8x8 2009 Annual Report Download - page 68

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On June 8, 2007, the FCC released an order implementing various recommendations from its Independent Panel Reviewing the
Impact of Hurricane Katrina on Communications Networks Panel, including a requirement that certain interconnected VoIP
providers submit reports regarding the reliability and resiliency of their 9-1-1 systems. At this time, the Company is not
subject to these reporting requirements but may become subject in future years.
On June 15, 2007, the FCC extended the disability access requirements of Sections 225 and 255 of the Communications Act,
which applied to traditional phone services, to providers of interconnected VoIP services and to manufacturers of specially
designed equipment used to provide those services. Section 255 of the Communications Act requires service providers to
ensure that its equipment and service is accessible to and usable by individuals with disabilities, if readily achievable, including
requiring service providers to ensure that information and documentation provided in connection with equipment or services be
accessible to people with disabilities, where readily achievable and that employee training account for accessibility
requirements. In addition, the FCC said that interconnected VoIP providers were subject to the requirements of Section 225,
including contributing to the Telecommunications Relay Services, or TRS, fund and that they must offer 7-1-1 abbreviated
dialing for access to relay services. The Company may be subject to enforcement actions including, but not limited to, fines,
cease and desist orders, or other penalties if it is not able to comply with these new disability obligations. The rules established
in the Disability Access Order were scheduled to become effective on October 5, 2007, and as of this date, the Company
started to remit TRS fund contributions and implemented 7-1-1 abbreviated dialing which connects all of the Company’ s
customers to California relay service operators. On October 10, 2007, the FCC granted a limited waiver of the 7-1-1 call
handling requirement. While still mandating that interconnected VoIP providers like the Company are required to transmit
7-1-1 calls to a relay center, the FCC waived the requirement, until March 31, 2009, insofar as it requires such providers to
transmit the 7-1-1 call to an “appropriate relay center,” meaning the relay center(s) serving the state in which the caller is
geographically located or the relay center(s) corresponding to the caller’ s last registered address. As of April 5, 2008, the
Company has implemented a 7-1-1 system which routes such calls to the appropriate relay center based upon the telephone
number assigned to the account.
On August 6, 2007, the FCC released a Report and Order concerning the collection of regulatory fees for Fiscal Year 2007
("Regulatory Fees Order"), which, for the first time, mandates the collection of such fees from interconnected VoIP service
providers like 8x8. The Regulatory Fees Order requires that interconnected VoIP providers pay regulatory fees based on
reported interstate and international revenues. The Regulatory Fees Order became effective in November 2007. Regulatory fees
for the FCC's Fiscal Year 2007 will be due in 2008 during a separate filing window yet to be determined. Fiscal Year 2008 fees
will also be paid in 2008 during the normal regulatory fee payment window. The assessment of regulatory fees on the
Company's service offering will increase its costs and reduce its profitability or cause the Company to increase the retail price
of the Company's service offerings.
On November 8, 2007, the FCC released a Report and Order concerning Local Number Portability ("LNP Order"). The LNP
Order imposes local number portability and related obligations on interconnected VoIP Providers. The obligations require
interconnected VoIP providers to contribute to shared numbering administration costs on a competitively neutral basis. The
assessment of local number portability fees to the Company’ s service will increase the Company’ s costs and reduce its
profitability or cause the Company to increase the price of its retail service offerings. On May 13, 2009, the FCC released
another order concerning LNP that reduces the timeframe for certain types of ports that interconnected VoIP providers, like the
Company, have to process requests from its customers to port numbers out to other service providers. The new rules imposing
reduced porting timeframes are not currently effective and the Company does not expect them to become effective for at least
one year. The Company relies on third parties to comply with the existing porting timeframes and the Company will continue
to rely on third parties to comply with the new porting timeframes. The Company could be subject to fines, forfeitures and
other penalties by state public utilities commissions or the FCC if it is not able to process certain ports in the existing or future
timeframes or the Company could face legal liability in state or federal court from customers or carriers. The FCC also
released a Further Notice of Proposed Rulemaking to refresh the record on how to further improve the porting process, and
how to potentially expand the new one business day porting timeframe to other kinds of ports. The Company cannot predict
the outcome of this proceeding nor its potential impact on the Company at this time.
On May 13, 2009, the FCC extended discontinuance rules that apply to non-dominant common carriers to interconnected VoIP
providers, like the Company. The FCC's rules require non-dominant domestic carriers to provide notice to customers at least
30 days prior to discontinuing service to a telephone exchange, toll stations serving a community in whole or in part, and other
similar activities that affect a community or part of a community. Additionally, carriers must inform certain state authorities of
the discontinuation, and obtain prior FCC approval before undertaking the service disruption. The FCC’ s rules allow for
streamlined treatment for FCC discontinuance approvals and interconnected VoIP providers will be able to take advantage of
the same streamlined procedures afforded to non-dominant carriers. The applicability of these rules to interconnected VoIP