The common theme expressed throughout the Order and informing the final rules is enhanced Commission visibility into the overall status and reliability of the submarine cable infrastructure which transmits critical national security and economic communications.

Some of the key reporting provisions are summarized below:

Rerouting Does Not Obviate the Need to Report an Outage - The rules define an “outage” as a “failure or ‘significant’ degradation” in a cable’s performance, regardless of whether traffic can be rerouted. Noting a need to “assess outages across the total undersea cable environment serving the United States,” the Commission explicitly declined to exempt outage reporting where traffic was rerouted. The Commission explained that exempting outage reporting where rerouting occurs could mask the overutilization of redundant routes which, in turn, could signal an emerging expansive outage event impacting other cable systems. Significantly, neither the Commission’s rules nor the Order define the terms “degradation” or “failure” and licensees must look to the rules for reportable event triggers.

Outage Reporting Triggers – The Commission established two reporting triggers designed to capture outages impacting connectivity (the ability to transmit a signal) or capacity (the amount of bandwidth a cable can transmit at any one time). Accordingly, licensees must report:

(i) Outages, “including those caused by planned maintenance, of a portion of submarine cable system between submarine line terminal equipment (SLTE) at one end of the system and SLTE at another end of the system for more than 30 minutes”; as well as

(ii) The loss of any fiber pair on a cable segment for any reason, including but not limited to, outages due to SLTE failures, lasting for four (4) or more hours, regardless of the number of fiber pairs on the system.

Responsible Licensees and Compliance Liability - As noted above, all submarine cable licensees on a cable system are subject to the new outage reporting requirements. The Order explained that exempting any licensees from the reporting requirements would prevent the Commission from meeting its goal of “acquiring a comprehensive viewpoint of the operational status of all submarine cables.” However, the Commission acknowledged the unique aspects of submarine cable systems operated by consortium members or multiple licensees, such as size, domestic/foreign composition, time zone differences and possible language barriers. Accordingly, the rules permit cable system licensees to designate to the Commission a single Responsible Licensee, for systems with multiple licensees, to manage reporting compliance. Once registered with the Commission, a Responsible Licensee alone will be held responsible by the Commission for compliance. In a departure from the Commission’s original proposal that licensees be held jointly and severally liable for cable outages, the Order notes that, if a Responsible Licensee has not been registered with the Commission or is not in effect at the time of a reportable outage, only the cable licensee experiencing an outage can be held responsible for reporting and liable in an enforcement action.

Six Month Transition Period – Although the Commission did not propose or seek comment on an implementation timeframe, several commenters proposed extended implementation periods as long as fifteen months. The Commission settled on a transition period of six (6) months from receipt of OMB approval of the new rules’ data collection requirements, citing its goal of balancing industry need to prepare for regulatory compliance with the Commission’s need for “timely situational awareness” of submarine cable infrastructure. Since OMB approval can take several months or longer, the rules potentially may not take effect until mid-2017 or later.

Three-Part Reporting Regime Retained - The Commission retained the proposed three-part reporting regime requiring initial Notification, Interim and Final reports within specified timeframes and the Order details the numerous data points to be included in those reports. Notably, the Commission responded to industry concern that certain information – particularly, the root cause of an outage – may not be known at the time of initial reporting. Consequently, the Commission will require that licensees provide only a brief description of the outage and include outage root cause information only if known at the time of the initial Notice and Interim Reports. While licensees are required to include, in the Final Report, the root cause information only if known at the time of the report, the Order states licensees are expected to continue conducting “reasonable due diligence to ascertain the root cause of an event” and the rules require licensees to supplement the Final Report if additional information becomes available.

The text of the Order has not yet been released - so any information will be preliminary pending issuance of the Order and rules - but the discussion at today’s Commission Open Meeting provides insight into some of the new rules. Industry advocacy appears to have been influential in convincing the FCC to soften some of the more burdensome reporting timelines although it is uncertain if efforts to reduce onerous report contents were equally successful. In addition, the Commission stated it will open a proceeding, in three years, to revisit the reporting requirements. Accordingly, licensees may have another opportunity to make their views known and possibly to shape the reporting requirements going forward.

Reportable Outage Threshold Extended – In Part

As proposed, licensees will have to report network outages, possibly including planned outages, of a qualifying portion of a cable system lasting more than thirty (30) minutes regardless of whether traffic can be rerouted. The trigger for reporting failure or significant degradation of a cable lasting at least four hours will trigger a reporting obligation. However, whether the final definitions of “outage,” “failure,” and “degradation” reflect the NPRM’s proposed definitions will remain unknown until the Order is released.

Increased Reporting Deadlines

The Commission has retained the proposed three-part reporting structure similar to existing network outage reporting regime for other communications providers.

