HomeMy WebLinkAboutCenturyLink Comments 09-14-16.pdf
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PREMPTION OF VOIP REGULATION IN IDAHO
CENTURYLINK COMMENTS
Background Information
On March 28, 2016, Senator Brent Hill (President Pro Tempore, Idaho Senate) and
Representative Scott Bedke (Speaker, Idaho House of Representatives) sent a letter to
Commissioner Kjellander of the Idaho Public Utilities Commission regarding the potential
preemption of regulation for Voice over the Internet Protocol (VoIP) service and IP-Enabled
Services. The letter asked the Commission:
o What effect the preemption of regulation for Voice over the Internet Protocol (VoIP)
service and IP-Enabled Services might have on the need for revision of other Idaho
statutes?
o To consider convening a group of interested parties to evaluate VoIP and IP-Enabled
Service regulation preemption, and determine whether it should be enabled via
legislation, and, if so, what form it can and should take.
The letter also clarified that it was not asking the Commission to undertake a comprehensive
review that would lead to a broad sweeping rewrite of Idaho’s code related to communications or
telecommunications services.
The Commission hired Joseph Cusick as a consultant and a meeting was held with interested
parties on July 12, 2016 at the Commission offices to discuss this issue. During the meeting,
Mr. Cusick requested that interested parties file comments.
Summary of CenturyLink’s Position
Historically VoIP has not been considered a “telecommunications service” and has not been
regulated at the state level. CenturyLink agrees that VoIP should not be regulated by the Idaho
Commission. However, VoIP providers, along with traditional telecommunications providers
and wireless providers should be required to pay the various taxes, fees and surcharges that
traditional telecommunication service providers pay, including but not limited to:
Idaho Universal Service Fund
Idaho Telecommunications Service Assistance Program (ITSAP)
Idaho Telecommunications Relay Service (TRS) Fee
Regulatory fee to support Idaho PUC
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Today, VoIP providers are not required to pay surcharges for any of these programs, and
wireless providers only pay surcharges for ITSAP while traditional telecommunications
providers like CenturyLink pay each of these surcharges. It is clear that payers into the funds
like CenturyLink are competing vigorously with VoIP and wireless carriers. For example,
traditional landlines continue to decline, primarily due to wireless substitution.1 In addition, for
customers that continue to have landline phone service, VoIP has proven to be effective
alternative to traditional phone lines. As of June 2015, interconnected VoIP represented 23.7%
of the total landlines in Idaho.2
It is discriminatory for some voice providers to pay for these state programs while other voice
providers do not, as this provides a competitive advantage for some providers over others.
Payment of the various taxes, fees and surcharges, should be nondiscriminatory and
competitively and technologically neutral; neither providing a competitive advantage for, nor
imposing a competitive disadvantage upon, any voice service provider3 operating in Idaho. For
example, all voice service providers traditional— wireline, wireless and VoIP—should be
required to contribute to the Idaho Universal Service Fund (IUSF) that supports voice services.
If the legislature wants to move forward with “preemption of regulation of VoIP and IP-enabled
services” legislation, it should also at a minimum require VoIP and IP-Enabled Services to pay
all of the same taxes, fees and surcharges as other telecommunication service providers currently
pay.
Utah VoIP legislation experience
The Idaho legislature may want to consider what occurred when VoIP services were deregulated
in Utah. In 2012, legislation was passed in Utah that preempted the regulation of VoIP.4 This
legislation was actively supported by Verizon, AT&T and other providers. CenturyLink and
other rural telecommunications providers argued that the bill should include language that
would mandate that VoIP providers to pay all the various taxes, fees and surcharges that
telecommunication service providers pay.
1 During the second half of 2015, nearly one half of American homes (48.3%) had only wireless telephones.
Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, January–June 2015,
NHS Early Release Program, Released December, 2015, page 1. See: http://www.cdc.gov/nchs/nhis/releases.htm
2 Calculated from the FCC Voice Telephone Services Report, State-Level Subscriptions (Excel file): June 2015:
https://www.fcc.gov/wireline-competition/voice-telephone-services-report
3 Voice service" means local voice service (landline and wireless) provided through any technology that
interconnects with the Public Switched Telephone Network, or its functional equivalent and can reach an emergency
service provider such as 911.
