Regulatory Alert: FCC Reminds ACS Providers (Advanced Communications Services) of Filing for CVAA Compliance

Seal of the United States Federal Communicatio...

The FCC recently issued a public notice reminding Advanced Communications Providers (ACS) and equipment manufacturers that they need to provide evidence that they are complying with the Twenty First Century Communications and Video Accessibility Act (CVAA). The FCC is now implementing Section 255 of the Telecommunications Act of 1996 that requires telecom products and equipment be accessible by people with disabilities.

The FCC defines an ACS provider in Section 3(1) of the Act to mean a carrier that provides one of the following: (A) interconnected VoIP service; (B) non-interconnected VoIP service; (C) electronic messaging service; and (D) interoperable video conferencing service. The FCC also defines advanced communications services providers to include all entities that offer advanced communications services in or affecting interstate commerce, including resellers and aggregators. Such providers include entities that provide advanced communications services over their own networks, as well as providers of applications or services accessed (i.e., downloaded and run) by users over other service providers’ networks.

The CVAA law was enacted in 2010 and is aimed to ensure that people with disabilities have access to advanced communications services. This requirement by the FCC is somewhat unusual in that it applies to telecom providers who are otherwise largely unregulated.

And there are a lot of nuances to be in compliance:

  • There must be a filing done for each corporate entity that provides ACS services and you can’t just designate somebody at the parent company to cover all of your subsidiaries.
  • You must provide an affidavit of compliance by a company officer.
  • It must be filed electronically.

The original deadline for these filings was April 1, but we believe a lot of entities who should have filed did not. If you provide any form of VoIP you need to comply with these rules or face eventual fines.

The filing requires the following:

  • A description of the effort the company will undertake to discuss your services with customers with disabilities.
  • A description of the features and other ways that your products will be made accessible to customers with disabilities.
  • A description of how people with disabilities would most likely be able to use your products.

So, if you provide VoIP – even on a resale basis – you need to make this filing.

If you want to know more about the specific filing requirements, or if you want assistance in making this filing contact Terri Firestein at (301) 788-6889.

Data Mining – It’s Not What Customers Think

I know that when the public hears that their ISP is engaging in data mining that they assume this means that the ISP is reading their emails and monitoring their website viewing. And ISPs do have the ability to do those things although I don’t know any who spy on their customers in that way.

I can certainly understand why data mining scares the average consumer. Supermarkets get you to sign up for their loyalty programs so that they know everything you buy from them. And I know I get a spooky feeling when I express an interest about some product in one place on the Internet and then see ads for that product pop up on Facebook or my Google search.

But data mining is a valuable tool and every ISP should be using it – just not in the same way that the supermarkets and Facebook do it. In fact, we probably need to come up with a better terminology for doing the things I am suggesting below.

There are a number of tools around that let you look at data about customer usage and these tools allow an ISP to do the following:

  • Spambots. There is a wide array of spambots and other malware on the web that can infect customers’ computers. The worst of these, from a network perspective are spambots, which take over your customer’s computers and use it to send out spam. Most ISPs monitor email usage from their own domain and can spot when one of their users has been taken over by a spambot. But most customers these days do not use the email names and domains assigned by their ISP. Instead they web email addresses such as gmail or even the older AOL. And some spambots create new email addresses that the customer doesn’t even know about. And so data mining can be used to look for customers with unusual upload traffic. No customer is going to be offended if you ask them if they are uploading traffic 24 hours per day if in the process you help eliminate Trojan horses and spambots from their computer.
118 - Another File Sharing Session

118 – Another File Sharing Session (Photo credit: erickespinosa)

