny is placed on the applications of Dominant Carriers and the FCC may place other regulatory limits on these types of carriers.

The FCC and other federal agencies have increasingly utilized the 214 Authority as a benchmark for assessment of regulatory and tax liability associated with end-users. Carriers are now seeing more requests from regulatory agencies and the IRS for reporting associated with their 214 Authority or CORES registration.

Are you a licensed 214 Provider that has international traffic (VoIP or TDM) that either originates from or transits the United States? Federal regulation also places some specific conditions on your 214 Authority in the area of reporting:

Under CFR Sec. 63.21 (a) carriers are responsible for the continuing accuracy of the certifications made in its application and must notify the FCC if their certificate information is inaccurate. This includes disclosure of ownership, business address, affiliations with foreign dominant carriers or any other information that differs between your first application and your present state of business. Should you update your certificate, the FCC will adjust your 214 Certificate, however, it also reserves the right to review your certification anew to evaluate if your regulatory status has changed for any reason. The purpose of this requirement is simple - maintain an updated public file that consumers and other carriers can check to verify carriers.
Under CFR Sec. 63.21 (c) non-dominant carriers that provide de-tariffed international services must comply with public disclosures requirements of CFR § 42.10 and 42.11. Specifically CFR Sec. 42.10(a) requires non-dominant inter-exchange carriers (IXCs) to make available to the public information concerning its current rates, terms and conditions for all of its international and interstate services and detail how the public may obtain the information. Although called “service information” in the regulations, the contents of this requirement more or less constitute a tariff. This point is reinforced in CRF § 42.11 (a) which requires a non-dominant IXC to maintain the same information, regarding price and service, for submission to the Commission and to state regulatory commissions regarding all of the carrier's international and interstate service offerings. This information must be maintained in a manner that it can produce by the reseller within 10 business days if requested by the Commission or any state regulatory commission. The result is that resellers are still required to “maintain” rate and service information, as if they filed a tariff, even though they are not required to file it with the FCC.
CFR 61.19 Sec. (b) allows reseller to file tariffs if they are common carriers, non-dominant, in the provision of international and domestic services for dial-around 1+ services. Dial-around 1+ calls for this purpose constitutes those calls made by accessing the inter-exchange carrier through the use of that carrier's carrier access code.
Under CFR Sec. 63.21 (c) Common Carriers must file annual reports of Overseas Telecommunications Traffic pursuant to CRF § 43.61(a) (1), (2) and (3) which require each carrier engaged international services in the continental United States, off-shore, and in any country outside the U.S. to file a report with the Commission not later than July 31 of each year for service actually provided in the preceding calendar year. This information must include actual traffic and revenue data for each and every service provided, divided among service billed in the United States, outside the United States, and service transiting the United States. Similar to USF Contribution reporting, the overseas telecommunication traffic report has a quarterly report element required for the carrier's aggregate minutes of facilities resale switched telephone traffic for:
- Service billed in the United States are greater than 1.0 percent of the total of international traffic for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;
- Service billed outside the United States are greater than 1.0 percent of the total of international traffic for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;
- Service billed in the United States for any foreign country are greater than 2.5 percent of the total of international traffic for that country for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;
- Service billed outside the United States for any foreign country are greater than 2.5 percent of the total of international traffic for that country for all U.S. carriers published in the Commission's annual report of international telecommunications traffic.
Pursuant to CFR 63.21 (e) and (f) 214 carriers are prohibited from having access or making use of specific U.S. customer proprietary network information that is derived from a foreign net-work unless the 214 reseller obtains approval from that U.S. based customer. The majority of those U.S. customers mentioned in this regulation are non-dominant U.S. based resellers engaged in resale at the international level. Should a reseller seek to obtain this kind of information, the carrier must first notify the U.S. customer and require the foreign carrier only to disclose the information upon their written request. Likewise, U.S. carrier are also prohibited from receiving from a foreign carrier any proprietary or confidential information pertaining to a competing U.S. carrier, obtained by the foreign carrier in the course of its normal business dealings, unless the competing U.S. carrier provides its permission in writing. The purpose is to protect the integrity of U.S. resold networks built in other countries from our jurisdiction.

Contact the Maldonado Law Group for any questions you may have as to the regulatory definition of your VoIP or TDM services, compliance, and administrative defense of you company from FCC Enforcement Actions and Administrative Inquiries. We actively represent clients and companies as common carriers and private networks and are available to assist your company’s particular needs. Contact us today at (305) 468-1645 ex 208 or via e-mail at info@maldonado-group.com for questions or representation.

Distributors: Top 10 Litigation problems in Calling Card Disputes between Distributors & Carriers.