4 Utah Statute: Title 54 Chapter 19, Regulation of Internet Protocol Services:
http://le.utah.gov/xcode/Title54/Chapter19/54-19.html?v=C54-19_1800010118000101
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As a compromise, the legislation was modified with language inserted that did not preclude the
payment of various taxes, fees and surcharges by VoIP providers.5 The original intent by the
legislature was to address the tax parity issue the next year. However, after four years there has
not been any additional legislation addressing any of the taxes, fees and surcharges, under the
jurisdiction of the Utah Public Service Commission, and many VoIP providers continue to not
pay the various taxes, fees and surcharges that telecommunication service providers pay (Those
taxes, fees and surcharges under the direction of the Utah State Tax Commission, such as the
911, have now been applied to VoIP service). VoIP and wireless providers that previously
actively supported the 2012 VoIP legislation have not supported efforts by telecommunications
providers to obtain parity in the payment of the taxes, fees and surcharges in Utah.
If the Idaho legislature does not mandate that VoIP providers must pay the various taxes, fees
and surcharges as part of any pre-emption of regulation legislation, it can expect a similar
outcome as the experience in Utah. Additionally, it would be easier for the legislature to
address this issue at the same time and ensure parity in the payment of the various taxes, fees and
surcharges by all providers of voice service6 regardless of the technology used to provide the
voice service.
Discussion of Specific taxes, fees and surcharges
The following discussion describes the taxes, fees and surcharges that are under the jurisdiction
of the Idaho Public Utilities Commission (IPUC).7 These surcharges should apply to all voice
providers, including traditional providers like CenturyLink, wireless providers and VoIP
providers.
5 Utah Statute: 54-19-103 Authority over Internet protocol-enabled services and voice over Internet protocol
services. (1) A state agency and political subdivision of the state may not, directly or indirectly, regulate Internet
protocol-enabled service or voice over Internet protocol service; (2) The regulatory prohibition in Subsection (1)
does not (a) affect, limit, or prohibit the current or future assessment of (i) a tax; (ii) a 911 fee; (iii) a universal
service fund fee; (iv) telecommunications relay fee; or (v) a public utility regulatory fee. (emphasis added)
6 Voice service" means local voice service (landline and wireless) provided through any technology that
interconnects with the Public Switched Telephone Network, or its functional equivalent and can reach an emergency
service provider such as 911.
7 Examples of other taxes, fees and surcharges not listed; local 911 surcharge of $1.00 per access line and state sales
tax at 6%.
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Idaho Universal Service Fund
The Idaho Universal Service Fund (IUSF) came into existence through the Telecommunications
Act of 1988 (Title 62, Chapter 6 of the Idaho Code), and the specific authority is provided in
§ 62-610. The Commission established a universal service fund for the purpose of maintaining
the universal availability of local exchange service at reasonable rates and to promote the
availability of message telecommunications service (MTS) at reasonably comparable rates
throughout the state of Idaho.”8
The IUSF is currently funded by a surcharge on residential and business switched access
telephone lines (traditional phone service). Additionally, there is surcharge on long distance
services on a per minutes-of-use (MOU) basis. However, VoIP and wireless providers currently
are not required to pay this surcharge.
This disparate treatment is discriminatory. In addition, since the surcharge is assessed on
traditional business and residential landline telephone service, and not VoIP and wireless service,
the source of funding is being significantly reduced. Attachment A contains information
regarding the IUSF. This attachment shows that since 2000, residential access lines have
declined about 68% and business lines has increased about 3%, for a combined total line
decrease of almost 50%. VoIP and wireless are replacing traditional landlines, but the
responsibility for universal service funding remains with the providers of declining landlines.
