If the Phone Doesn’t Ring, It’s Rural America
[imgbelt img=callchart.jpg]In trying to avoid fees that support rural phone service, communication companies have unintentionally created big headaches for rural residents getting calls from cities. Can the FCC help fix the problem, or will the U.S. phone system hang up on rural America?
An Unexpected Bug As We Upgrade the Phone System
Where did this problem come from, and why does it keep getting worse despite recent efforts by the FCC and phone companies to address it?
The answer lies in the transition of the phone system from its traditional circuit-switched technology (called “time division multiplexing” or “TDM”) to a new technology based on Internet protocols (IP) called “voice over IP,” or just VOIP.
[imgcontainer left][img:phone3.jpg]The FCC has a way to track complaints about incomplete or poor-quality calls to rural communities. There's a "frequently asked questions"page and a form to report complaints.
To the extent most people have heard of VOIP, they know it as the technology that lets companies like Vonage and MagicJack replace your traditional phone with a broadband connection. But cable operators and other providers that offer what looks like traditional telephone service use the same VOIP technology. Recently, both AT&T and Verizon have announced plans to convert their existing traditional phone systems to VOIP. The FCC’s technical advisory committee has predicted that over 90% of the phone network will be VOIP by 2018, with less than 10% of the phone system using traditional TDM-based phone service.
Companies like VOIP for a lot of reasons. It’s cheaper to run and offers more services than a traditional TDM-based network. In addition, because the FCC does not regulate VOIP as a traditional telephone service, companies offering what looks like a traditional telephone service – but using VOIP instead – avoid many of the responsibilities and consumer protections that apply to traditional phone services. Many states have passed laws totally deregulating IP-based services and prohibiting state public utility commissions from regulating VOIP.
That’s a very attractive package for communications companies and encourages them to switch from traditional phone service to VOIP. But it also means that when problems like rural call completion come up, they can persist a long time before enough people notice to get the FCC involved. And even then, it’s not clear what the FCC should do – or legally can do – to fix the problem.
IP And Rural Call Completion
For 100 years, we have been committed to the concept that everyone in the United States is entitled to get phone service at an affordable rate, no matter where they live. Serving rural areas is much more expensive than serving urban areas, and rural networks have fewer subscribers to cover these costs. To make sure that rural areas can affordably support phone companies, the FCC set up a system of mandatory fees that urban networks pay to keep rural phone service viable. This includes requiring phone companies in urban areas to pay a “termination fee” and other forms of “access charges” to rural phone companies whenever someone on the urban phone network places a call to a rural phone network.
The result is that urban phone networks and urban subscribers subsidize rural phone service. In exchange we get a phone system that covers the entire country. This is one of the reasons our phone system has been the envy of the world and why nearly everyone in the country has a phone.
To make this subsidy system work, phone companies need to know where a call came from and what type of call it is so they can charge the right amount. In the old phone system, which uses fixed circuits, this is easy. But IP-based systems are designed to use many different routes to reach their destination. This is part of what makes them cheaper and more efficient than traditional phone systems. Also, unlike traditional phone service, where companies have to reveal their phone routes and their prices for routing traffic, IP-services are not regulated. Companies negotiate their own prices to handle phone calls, and these contracts usually prevent companies from sharing this information.
In the last several years, businesses called “least cost routing” companies have sprung up. These companies promise phone networks to find the least expensive way to route their phone calls. The phone companies themselves don’t know how the least cost routing companies are routing the phone calls. They just trust them to do it.
Since completing calls to rural areas is expensive, least cost routers generally try to find long, complicated routes that will minimize the termination fees and other charges by making the call look like it comes from someplace with lower fees. This introduces something called “latency.” The lengthy routes mess up the IP-based phone call, causing long breaks in the signal that the traditional phone network (operated by a rural phone company) interprets as dead air or a disconnect.
[imgcontainer left][img:level31.jpg]Level 3, a long distance carrier, has entered a settlement agreement with the FCC.
Level 3 has an IP-based network and has contracts with least cost routers. When someone places a long-distance call using Level 3, say from Washington D.C. to rural Virginia, Level 3 hands it off to a least cost router. The routing company finds the least expensive way to send the call to the phone in rural Virginia, which might involve passing through many different networks to avoid the termination fee the rural Virginia phone network would otherwise collect from Level 3. Going through so many networks degrades the quality of the call, to the point where the phone network in rural Virginia doesn’t recognize it as a phone call, or the quality is lousy.
Level 3 doesn’t even know it has a problem. To hide the fact that calls aren’t going through, some of these least cost routing companies introduce a “fake ring back.” The Level 3 subscriber in Washington D.C. thinks the phone is ringing in rural Virginia, but the rural phone subscriber is not getting a call. Even if the Level 3 subscriber knows the call hasn’t gone through, he doesn’t know whom to blame. As far as Level 3 can tell, everything is working normally. Level 3 has no idea what routes the least cost routing company uses, and has no obligation to find out because VOIP calls like this are not regulated like traditional phone calls.
What the FCC Is Doing
It is difficult to track how widespread rural call completion problems have become, because no one is required to keep records. Rural advocates have argued to the FCC that many thousands of rural subscribers have experienced call completion problems and that the problem is growing. In some areas entire towns are effectively without phone service, or cannot count on reliably reaching 9-1-1 or other emergency services.
The FCC has recognized that the first and foremost responsibility for the FCC is to ensure that all Americans have access to reliable telephone service, and has proposed several steps to address the problem. In the fall of 2011, the FCC formed the Rural Call Completion Task Force to investigate the problem and to propose appropriate solutions to ensure that rural call completion remains at levels comparable to urban phone service. In 2012 the FCC’s Wireline Bureau issued an order clarifying that the responsibility for making sure a call is completed falls on the network where the call originated, and that simply handing off phone traffic to a least cost router does not satisfy this obligation. The FCC also started a series of enforcement investigations to determine whether providers were being appropriately diligent to ensure that calls to rural networks are properly completed. In addition, as part of broader reforms of the phone system, the FCC announced plans to phase out the high termination fees paid to rural systems, which the FCC expects will eliminate the incentive to route calls through many networks.
Because the problem continues to grow, the FCC issued a Notice of Proposed Rulemaking last February. Under the proposed rules, all providers of phone service, whether they use IP-based services or traditional TDM-based services, would need to keep records of their call routing and make sure that rural calls go through. The reporting requirements would phase out as the call completion rates become comparable to urban call completion rates. The FCC also settled its investigation into Level 3. Under the consent agreement, Level 3 will go ahead and adopt procedures like those outlined in the proposed rules without waiting for the FCC to conclude the rulemaking.
Can The FCC Solve The Problem?
Every FCC commissioner has emphasized publicly that they regard rural call completion as a very serious problem. They have said that making sure the phone system works reliably for everyone, no matter where they live, is a core responsibility for the FCC. The question is, does the FCC have the authority to solve the problem?
The FCC refuses to classify IP-based services as “telephone” services (although it has the authority to do so). As a result, it can only regulate IP-providers indirectly with something called “ancillary authority.” Whether “ancillary authority” allows the FCC to regulate IP-based providers, such as least cost routers, remains to be seen.
The FCC has not yet set a due date for comments in the rulemaking proceeding. Once that happens, it will take several months, at least, for the FCC to settle on final rules – which may or may not get challenged in court. Until then, we will have to hope that other carriers will follow Level 3’s example and enter into consent agreements with the FCC to adopt these rules voluntarily.