• For outages occurring during the first three (3) years after the rules take effect, initial reports must be submitted within eight (8) hours of the licensee identifying a reportable outage event. This timeframe marks a significant increase in time from the NPRM’s proposed two (2) hour initial report deadline. After the first three (3) years, the time to file the initial report will be halved to four (4) hours.
• Interim reports will be due within 24 hours of the licensee receiving a cable repair plan providing the projected cable restoration timeline and identifying any logistical challenges. This interim reporting schedule represents a substantial increase from the Commission’s initially proposed two (2) hour interim reporting timeline.

• The final report due date remains unchanged from the NPRM proposal and will be due within seven (7) calendar days after the cable is repaired.

The Order should be released in the near future and Kelley Drye will provide a more detailed review once the text is available.

6. Admission of Liability. TWC admits, solely for the purpose of this Consent Decree and for Commission civil enforcement purposes, and in express reliance on the provisions of paragraph 8 herein [TLM Note: paragraph 8 terminates the investigation and agrees not to use the investigation to TWC's detriment in certain ways], that the circumstances described in paragraph 3 herein constitute violations of the Commission’s Network Outage Reporting Rules.

14. Civil Penalty. TWC will pay a civil penalty to the United States Treasury in the amount of one million one hundred thousand dollars ($1,100,000) within thirty (30) calendar days after the Effective Date.

As we explained, the effective date of the new VoIP outage reporting rules would be delayed until 90 days after the Office of Management and Budget (OMB) approves the information collection required by the Report and Order. Well, that process is complete, and the FCC published in the Federal Register today a notice announcing the effective date of the new rules as December 16, 2012.

If they haven't already, VoIP providers should make sure they understand the new requirements and have processes in place to ensure that the FCC's tight reporting requirements can be met in a timely fashion --- some reports must be filed within four hours of an outage commencing. Significant enforcement penalties may apply in cases of non-compliance. In the past, the FCC has set significant fines for carriers subject to similar outage reporting obligations in a timely fashion. It has used base forfeitures of $40,000 for failing to file an initial outage Electronic Notification, $20,000 for failing to file the subsequent outage reports and $25,000 for filing incomplete or inaccurate reports. Presumably, similar base fines will likely apply to a VoIP provider that fails to comply with the new rules, although perhaps limited to $16,000 per violation per day, since VoIP providers have not to date been classified as telecom carriers. The prospective fines will vary depending on the circumstances. But as we note elsewhere, at least for now, VoIP providers may be subject to monetary forfeitures only after they first receive a citation.

In February, the FCC adopted new outage reporting rules for interconnected VoIP providers. Our story and our advisory on the new rules are available at this link. At the time, we told you that the rules would become effective 90 days after OMB approved the new information collection.

On Friday, the new outage reporting rules took one step closer to becoming effective. No, OMB has not yet approved the rules. However, the FCC published notice in the Federal Register of its Report and Order extending the network outage reporting requirements to interconnected VoIP service providers. Friday’s publication was made to comply with OMB information collection requirements. The FCC will make a future publication announcing the effective date of the new rule when OMB approval is obtained.

This notice does have the effect of starting the clock for appeals or petitions for reconsideration of the new outage reporting rules. Interested parties may file for reconsideration within 30 days of the notice; petitioners may appeal the decision within 60 days.

The cases involve Verizon and Verizon Wireless. In July 2009, Verizon experienced a reportable network outage and submitted a timely report concerning that outage. In July 2010, the FCC issued a Notice of Apparent Liability against Verizon for failing to file a true, complete and accurate outage report regarding a significant disruption in service. The Bureau proposed a monetary forfeiture of $25,000. Subsequently, in March 2011, the Bureau issued a letter of inquiry to Verizon, expanding its investigation into Verizon’s compliance with reporting requirements. In the Consent Decree released on Wednesday, Verizon agreed to pay $90,000 to resolve the investigation.

In the other investigation, the Bureau first issued a letter of inquiry in June 2008, directing Verizon Wireless to submit a sworn written response to a series of questions relating to Verizon Wireless’s compliance with the Commission’s network outage reporting rules. Verizon Wireless submitted a timely response and, in response, the Bureau subsequently issued five follow-up letters of inquiry over the September 2008 through October 2009 time period. Because no notice of inquiry was issued, it is not clear whether the Verizon Wireless investigation involved failure to report or the filing of inaccurate or incomplete reports, or both types of infractions. But in the Consent Decree released on Wednesday, Verizon Wireless agreed to pay $110,000 to resolve the investigation.

Both consent decrees contain provisions requiring Verizon and Verizon Wireless to develop a compliance plan, designate a compliance officer, to perform training of its personnel, to file compliance reports, and to report future violations to the FCC. In addition, the Verizon decree requires it to modify its existing processes for gathering, analyzing, and reporting information about its network outages particularly as they relate to public safety answering points. The Verizon decree does not indicate how many outages were involved, but nothing suggests that it was more than one.