Over the years MLG Telecom Practice Group has see its share of carrier – distributor billing and collection disputes over prepaid phone cards. The following list is short list of the areas we commonly see as the cause, that could have been prevented if the transaction or the business relationships were better handled. All of these problems lead to costly litigation:

No formal written Agreement signed although the parties hold drafts
Written Agreement that is used does not reflect terms of the transaction or distribution
Use of written “canned agreements” of larger companies that are outdated or obsolete.
Use of “soft credits” to Distributor to boost number of carrier’s cards on street, and in use, and never defining conditions under which credit was given or the terms of that credit.
Vague Invoice - with no proper description of activated cards usage or first-use of cards
Vague Invoice – use of PINs instead of Batch numbers to Identify cards AND services.
Theft of Cards Invoiced to Distributor stolen from retailer
Passage of misinformation by others through industry chat rooms, message boards, or bulk e-mails as to reputation of both parties usually encompassing rumors of bankruptcy or financial instability or fraud with all-of-which being unfounded.
Carrier suing for Invoice value instead of activated services evidenced from the prepaid debit platform.
Distributor deals only in cash with retailers and does not evidence payments made to carrier and from retailer well.

Should you have a similar claim or problem contact the Maldonado Law Group for any questions you may have as a Distributor or Carrier in a Billing or Collection Dispute. MLG actively represent both carriers and distributors and has successfully litigated and negotiated resolution cases of this nature. Contact us today at (305) 468-1645 ex 208 or via e-mail at info@maldonado-group.com for questions or representation.The Patriot Act, CALEA and the Complying Telecommunication Provider.

Indicators that you are an Electronic Service Provider

ECPA provides for the voluntary disclosure of non-content customer records by a provider to a governmental entity when:

1. The disclosure "may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service," § 2702(c)(3);

2. The provider "reasonably believes that an emergency involving immediate danger of death of serious physical injury to any person" justifies disclosure, § 2702(c)(4); orThe disclosure is made with the consent of the intended recipient, or pursuant to a court order or legal process § 2702(c)(1)-(2).

Communication Provider Liability Can arise for wrongful disclosure - ECPA includes separate provision for suits against any other person or entity for wrongful disclosure. 18 U.S.C. § 2707 permits a "person aggrieved" by an ECPA violation to bring a civil action against the "person or entity, other than the United States, which engaged in that violation." 18 U.S.C. § 2707(a). Relief under the ECPA can include money damages no less than $1,000 per person, equitable or declaratory relief, and a reasonable attorney's fee plus other reasonable litigation costs.

In developing your Policies and Procedures for Addressing the Patriot Act, CALEA and ECPA disclosures, the Telecom Provider must balance the requirement to comply with its own economic or logistical provisioning constants in establishing your company’s policy. Remember that it is best to have some policy in place prior to the receipt of a law enforcement request, and it is best to plan ahead. For any help in developing proper policies, procedures and protocols for complying with the Patriot Act, CALEA or ECPA disclosures, the Maldonado Law Group stands ready to assist your company. Contact us today at (305) 468-1645 ex 208 or via e-mail at info@maldonado-group.com for questions or representation.

TELECOMMUNICATION LAW FEATURED FQA:

VoIP and 214 Authority: Should my company obtain Section 214 Authority?

The answer hinges on your services, the way you provide them and to whom. The AT&T Final Divestiture Order of 1983 required that all common carriers of telecommunications services were enjoined to be registered by the FCC and thereafter regulated. This order was later codified in the 1996 Telecommunications Act under 47 United States Code Section 214 (47 USC § 214). This section of the statute directly addresses two areas related to defining what is a Common Carrier: 1.) what is a Private vs. Common Carrier; and 2.) what are Dominant vs. Non-Dominant carriers for purposes of regulation. In regard to common carriers, a more definitive answer is found under both positive and negative definitions.

POSITIVE DEFINITION: Any person that provides telecommunications services for hire or holds themselves out to the public to provide telecommunications services for profit is a Common Carrier.

NEGATIVE DEFINITION: Private networks are telecommunication providers that do not offer voice telephony to the public, or, provide services to the public through the Public Switched Telephone Network.

In general, private networks are telecommunications providers that do not provide their services to the general public, or, provide their services exclusively within a particular company. A good example of this would be Satellite Broadcasters, or inter-office telephone networks between different branches and offices of a national bank. Initially this is the definition, that of a private carrier, was the Section 214 definition that providers using Voice over Internet Protocol (VoIP) technology and transmission techniques rallied behind to exclude their services from federal regulation. While there are some elements of VoIP and Private networks are consistent, most VoIP providers offer and provide their services to the general public and do not fit the regulatory definition of a private network, thereby excluding them as exempt from common carrier requirements and regulation. While much of current federal regulation was conceived in the era of Time Division Multiplex, or TDM, the FCC in 2004 ruled that it has jurisdiction over VoIP as a subject matter for regulation as a telecommunication service. The FCC now has begun the Comment period on an array of VoIP/common carriage issues and extension of modified VoIP common carrier regulations is all but a matter of time.

