Washington Post 2011 Annual Report Download - page 31

Emergency 911 Services. The FCC has ruled that an interconnected VoIP service provider that enables its customers to
make calls to and from persons who use the public switched telephone network must provide its customers with the same
enhanced 911 (E911) features that traditional telephone and wireless companies are obligated to provide. This
requirement was upheld on appeal. The FCC is currently assessing whether additional rules related to the provision of
E911 services by interconnected VoIP service providers should be adopted.
CALEA. FCC regulations require providers of interconnected VoIP service to comply with the requirements of CALEA,
which requires covered entities and their equipment suppliers to deploy equipment that law enforcement officials can
access readily for lawful wiretap purposes.
Universal Service. The FCC has determined that interconnected VoIP service providers must contribute to the U.S.
Federal Universal Service Fund (USF). The amount of a company’s USF contribution is based on a percentage of revenues
earned from end-user interstate and international interconnected VoIP services. Cable ONE is permitted to recover these
contributions from its customers. This percentage changes from time to time and generally has been increasing, prompting
Congress and the FCC to consider ways in which the USF and the payment obligations of fund contributors should be
reformed. In 2011, the FCC adopted an order and new rules intended to transition the USF so that it supports the build
out of broadband, rather than telecommunications facilities. The order principally addressed the manner in which
universal service funds will be distributed to network operators for broadband build out, but the FCC is expected to initiate
a proceeding shortly that focuses on reforming the nature and manner in which entities should contribute to the USF and at
what levels. Cable ONE cannot predict whether and how such reform will occur and the extent to which it may affect
providers of VoIP services, including Cable ONE and its competitors. The FCC’s 2011 universal service reform order is
subject to both reconsideration requests and appeals, and Cable ONE cannot predict the outcome of those actions. In
November 2010, the FCC determined that states may impose state USF fees on interconnected VoIP service providers
subject to certain limitations and requirements. State USF contributions are based on a percentage of revenues earned
from end-user intrastate interconnected VoIP services, and Cable ONE is typically permitted to recover these contributions
from its customers. Cable ONE cannot predict whether or how the imposition of such state-based universal service fees
will affect its operations and business.
Intercarrier Compensation. The order and new rules adopted by the FCC in 2011 in connection with universal service
reform also addressed intercarrier compensation and specified that “VoIP-PSTN traffic,” that is, traffic exchanged over
public switched telephone network facilities that originates and/or terminates in IP format, which includes interconnected
VoIP traffic, is subject to intercarrier compensation obligations either on the basis of specified default charges or through
negotiated rates. The FCC’s order is the subject of both reconsideration requests and appeals, and Cable ONE cannot
predict the outcome of these actions. Future FCC determinations regarding the rates, terms and conditions for transporting
and terminating such traffic can have a profound and material effect on the profitability of providing voice and Internet
services. It is not possible to predict what actions the FCC might take in this area or the effect that they will have on
Cable ONE.
Customer Proprietary Network Information (CPNI). In 2007, the FCC adopted rules expanding the protection of
CPNI and extending CPNI protection requirements to providers of interconnected VoIP service. CPNI is information about
the quantity, technical configuration, type, location and amount of a voice customer’s use. These requirements generally
have increased the cost of providing interconnected VoIP service, as providers now must implement various safeguards to
protect CPNI from unauthorized disclosure.
Access for Persons With Disabilities. FCC regulations require providers of interconnected VoIP services to comply with
all disability access requirements that apply to telecommunications carriers, including the provision of telecommunications
relay services for persons with speech or hearing impairments. Cable ONE and other interconnected VoIP service
providers must also contribute to the interstate Telecommunications Relay Service fund to support such access. These
requirements generally have had the effect of increasing the cost of providing VoIP services.
Service Discontinuance Obligations. In 2009, the FCC adopted rules subjecting providers of interconnected VoIP services to
the same service discontinuance requirements applicable to providers of wireline telecommunication services. These
requirements typically apply when a service provider exits a region or eliminates services. Along with other FCC actions
described in this section, which impose legacy telecom obligations on interconnected VoIP providers, this development will
subject the Company’s interconnected VoIP services to greater regulation and thus greater burdens and costs.
Regulatory Fees. The FCC requires interconnected VoIP service providers to contribute to shared costs of FCC regulation
through an annual regulatory fee assessment. These fees have increased Cable ONE’s cost of providing VoIP services.
Local Number Portability. Providers of interconnected VoIP services and their “numbering partners” must ensure that
their subscribers have the ability to port their telephone numbers when changing service providers, and local exchange
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