It is worth noting that the FCC now assesses its Universal Service Surcharge to all voice service
providers, including telecommunications providers, wireless providers and VoIP providers. In
making the determination that VoIP should start paying the federal USF, the FCC stated the
following:
“[W]e recognize that interconnected VoIP service "is increasingly used to
replace analog voice service." We expect that trend to continue. If we do not require
interconnected VoIP providers to contribute, the revenue base that supports the Fund
will continue to shrink, while these providers continue to benefit from their
interconnection to the PSTN. We believe that this trend threatens the stability of the Fund
and our action to extend contributions obligations to interconnected VoIP providers is
"reasonably ancillary to the effective performance of [our] responsibilities" under
section 254. Thus, we determine, as required, that the approach we adopt today "will
'further the achievement of long-established regulatory goals'" to preserve and advance
universal service through specific, predictable, and sufficient contribution mechanisms.”
Interconnected VoIP Order , para. 48.
8 Language in the 2016 Idaho Universal Service Fund Annual Report and Recommendation, Case No. GNR-T-16-12:
http://www.puc.idaho.gov/fileroom/cases/tele/GNR/GNRT1612/staff/20160819DECISION%20MEMO.PDF
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The Idaho legislature should mandate that VoIP and wireless providers pay into the IUSF.
Idaho Telecommunications Service Assistance Program (ITSAP)
ITSAP supplements the federal Lifeline program benefits provided to qualified low-income
customers. ITSAP currently provides a $2.50 monthly discount on basic residential service. The
federal Lifeline program provides an additional $9.25 monthly discount.9 Currently all
telecommunications and wireless service providers in Idaho—but not VoIP providers—are
required to pay into the ITSAP. The legislature also should mandate that VoIP providers pay
into ITSAP.10
Attachment B provides information regarding ITSAP. This attachment shows that as wireline
continues to decline, wireless is increasing and overall wireline and wireless lines combined
increased 7.7% since 2008. The current $.01 per month per line surcharge has decreased 87.5%
since 2001.
Telecommunications Relay Service (TRS) Fee
The TRS program allows citizens who are hearing or speech impaired to engage in telephone
communications in a manner functionally equivalent to that of individuals without hearing and
speech impairments. (Idaho Code § 61-1301)
Currently the TRS program is funded through a monthly per access line surcharge of $.02 and a
$.0002 Minute-of-Use (MOU) surcharge on toll services.11 Attachment C provides information
about the TRS program. Since 2000, access lines subject to the surcharge have decreased over
50% and toll MOU have declined about 28%. The annual expenses for TRS have declined over
73%, allowing a 50% reduction in the access line surcharge and a 71.4% decrease in the toll
MOU charge. The reason for the TRS program expense reduction is attributable to technology
changes providing other options for communication with the hearing and speech impaired.12
Currently wireless and VoIP providers are not required to pay into the TRS fund. The legislature
should require them to do so.
9 A qualified low-income customer currently can have the $9.25 discount applied to basic residential service or to a
wireless service.
10 CenturyLink has a digital voice service (VoIP) that it is now starting to offer. In the near future this could be
offered to low-income customers qualified for ITSAP and the federal Lifeline program.
11 Providers are not currently allowed to bill the surcharge on the monthly customer bills. The legislature should
change this and allow providers the choice to do so.
12 For example, the increase use of texting on wireless phones and use of CapTel phone sets.
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Regulatory Fees to Support IPUC
While telecommunications providers like CenturyLink continue to pay Idaho regulatory fees,
wireless providers and VoIP providers do not.13 The statutes should be modified to require
wireless and VoIP providers to pay Idaho regulatory fees, just as they are required to pay
regulatory fees at the federal level.
The regulatory fee was originally established when telecommunications was a monopoly, and the
Commission only dealt with issues that involved traditional telecommunications carriers.
However, today the Commission addresses issues that do impact wireless and VoIP providers.
