Call Completion Woes Continue as Carriers and States Look to FCC for Enforcement Action

The ruling came in response to a sharp increase in complaints that long distance calls were not completing, with rural customers in particular reporting degraded quality in many calls that did connect. Carriers blamed the practice of “least-cost routing,” which tries to minimize termination charges to rural areas by connecting calls at the lowest cost possible. After an October workshop to solicit comments and walk through potential solutions, the Feb. 6 ruling discussed the problem and warned carriers that practices leading to call termination and quality problems “may constitute unjust and unreasonable practices” in violation of several sections of the Communications Act.

"There’s an inherent incentive to game the system,” said Brandon Zupancic, vice president-technical operations for Canby Telcom in Oregon. The declaratory order had no effect, he said. “Nobody has stopped doing this kind of stuff,” he said. The Oregon PUC has opened an investigation and is actively pursuing consumer complaints, but state commissions can only deal with intrastate and local calls; carriers need the FCC to handle interstate problems, he said. “Until the Enforcement Bureau steps in and makes a painful example of somebody, this is going to not only continue, but continue to accelerate,” he said. “Until you come down hard, they're going to continue to act with impunity."

An FCC spokesman told us the Enforcement Bureau is engaged in ongoing investigations in response to rural call completion complaints, and will take action as appropriate. “The FCC has taken numerous steps to address the rural call completion problem, both short-term and long-term,” he said. “With the help of the affected carriers and our partners in the states, we will continue to work on the problem until it is resolved.” Although some criticize the declaratory ruling as insufficiently aggressive, it put carriers on notice that their actions may violate the Communications Act, the spokesman said.

'Not How the PSTN Is Supposed to Work'

The economic incentives to engage in this kind of activity are “immense,” said Dave Lewis, CEO of Anpi Zone, which provides voice service to 700 independent telephone companies across the U.S. Least-cost routing has been around for decades, but only after traffic pumping schemes gained notoriety a few years ago did companies realize how much money they could make by more actively managing the paths of outbound calls, he said. Because of the higher cost to terminate calls in rural areas, carriers had to figure out ways to remain profitable. The potential for arbitrage schemes grew. Before the USF/intercarrier compensation order, some carriers classified all their calls as VoIP to try to avoid paying access charges, he said. Others masked the call so the call stream was corrupt and LECs couldn’t figure out whom to bill. “There are all these schemes out there that were engendered by IXCs trying to cut their costs because they were losing money,” he said, characterizing aggressive routing tactics as a “self-help strategy that eliminates the FCC glide path and delivers a much lower terminating cost today."

An entire ecosystem grew around the business of offering cheap routing rates to carriers, but low barriers to market entry led to problems, Lewis said. “You've got some putz that is literally out in the cloud somewhere operating a shared server with open source software,” he said. “It creates this whole mosh pit of opportunities for carriers to regrow margins and cut their costs.” There’s nothing inherently bad with open source software or the cloud, but they can lead to congestion and a lack of interoperability between carriers, he said. Plus, not everyone uses carrier-grade equipment: “Voice has become so commoditized that there is a general opening for people to run much, much lower cost gear,” he said. The result is compromised quality. And because long distance calls are handed off up to 20 or 30 times before they terminate, “trying to figure out who is causing the issue is incredibly difficult to track down,” he said.

For most rural customers, the clear culprit is their own local carrier. Customers frequently complain to Illinois-based Home Telephone Co. about missed calls. To those customers, their small family-run carrier is the face of the industry, the obvious one to turn to for help. But HomeTel can’t do anything about it. “We can only control the calls that leave our office,” Marketing Manager Rachel Stopka said. “The customers don’t quite understand it, or don’t want to believe it. They want us to fix it."

A Communications Daily reporter experienced the problem firsthand when using a VoIP service to interview HomeTel officials for this story. Several calls failed to connect, ringing dozens of times without answer. On HomeTel’s end, the calls rang twice but no one was on the other end. “This happens all day,” Stopka said. “Our secretary will answer the phone 10 to 15 times a day and no one’s there."

HomeTel sees the issue most frequently with wireless and IP calls. Sometimes the call completes but quality is degraded. Central Office Manager Jason Schmidt said he spends a lot of time on problems that “we didn’t cause, and we can’t fix.” It’s hard to get ahold of the right person at the interexchange carrier, he said, and Schmidt can’t find out who the IXCs are handing their traffic off to. Schmidt said he hasn’t noticed any improvement in call completion problems recently. Stopka said that, if anything, the problem has gotten worse since the new year.

For Golden West Telecommunications in western South Dakota, the problems are just as bad as they were before the ruling, General Manager Denny Law told us. It’s hard to troubleshoot -- “it’s a little like trying to troubleshoot what’s wrong with a car when you haven’t driven it” -- but he agrees the problem lies with the routing systems used by other carriers. Law hopes the FCC steps up enforcement actions against IXCs who may be attempting to avoid the cost of termination into higher cost rural areas.

Law finds the current reality incongruous with customers’ high expectations of the public-switched telephone network. “We as a country have historically had the most reliable telecommunications network in the world, and now we have companies that are really removing the reliability and quality from that network” in an effort to avoid costs, he said. “That’s not how the PSTN is supposed to work."

On Friday, the National Exchange Carrier Association completed two weeks of testing to determine the extent of the call completion problem. NECA made thousands of calls to and from rural areas using wireless, wireline, and VoIP services. The problems are just as bad as carriers have been reporting, said Colin Sandy, NECA’s government relations counsel. “I've seen some of the preliminary results, and across the board you have double digit percentage call failures in rural areas,” he said. NECA expects to release a final report by the end of April.

State Commissions Urge Enforcement

It appears that the FCC’s order has had no effect, South Dakota Public Utilities Commissioner Chris Nelson told us. “Essentially the order said this is wrong, don’t do it again,” he said. Without the FCC “finding the culprits and levying penalties for not completing calls, there’s little incentive for change,” he said. South Dakota has done everything it can to encourage the FCC to take strong measures to solve the problem, he said. But nothing of substance has occurred and thus the problem continues, he said.

Meanwhile, South Dakota’s own investigation indicated the problem wasn’t in the state, Nelson said. That’s a major challenge for state action because state regulators don’t have authority outside the state, he said. It’s a role that the FCC should play and is best positioned to play, he said, calling call completion an “incredibly frustrating” issue. “The problem is still occurring,” though it’s hard to determine how much of it is companies refusing to terminate calls to high cost areas and how much is due to misrouting or failures in the IP network, a state regulatory analyst said. The FCC’s order is a good step but the issue won’t end until enforcement action comes, he said.

Strict enforcement action from the FCC would be the key to address the issue, said John Burke, NARUC Telecom Committee chair. Some claimed that the FCC USF Order’s bill-and-keep regime would end the problem but “you shouldn’t reward bad actors,” he said. They should be punished, he said. NARUC is aware of the problem, said the group’s general counsel Brad Ramsay. The FCC is well positioned after NARUC requested the declaratory ruling to “come down hard on bad actors,” he said. Any party that contracts with those who fail to transmit calls should also be fined, according to Nebraska Public Service Commissioner Anne Boyle.

In response to a January letter sent by a bipartisan group of 24 senators concerned about call completion issues in rural areas, FCC Chairman Julius Genachowski said last month that the declaratory ruling was “an important step in clarifying the rules of the road” (http://xrl.us/bm3kni). The FCC is working with state commissions to solve the problem, he said, increasing coordination with the Alliance for Telecommunications Industry Solutions to set standards, and investigating carrier practices.