For audio conferencing providers, “round two” of the FCC’s regulation has begun. (Round one was 2008’s Audio Bridging Classification Order, which applied direct USF contributions to the audio conferencing industry). On November 3rd, the Wireline Competition Bureau denied a Universal Service Fund appeal concerning “IP audio conferencing services.” At the same time, the Commission announced it is close to deciding the appeals of the 2008 classification order.

Both developments signal that the inclusion of conferencing in USF is here to stay. In the appeal, the FCC agreed that USF obligations apply to “IP in the middle” audio conferencing, and denied the conferencing provider’s request to apply USF prospectively. In the upcoming reconsideration order, we don’t know what the decision will say, but I would be surprised if it does not uphold the 2008 classification.

MeetingOne. In MeetingOne’s service, a PSTN user dials a regular toll-free number, the call is routed through the PSTN to MeetingOne’s terminating carrier, and the terminating carrier converts the call to IP before handing it off to MeetingOne. MeetingOne, in turn, connects the call to its IP-based bridge and, on return communications to the participant, hands the traffic off in IP format to the carrier for termination back to the PSTN. MeetingOne appealed a decision by the USF administrator to require MeetingOne to pay USF for this traffic.

The FCC denied MeetingOne’s request in its entirety. First and foremost, the Bureau concluded that MeetingOne’s service is functionally equivalent to other audio bridging services covered by the 2008 Audio Bridging Classification Order. Based on the specific fact pattern involved, the Bureau concluded that MeetingOne’s use of IP is equivalent to an IP in the Middle decision from 1997. MeetingOne’s use of IP technology did not provide any new functionality or net protocol conversion for its conferencing users.

Second, the Bureau declined MeetingOne’s request to make its ruling prospective only. Here, the Bureau contrasted MeetingOne’s situation with the InterCall situation in 2008, where there was significant and pervasive uncertainty concerning the direct payment obligations of stand alone conferencing providers. Finding no such uncertainty here, the FCC ordered MeetingOne to contribute toward the USF retroactive to 2008.

Notably, although the order talks about “IP audio bridging” the specific facts are important to the outcome here. The Bureau does not address all uses of IP technology. In particular, it declined to rule on the classification of pure SIP-based audio conferencing (para. 13), or any service that both originates and terminates as IP. Thus, reports that the FCC extended USF to “IP conferencing” read too much into the order, in my opinion.

Reconsideration Petition. After the 2008 classification order, two parties sought reconsideration of the FCC’s decision. Those petitions have been pending for several years with little apparent activity. Last week, however, the FCC listed the reconsideration order on its weekly list of items under consideration by the Commissioners. Unfortunately, the FCC does not publicize the draft that is under consideration, so we do not know what the order says. Nevertheless, given the light activity, it is unlikely that the order makes significant changes in the 2008 Order. Hopefully, the order will more clearly explain the rationale for concluding that audio bridging involves “telecommunication,” because the uncertainty has made it very difficult to apply the order to the totality of a conferencing provider’s services.

The Commission typically issues a final order within two weeks of such an order beginning to circulate. We probably will see the order before Thanksgiving. When the order is released, we will post it here.

FCC Denies IP Conferencing Appeal; Moving Forward on Reconsideration of Conferencing Classification Decision