The IPUC continues to have many critical responsibilities necessary to support
telecommunications and voice service, based on both state and federal law. For example the
wireless providers that want to participate in the federal Lifeline program, must be approved as
an Eligible Telecommunications Carrier (ETC) through a state regulatory filing. Over the last
several years, several wireless providers have filed for ETC status from the IPUC and they do
not pay regulatory fees for the resources they utilize. Some of the most important
responsibilities for the IPUC are related to universal service and universal calling. To ensure all
customers can communicate with others, the IPUC has many responsibilities related to IUSF,
ITSAP and the TRS program. The IPUC also is responsible for approving and arbitrating
interconnection agreements between voice service providers and resolving disputes to ensure that
calls are not blocked.
Unlike traditional telecommunications companies like CenturyLink and the rural
telecommunications providers, wireless and VoIP providers are not required to report their Idaho
voice service revenues to the IPUC. The reported revenue of a provider is the basis used by the
IPUC to calculate the regulatory fee owed by that provider. Because wireless and VoIP
providers do not report the revenues, they do not pay the regulatory fee.
Attachment D contains information about regulatory fees and provides a new option for voice
service providers, better than a revenue based method. This option is a non-discriminatory way
for assessing regulatory fees to all telecommunications and voice service providers. This
illustrates that the regulatory resources necessary to support telecommunications and voice
service can be funded through a very minimal ($.05 per month per line) surcharge applied to all
voice service lines.
13 Note: Providers like CenturyLink who offer both switched access line service (traditional phone service) and also
VoIP service do pay Idaho regulatory fees.
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Minimal customer impact of implementing parity of taxes, fees and surcharges
Attachment E provides information regarding the taxes, fees and surcharges under the
jurisdiction of the IPUC. It also illustrates that a non-discriminatory assessment of these fees on
a per voice service line basis, would have a minimal impact to customers. Some customers
would actually experience a reduction in the total amount of the surcharges they currently pay.
An estimated $0.15 per month per line surcharge to all voice service customers in comparison is
significantly less than the existing $1.00 per month per line 911 surcharge. This will enable
nondiscriminatory treatment of customers and providers. Additionally it will ensure adequate
funding for the various programs and regulatory resources.
Conclusion
CenturyLink supports the legislative efforts to make it clear in the statutes that VoIP is not a
regulated service at the state level as long as there is parity in taxes, fees and surcharges. The
legislature should mandate VoIP and wireless providers to pay all of the taxes, fees and
surcharges that telecommunication providers pay, including those under the jurisdiction of the
IPUC.
Other necessary changes that need to be made by the legislature
USF reform
CenturyLink also believes there is a need for USF reform, making necessary changes to the
Idaho USF program. Consistent to what is happening with the federal USF, the Idaho USF needs
to transition to supporting on a targeted basis both voice service and high speed internet service
capable of supporting voice service in high cost areas. Without reform of the Idaho USF, rural
high cost areas in Idaho will fall behind in the services available to them in comparison to less
rural areas. This will diminish the value of universal service to all Idaho citizens.
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ITSAP reform
There is a need for ITSAP reform and the Idaho legislature should approve the required changes
necessary to align ITSAP with the federal Lifeline program. The growing inconsistency between
the programs creates problems for both low-income customers and for ITSAP/Lifeline
providers.14 For example, today the $9.25 monthly benefit can be applied to either basic
residential service or to a wireless service. The FCC is changing the federal voice only Lifeline
program to provide support for high speed internet service. Over time the support for voice
service is being phased out. Additionally, the qualification requirements for ITSAP are not the
same as for the federal Lifeline program. It would be easier and much better for low-income
customers if the qualification requirements of ITSAP were the same as the federal Lifeline
program. To not make the necessary changes puts the ITSAP program in jeopardy.
14 The FCC has made changes to the qualification requirements for the federal Lifeline program. Currently A low-
income customer that qualifies for various federal and state low-income programs can also qualify for federal
Lifeline. ITSAP has different qualification requirements than the federal Lifeline program, qualified based only on
income levels and not participation in other low-income programs.