I think if I worked at the FCC I would have had it by now with constantly having to deal with switched access disputes. These battles spout like wild weeds, from all directions and seemingly between all carriers. I could write about them forever (and usually do). This week we have another! A rather pointless dispute between Verizon, and the CLEC subsidiaries of Peerless Network (Peerless). As I discuss below, Verizon should win easily. 

On June 15, 2018, Verizon filed a Petition for Declaratory Ruling (Petition) in Docket 18-221, requesting the FCC to find that a LEC cannot assess end office terminating switched access charges on calls delivered to any two-stage dialing platform, including IP-based platforms.  Verizon bases its claim on the fact that in this scenario, the LEC does not terminate the call to the called party and therefore does not perform - and cannot bill for - end office switched access. According to Verizon:

These "two-stage dialing platforms" consist of equipment that allows end-user customers to complete a call by first dialing a long distance number to reach the calling platform and then dialing a second (typically international) telephone number to reach the called party. The LEC in this scenario does not perform terminating switched access functions. It simply hands the call to its two-stage dialing platform customer, which hands it to someone else; any terminating end office functions are performed by some unknown third-party, usually in another country, when the call reaches the called party. (Verizon Petition at pp. 1-2).

Verizon's argument ought to be convincing to all, but clearly some view the situation differently:

[S]ubsidiaries of Peerless Network,Inc. ("Peerless") are competitive LECs that deliver calls to two-stage calling platforms. For years, Peerless has billed its tariffed terminating end office switched access charges to the interexchange carriers ("IXCs") that passed these calls to Peerless, including Verizon. Whether the Commission's rules prohibit Peerless from billing these charges is a central issue in litigation between Peerless and Verizon, and in March 201 8 the United States District Court for the Northern District of Illinois referred this issue to the Commission for resolution based on primary jurisdiction. (Id. p. 3).  

You might think that this dispute would be rendered moot as terminating access moves toward bill-and-keep. However, while end office rates for price cap ILECs have been reduced to bill-and-keep, disputes exist for bills before July 1, 2017. Moreover, rate-of-return ILECs will continue to have terminating end office charges until July 1, 2020.

Peerless, or any other parties that charge access for two-stage calls, ought to take note that an argument that IP-enabled traffic should to be treated differently than traditional circuit-based calls has been rejected many times by the Commission, which has long stated that its rules are technologically neutral. 

In addition, it has been a long-established FCC precedent to treat calls on an end-to-end basis regardless of the network routing:

The Commission has long treated these two-stage calls as a single, "end-to-end" call that terminates at the location where the person answers the telephone, because the Commission "regulate[s] an interstate wire communication under the Communications Act from its inception to its completion.". In the AT&T Calling Card Order [in 2005], AT&T sought a declaratory ruling that, by routing a pre-paid calling card call to an out-of-state calling platform, even where the called party was in-state, AT&T actually was handling two jurisdictionally interstate calls rather than a single intrastate call: one between the caller and the out-of-state platform, and one between the out-of-state platform and the called party. The Commission rejected this argument, explaining that it "has applied an 'end-to-end analysis"' and classifies long distance calls "based on the endpoints, not the actual path, of each complete communication." (Id., p. 4). 

Companies that attempt to charge switched access in every suspect scenario may soon find themselves in a dilemma. They exist through the revenues these charges accrue. However, they are driving the FCC to once and for all move all switched access charges to bill-and-keep.  Then, where will they be?

Industry comments on Verizon's Petition are due on August 20, 2018. Reply comments are due on September 5, 2018.