  • Web servers. Most ISPs do not want a customer to be using a residential ISP account to run a commercial web server. A web server is a device that is being used to run a website or service that drives a large amount of download traffic. Such a website might be used for e-commerce for example. But far too often web servers are used to run porn sites. ISPs are not against web servers, but they do expect people who operate them to buy the proper business level service. A web server can be full 24-hours per day, and that is generally not the level of service that is intended for a shared residential product. Data mining can be used to identify web servers and the customer can be directed to a more appropriate (and appropriately priced) service.
  • Data Caps. Most ISPs have set some cap on the amount of usage that a customer can download in a month. And these caps do not have to be small. I have one client that has a 2 terabyte cap each month for residential downloads. But there is no sense in having a data cap if you can’t actually measure how much bandwidth each customer is using. Data mining tools are the way to measure customers’ usage.
  • File sharing. Most ISPs have terms of service that prohibit customers from sharing copyrighted materials with others. But realistically an ISP is not going to know what customers are sharing with each other unless you get a complaint from a copyright holder. But many ISPs still like to get a handle on file-sharing because such traffic can eat up a lot of system bandwidth. Data mining can help you identify customers who are probably involved in one of the common file sharing programs.  An awful lot of file sharing is done by teenagers. I have clients who send out friendly reminders to customers who they think are file sharing that say something like: “We notice by your internet usage that you are probably running a file sharing program. We would just like to remind you that it is illegal to share copyrighted material and that there have been cases where copyright owners have gotten significant settlements by suing people who were sharing their property.” Such notices cut down on a lot of file sharing traffic as parent pressure kids into doing the right thing.

So you should be data mining. But perhaps the things I have described could all better be classified as network management, a term that would not dismay your customers.

Will Poor People Get Google Fiber?

FiOS installed in Montclair, New Jersey

FiOS installed in Montclair, New Jersey (Photo credit: Wikipedia)

This was a great question that was posed by a recent article in Forbes Magazine. In this country we have a long history of having telecom provided by monopoly telephone companies and more recently by cable companies. Both incumbent providers have been mandated to serve almost everybody in their footprint. In the case of telephone companies this has been done by regulatory fiat by the various state Commissions that regulate telephone service in each state. Every state has rules for incumbent telephone companies that include a requirement for universal service using a concept known as carrier-of-last-resort. When a telephone company got the right to serve an area they were expected to provide service to everybody in that area, within reason, and then the costs of the more expensive-to-reach customers was averaged with everybody else. I say within reason, because even the telephone companies were allowed an out for really expensive-to-reach customers. For instance, if a farmer lived back a seven-mile long lane, the phone company might only provide a mile or two of the service line and expect the customer to pay for the rest.

And cable companies had similar requirement that came through the franchise agreements that they signed with local governments. If a cable company wanted to serve a town, then they were required to serve everybody in town in order to get the franchise.

Today fiber is being built by both regulated monopoly carriers like Verizon, but also by competitive providers like Google. But none of the fiber builders has the same carrier-of-last-resort or cable-like franchises requirements that the incumbents faced when they built their copper networks.

So to answer the opening question, will everybody get Google fiber?  The answer is no, for the following reasons:

  • Copper is still in place.  As long as the copper is still in place for the telephone and cable company, they can satisfy their service obligations by connecting customers on copper. They are thus relieved of building fiber everywhere as long as copper still exists.
  • Exclusive contracts with MDUs.  Anybody that builds with fiber needs to get the approval of the owner of multi-tenant buildings, be that apartments or multi-tenant business buildings. And some of those building owners are not going to give permission. Some building owners will have signed exclusive access contracts with the incumbent cable company. The FCC invalidated some types of exclusivity a few years ago, but there are still contractual ways for the cable company to keep out competition. Further, some building owners just don’t want to let a provider into their complex.
  • Places too expensive to serve.  Fiber overbuilders can pick and choose where to serve. It is often very expensive to bring fiber into apartment buildings, particularly older apartments, and many fiber builders choose to not build or selectively build to apartments. Verizon is famous for avoiding high-cost places. If you look at a suburban map of Verizon FiOS you would find a real patchwork of served areas. They will build to one pocket of houses but then skip over ones right next door, certainly due to cost. For the most part Verizon has elected to not dig up streets to build fiber, and so FiOS is more commonly placed in neighborhoods with existing Verizon aerial wires, or in neighborhoods where there is existing conduit in the ground. Verizon also often skips past apartment complexes. But I don’t want to single out Verizon since this is true of just about every fiber overbuilder.
  • Redlining, or the nearest thing to it.  As the article suggests, the build-out patterns of Verizon, Google and just about any other fiber overbuilder have a significant taste of redlining about them. It is easy for the fiber builders to say they are building where the cost is the lowest and the returns are expected to be the highest, but this means that they generally end up avoiding large apartment complexes and poorer neighborhoods. If they had set out to deliberately redline they would end up with basically the same networks that actually get built.