The difference between Dominant and Non-Dominant carriers has to do with market strength. Dominant carriers are carriers that control more than 30% of the consumer market. Non-Dominant carriers are those that control less than 30%. Most small to mid-sized operations are Non-Dominant. Likewise, more scrutiny is placed on the applications of Dominant Carriers and the FCC may place other regulatory limits on these types of carriers.

The FCC and other federal agencies have increasingly utilized the 214 Authority as a benchmark for assessment of regulatory and tax liability associated with end-users. Carriers are now seeing more requests from regulatory agencies and the IRS for reporting associated with their 214 Authority or CORES registration.

Are you a licensed 214 Provider that has international traffic (VoIP or TDM) that either originates from or transits the United States? Federal regulation also places some specific conditions on your 214 Authority in the area of reporting:

• Under CFR Sec. 63.21 (a) carriers are responsible for the continuing accuracy of the certifications made in its application and must notify the FCC if their certificate information is inaccurate. This includes disclosure of ownership, business address, affiliations with foreign dominant carriers or any other information that differs between your first application and your present state of business. Should you update your certificate, the FCC will adjust your 214 Certificate, however, it also reserves the right to review your certification anew to evaluate if your regulatory status has changed for any reason. The purpose of this requirement is simple - maintain an updated public file that consumers and other carriers can check to verify carriers.

• Under CFR Sec. 63.21 (c) non-dominant carriers that provide de-tariffed international services must comply with public disclosures requirements of CFR § 42.10 and 42.11. Specifically CFR Sec. 42.10(a) requires non-dominant inter-exchange carriers (IXCs) to make available to the public information concerning its current rates, terms and conditions for all of its international and interstate services and detail how the public may obtain the information. Although called “service information” in the regulations, the contents of this requirement more or less constitute a tariff. This point is reinforced in CRF § 42.11 (a) which requires a non-dominant IXC to maintain the same information, regarding price and service, for submission to the Commission and to state regulatory commissions regarding all of the carrier's international and interstate service offerings. This information must be maintained in a manner that it can produce by the reseller within 10 business days if requested by the Commission or any state regulatory commission. The result is that resellers are still required to “maintain” rate and service information, as if they filed a tariff, even though they are not required to file it with the FCC.

• CFR 61.19 Sec. (b) allows reseller to file tariffs if they are common carriers, non-dominant, in the provision of international and domestic services for dial-around 1+ services. Dial-around 1+ calls for this purpose constitutes those calls made by accessing the inter-exchange carrier through the use of that carrier's carrier access code.

• Under CFR Sec. 63.21 (c) Common Carriers must file annual reports of Overseas Telecommunications Traffic pursuant to CRF § 43.61(a) (1), (2) and (3) which require each carrier engaged international services in the continental United States, off-shore, and in any country outside the U.S. to file a report with the Commission not later than July 31 of each year for service actually provided in the preceding calendar year. This information must include actual traffic and revenue data for each and every service provided, divided among service billed in the United States, outside the United States, and service transiting the United States. Similar to USF Contribution reporting, the overseas telecommunication traffic report has a quarterly report element required for the carrier's aggregate minutes of facilities resale switched telephone traffic for:

• Service billed in the United States are greater than 1.0 percent of the total of international traffic for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;

• Service billed outside the United States are greater than 1.0 percent of the total of international traffic for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;

• Service billed in the United States for any foreign country are greater than 2.5 percent of the total of international traffic for that country for all U.S. carriers published in the Commission's annual report of international telecommunications traffic;

• Service billed outside the United States for any foreign country are greater than 2.5 percent of the total of international traffic for that country for all U.S. carriers published in the Commission's annual report of international telecommunications traffic.

• Pursuant to CFR 63.21 (e) and (f) 214 carriers are prohibited from having access or making use of specific U.S. customer proprietary network information that is derived from a foreign net-work unless the 214 reseller obtains approval from that U.S. based customer. The majority of those U.S. customers mentioned in this regulation are non-dominant U.S. based resellers engaged in resale at the international level. Should a reseller seek to obtain this kind of information, the carrier must first notify the U.S. customer and require the foreign carrier only to disclose the information upon their written request. Likewise, U.S. carrier are also prohibited from receiving from a foreign carrier any proprietary or confidential information pertaining to a competing U.S. carrier, obtained by the foreign carrier in the course of its normal business dealings, unless the competing U.S. carrier provides its permission in writing. The purpose is to protect the integrity of U.S. resold networks built in other countries from our jurisdiction.

Maldonado Law Group Regulatory Advisory August 2007

Maldonado Law Group: Regulatory Alerts April 2007

Articles : Maldonado Law Group, serving Miami, Florida