And so we are entering a future where there will be definite fiber haves and have-nots. There has been a lot of this for the last few decades since the introduction of DSL and cable modems. Rural areas for the large part have received very little broadband compared to urban and suburban areas. But the future digital divide is going to be starker, with the divide being everywhere, including the cities and suburbs, with some homes having fiber and others not.

For the last decade there has been conventional wisdom that having fiber connected to your home will add to the value of your house. I guess we are going to get to see this tested on a very large-scale.

One Month Anniversary

I’ve been writing this blog for a month now and so far I have learned the following:

It takes a certain discipline. On many of the topics I am covering I could easily write a white paper, or at least a long dialogue. However, blogging forces you to keep things short. I have found that I will have to break some topics into a series of blogs if I want to cover them fully.

And the trick is in making something short is to not over-simplify it. I have already caught myself doing that. Some telecom topics are complex and can’t be covered adequately in three paragraphs.

So bear with me as I learn this new medium. It has been interesting to write this way and I hope the resulting blog posts are of value to my readers.

There are a lot of topics. When I got the idea of writing the blog my first fear was that I would quickly run out of topics. On the first day I sat and thought hard and made a list of forty topics. It struck me that day that if I wrote those forty blogs that I would be done with this blog after two months.

Luckily, it seems that every time I write something or read something on the Internet that I think of five more related topics. I also now seeing a blog post every time I read a telecom news story.  CCG Consulting as a firm is involved in a huge array of telecom services. This gives me a really wide spectrum of relevant ideas to write about. I don’t know that I can crank out meaningful posts forever, but I think I can do it for years. We shall see.

Some topics are boring as hell. So far I have not found any good way to spice up a blog post about an FCC ruling or about the current nature of access disputes. But sometimes these are the topics that small LECS and CLECs most need to know about. So please just take my most boring blog posts like medicine and just remember they are good for you!

Know Your Fifty Biggest Business Customers

Customers

This is an idea that is so simple that I almost didn’t make a blog entry out of it. But every service provider should personally know their largest business customers. I arbitrarily set the number to fifty customers, but fifty is not a magic number and there is some number that is right for every carrier.

When I say that you should know them personally I mean just that. These customers should get a visit from you every year. You should do your best to get to know each of these customers well and understand their needs. Talk to them about their business and understand how they use your existing products. If this blog has highlighted anything, it is that the needs of business customers are evolving and changing quickly, so you should also be talking with these customers about how you help them to meet their needs in the future.

Starting this process is easy. Generate a report each month that lists the highest billing customers. As you compare these results month over month you will begin to see the top customers in terms of billing.

As you find out what your largest customers want, you are going to find out that you have holes in your product offerings. You might find that these customers are buying some things elsewhere or else are going without features and products they would like. It would not be surprising to find that some of them are thinking of changing service provider. Often you will find out that they don’t know what they need in terms of product, and part of the reasons for these visits is for you to educate them on the wide range of business products that are available to them today.

The businesses should welcome your visits if you come by to get to know them and advise them. You are not be building loyalty if you only visit your customers when they have a contract expiring or some similar event. Loyalty instead comes when they know you care about them and their success.

Most service providers I know can name their top few customers, but it’s rare to find somebody who can name their top fifty. And it is far fewer who have made it a priority to visit their largest customers every year. Visiting fifty customers is one visit per week. Find a way to work that into your schedule. You will love the results.

Current Access Disputes

We are seeing more access charge disputes today than we have ever seen. For those who don’t know about access charges they are the fees that an Interexchange Carrier (IXC, or long distance carrier) pays for accessing a local network. Most of the fees are quite miniscule at fractions of a penny per minute, but since there are still a lot of long distance minutes they add up to substantial payments from long distance carriers to LECs and CLECs.

It seems that a number of IXCs have recently adopted a policy of disputing access charges in the hopes of getting out of paying what they should pay. They know that some local telcos won’t dispute their claims even if the dispute is wrong. They also know that the dispute process can be painful and they hope to wear telcos down into making compromises just to get paid something. In my view some IXCs are being bad citizens in that they know they can strong-arm smaller telcos into accepting less than they should be paid.

Over the last year, the following are the sorts of disputes we have been seeing:

  • IXC’s are demanding a fully verifiable access bill. By that I mean that they expect every fact on the access bill to be correct. In the telephone industry there are several industry databases and the IXCs want every fact on the bill to match the information in these databases. This includes a lot of different facts from the names of switching offices (CLLI codes), mileages, billing percent splits between various carriers, the company that should be billing (OCNs), etc. There is nothing wrong with expecting the bills to be verifiable. But over time small errors creep into these databases as companies make changes to their networks. In the past the IXCs would see these kinds of issues as clerical issues and not substantive issues and they would often point them out and ask the carrier to fix them. But today the more aggressive carriers are refusing to pay bills until such problems are fixed.
  • NECA LATA issue. The NECA tariff which most small telephone companies still use for their Interstate tariff has a prohibition in it that says that a telco cannot carry their traffic to a tandem in a different LATA. This prohibition comes from 1984 when the RBOCs were all part of NECA for a few years. Judge Greene, in the order that divested the RBOCs from AT&T prohibited the RBOCs from carrying voice traffic to another part of the country, and this was left to the IXCs, being mostly AT&T then. However, when the RBOCs all left NECA nobody changed the language in the NECA tariff and so the prohibition is still there. There is no external law or rule that prohibits smaller telcos from carrying traffic to another LATA. Unfortunately, the language in a tariff overrides any industry rules, so if you use the NECA tariff and your tandem is in a different LATA your access bill can be successfully disputed. The only real fix for this is for NECA to fix their tariff or for you to use a different tariff.
  • Traffic and mileage pumping. Last year the FCC banned traffic and mileage pumping. Traffic pumping is when a carrier generates bogus traffic simply for the purposes of generating access charges. Mileage pumping is when a carrier rearranges their network to bill extra miles of transport for the purposes of billing more access. Since that ruling I have seen a number of disputes that accused telcos of one of these types of pumping, but in each case the accusation was not true. Since traffic pumping is now a bad word, I believe the IXCs are trying to scare telcos into settling rather than taking a claim of traffic pumping to a regulatory body. If you are accused of this please talk to us, because the chances are high that you are not in violation of this prohibition.

All of these issues can be a problem for a telco since the IXCs are in the driver’s seat. They can withhold payments for access which gives them the upper hand in a dispute. They know it is a costly process for telcos to appeal an access dispute to the next level, which is normally done by filing a complaint at the state Commission. I don’t mean to sound cynical, but I think there are ruthless people in the access departments of some IXCs that are getting bonuses for reducing access payments by any means they can find. Even scarier, there is now a whole industry of access consultants who get paid a percentage of any savings they can find in access bills. Such consultants are highly motivated to use any tactic in the book to get a payday.

And so my warning to LECs and CLECs is to get your access bills into the best shape they can be. Do a careful review between your access bills, your actual network and the industry databases (the LERG and Tariff 4). Eliminate any easy reason for the IXCs to single you out, because fighting your way out of access disputes can be costly and time-consuming. CCG has done hundreds of access charge reviews, so don’t hesitate to call us if you want to do this and need help.

The Video Game Fire Button!

Derrel Duplechin (Vice President of Engineering) recently was outside in the evening with his family when a cicada landed on his arm, and he tried to shoo it away.  What happened next is, well, pretty striking!

Customers – Make Them Part of Your ‘Club’

Today’s guest blogger is Mike Fox. He was one of the founders of CCG and we still work together on a number of projects. He is working today for Fox Management Advisors. Mike can be reached at (307) 431-6543.

MotorcyclesFor the past decade or so, the telecom industry has made great strides to become more competitive and focused on evolving customer needs and desires. However, we still have a long way to go. Our industry is changing and many products and services that were once ‘cash cows’ are now becoming almost ‘commodity’ services (although, in reality, treating any of your services like commodities is both dangerous and fundamentally wrong – I’ll address this in more detail in a future entry).

For example, long distance used to be a huge money-maker for telephone companies. Today, with unlimited (although, not ‘free’) calling throughout the US as part of most calling plans (landline or wireless), the world has changed. For those of us old enough to remember, it wasn’t that long ago that every long distance call was carefully scrutinized by our parents! Today, we don’t care who or where our kids call, just so long as they don’t go over the minutes in their plan.

So, how do we structure our sales culture to attract and keep more customers? What makes them sticky? Is it price? No, that’s commodity sales think. There will always be someone willing to offer lower prices. Sure, you have to be price competitive, but you should never sell on price.  Rather, sell on value and work to generate loyal customers. Many of the most loyal customer bases in the world are very willing to pay above market prices for the stuff they want. Think of Harley Davidson, Apple Computers and Starbucks. All provide products and services at prices above their competitors, but their customer base is extremely loyal and willing to pay such prices. And, it’s not just about quality. Sure their quality is good, but it’s more the subjective aspects that make these customers loyal – e.g., it’s fun to be part of the Harley club! Simply put, passionate, loyal and, ergo, sticky customers have an emotional attachment to the brand.

Do your customers feel passionate about your products and services? If not, that can be changed.  Find a way to make help your customers connect with your products and services in a personal way. While there are many ways to accomplish this, one important aspect is to nurture your personal relationships with your customers. Make them feel like they are part of your community and an important part of your community. When I lived back east, I became friends with a manager at an Acura car dealership. Over a period of 9 years, I bought several cars from him, even two used vehicles that were not Acuras. I love the Acura brand, but that isn’t what brought me back since there were several other Acura dealers in the area. Rather, every time I walked in that dealership (and I did many times when I wasn’t buying), they made me feel welcome and ‘part of the club’.  It was fun and whenever I was in the market for a new car, that’s who I went to first. Let’s figure out a way to make your customers think of you first when they think of ANYTHING related to telecommunications. Even if you don’t sell what they need at the time, encourage them to come in to the office and just talk. Who knows, it might result in a sale and it certainly will encourage them to come back the next time when you do have something they want.

Advantages to Customers of SIP Trunking

SIP stands for Session Initiation Protocol and is a technology at the enterprise level for delivering multiple voice connections to a PBX or key system over an IP data connection. In order for a business to utilize SIP they must have a PBX with a SIP-enabled trunk side and their data provider must be able to deploy and switch SIP.

Hot Desk, GTi, University of Glamorgan

Hot Desk, GTi, University of Glamorgan (Photo credit: jisc_infonet)

SIP Trunks at the enterprise level of the network replace PRIs between the central office and PBXs. A PRI is a dedicated T-1 transport circuit and can support 23 bearer paths for voice, but a SIP trunk connection typically rides an existing data circuit and can be used to carve out as many voice paths as are wanted within the limits of the bandwidth available.

Following are the reasons that businesses want SIP trunks, and thus for carriers to sell them. This list is discusses the advantages for the small and medium business customer.

Saves Money. SIP generally saves money. SIP trunks replace PRIs which are inefficient. It is not unusual for a customer with a PRI to be using only part of the capacity and yet they have to pay for it all since it is a linear product. SIP trunks are typically carved out of a company’s data or Internet connection and can be sized as needed within the constraints of the bandwidth. It is typical for a business to cut their costs at least in half using SIP trunks compared to PRIs due to the efficiency.

More Efficient Use of the Data Connection. Most businesses will already have an Internet connection and SIP trunks are carved from those connections. Most businesses use their data connections in a bursty fashion, meaning there are times of the day when they use a lot of their bandwidth, but also many times when they use very little. SIP trunking can take advantage of the unused capacity in most company data connections. Companies often do not need to increase the bandwidth they are buy SIP trunks and can fit them into their existing data product.

Enables Unified Communication. SIP enables all of the various features that comprise unified communications such as access to the phone system from cell phones or tablets, integrated voicemail and email, video chat, instant messaging and other features that make businesses more productive.

Enables Upgrade to an IP PBX. Businesses more and more want the kinds of features that are available with an IP PBX and IP handsets. Many businesses are choosing to buy an IP PBX to get these features rather than buy IP Centrex from their telco provider. The general advantage for a business to have their own IP PBX is the ability to customize their communications network, something that many service providers do not offer with IP Centrex.

Allows Multiple Locations to Act like One. With SIP trunks and an IP PBX a business with more than one location can have a unified telephone system that brings the data and voice together for all locations.

Any carrier that sells enterprise data service to businesses should offer SIP trunks. Even if you sell IP Centrex, customers who prefer to have their own phone system are going to want SIP trunks.

Regulatory Alert: Cap on USF Fee Charged to End Users

Seal of the United States Federal Communicatio...

Seal of the United States Federal Communications Commission. (Photo credit: Wikipedia)

In a footnote to WC Docket No. 13-76, adopted and released March 26, 2013, In the Matter of July 2, 2013 Annual Access Charge Tariff Filings (establishes procedures for the 2013 filing of annual access charge tariffs and Tariff Review Plans) the FCC reminds carriers of the requirement to apply FCC rule 47 C.F.R. §54.712 where applicable.

The footnote references 47 C.F.R. §54.712 :

Contributor recovery of universal service costs from end users.

(a) Federal universal service contribution costs may be recovered through interstate telecommunications-related charges to end users. If a contributor chooses to recover its federal universal service contribution costs through a line item on a customer’s bill the amount of the federal universal service line-item charge may not exceed the interstate telecommunications portion of that customer’s bill times the relevant contribution factor.

We believe that some contributors to federal USF that want to recover their contribution costs through a line item on a customer’s bill are going to have a problem complying with this Rule. We can think of two circumstances that may place a carrier in violation of this Rule:

  1. If a carrier has tariffed a Subscriber Line Charge (SLC) in their FCC interstate access tariff and bills it to their end users monthly that revenue is considered Interstate revenue. Carriers should ensure that the amount they are charging customers as a USF contribution recovery fee does not exceed the tariffed SLC charge times the current USF contribution factor (17%). The current 17% relevant contribution factor is higher than it was in past years so carriers should look at this again as the contribution factor changes.

For example, if your SLC charge is $4.00, then the most you could charge for a USF fee to end users based upon that amount is $4.00 X 17% = $0.68. So do the math and compare your USF recovery fee to 17% of your SLC charge. If the USF recovery fee exceeds that amount you have a problem, which will be discussed below.

  1. Some CLECs opt to not tariff or bill its end users a SLC charge. Until recently, USAC required that these CLECs to impute a SLC charge for USF 499 reporting purposes and to report the revenue as 100% interstate revenue.

However, recently the FCC informed USAC that they could no longer require CLECs to impute the SLC and report it as interstate revenue. This means that CLECs that do not have a SLC charge in their access tariff, and who do not expressly charge a SLC on the bill do not have any customer revenue that can be explicitly assigned to the interstate jurisdiction absent measuring interstate long distance usage. In such a case, the CLEC can’t bill a USF recovery fee to a customer who doesn’t make any interstate long distance calls. And they can only charge a USF recovery fee up to 17% of whatever a customer does spend for interstate long distance calling.

This creates a dilemma for carriers who find themselves in either of the two circumstances mentioned above. How does one bill the USF fee to customers since every one of them has a different amount of Interstate usage?

One thing that is important to remember is that the FCC does not mandate that a carrier bill its end-user customers a USF contribution recovery fee. It is optional for a carrier to recover its USF contribution from its end users. In other words, a carrier may treat its USF contribution as an expense.

We believe this footnote was included in the March Order for a reason, that the FCC suspects there are carriers who are violating the rule. So you can expect USAC to be auditing contribution recovery fee calculations in the near future.

So, if you are in violation of this rule, what are possible solutions for getting back into compliance?

  1. Decide to not bill the USF surcharge to your customers and pay USAC out of your own pocket (not recommended).
  2. If you tariff and bill a SLC charge today you can increase it to make it large enough to cover the USF contribution (assuming your SLC is not capped).
  3. If you don’t tariff and bill a SLC consider putting one in your access tariff. This would require breaking it out on the end user bill as a separate line item. However, note that by doing this you would be increasing the amount of your USF contribution paid to USAC if you are a contributor. Or, if you are not a contributor today it could make you into one.
  4. Increase your local rates by an amount that would cover the USF contribution. This is probably the best solution, except for possible competitive consequences. However, if you discontinue the USF fee and raise rates by the same amount you will not be increasing the customers’ bills overall.
  5. Pass the USF fee onto only those customers who have enough interstate long distance usage to cover the USF fee. The trouble with this idea is that it is hard to do correctly and it also means you would be charging the largest USF fee to those who make the most long distance. That is probably not a great idea from a competitive perspective.

We recommend you review the USF fee you are billing customers and ensure it passes the FCC “test”. If you need help to do this review please contact Terri Firestein at (301) 788-6889.