Because the FCC received substantially more than the amount it originally proposed in the Verizon NAL, it appears that the Bureau found additional potential violations in its subsequent investigation. In a case settled in August 2011, Alpheus Communications agreed to pay $55,000 for failing to timely file outage reports.

According to the Public Notice, the Report and Order "means that interconnected VoIP service providers will be obligated to report significant service outages to the FCC." The Public Notice also promises that the Report and Order "defines outage reporting for interconnected VoIP service, establishes reporting criteria and thresholds, and discusses how the reporting process should work, what information should be reported, and confidential treatment of the outage reports." Details on these obligations will not be available until the text of the order is released.

Importantly, the FCC also significantly narrowed the scope of the rules that it initially proposed. The FCC deferred action on a number of questions, including the possibility of setting thresholds for reporting outages of broadband Internet service, and measurements for outages of both interconnected VoIP and broadband Internet services based on performance degradation, as opposed to complete service outage.

Significant Enforcement Penalties May Apply. Meanwhile, interconnected VoIP providers should take note of these rules. In the past, the FCC has set significant fines for failing to file the required outage reports. It has proposed a base forfeiture of $40,000 for failing to file the Electronic Notification, $20,000 for failing to file the subsequent Outage Reports and $25,000 for filing incomplete or inaccurate reports. Presumably, the same fines will apply, but only after the VoIP provider first receives a citation.

The Commission will consider a Report and Order to extend outage reporting under
Part IV of the rules to interconnected Voice over Internet Protocol (VoIP) service providers. Extended reporting will enable the Commission to fulfill statutory E9-1-1 obligations and help protect the growing number of Americans who rely on VOIP phone service.

The FCC notice is available at this link. On the 15th, interested persons may view the FCC meeting at this link.

FCC Chairman Genachowski, in his prepared remarks, stressed the growing importance of non-traditional communications technologies. His position on application of the FCC's outage reporting rules to these technologies is clear:

A growing number of people are cutting the cord and replacing their phone lines with mobile service. Others are using VoIP and cable for phone calls.
We want our outage reporting systems to keep pace with those changes.

So, too, is Commissioner Copps' position. In his remarks to the same workshop, Commissioner Copps stated:

I was pleased to support last May’s NPRM exploring network outage reporting for VoIP and Broadband services. It's long past time for us to get beyond thinking about critical communications as just traditional voice and to realize consumers don’t make a lot of these distinctions that so often seem to fixate us and stymie us here in Washington, and especially they don’t make them when they are in trouble and need action fast. Consumers expect to communicate using all the tools at their disposal, and certainly they expect to get and should get the critical information they
need through their IP-based services.

VoIP providers raised many jurisdictional objections to the FCC proposal. At the policy level, at least, these two Commissioners seem convinced that extension of the outage reporting requirements is a good idea.

The Ooma outage may assure FCC staff that they are on the right track in requiring reporting of such outages in the future. Just last week, the Public Safety Bureau announced it was holding a "Workshop/Webinar" on the extension of the reporting requirements to VoIP and broadband providers. The portion of the workshop devoted to outage reporting is described as examining how public safety agencies and critical infrastructure industries rely on communications "and how outages of interconnected VoIP and broadband Internet service providers could affect their vital work." It looks like the FCC needs no convincing of the wisdom of requiring new outage reporting by VoIP providers.

The case in question involves Alpheus Communications. In July 2010, the FCC issued a Notice of Apparent Liability against Alpheus for violations of the FCC's network outage reporting rules. In the NAL, the Enforcement Bureau proposed a two-tiered approach to outage violations. The Bureau proposed a $40,000 fine for failing to file the outage Notification that is due within 2 hours after a carrier discovers that a qualifying outage has occurred. Failures to file the follow up reports -- one due within 72 hours and a final report due within 30 days -- would be subjected to a lesser amount of $20,000 per violation.

Using this two-tiered approach, the FCC proposed to fine Alpheus $60,000 for (1) a failure to file the Notification (due within 2 hours) and (2) failure to file the initial report due within 72 hours. In the Consent Decree, Alpheus agreed to pay $55,000 to resolve the NAL. The consent decree also contains provisions requiring Alpheus to develop a compliance manual, to perform training of its personnel and to report future violations to the FCC.

Because the FCC received close to the amount it originally proposed, we would not be surprised to see the FCC use the same two-tiered approach in the future. This two-tiered approach would apply only to failures to file the outage reports, however. A pending Verizon case suggests that the Bureau views the filing of inaccurate or incomplete reports as more serious than the failure to file. In that case, the filing of a report that did not "completely and accurately describe the outage" garnered a $25,000 proposed fine (more than if Verizon had not filed the report).

5/16 UPDATE: The FCC released the text of its proposal, which would set a service quality standard for IP-enabled services for the first time.

Unfortunately, the presentation was short on specifics, and the FCC did not release the text of its NPRM today. (The Bureau asked for "editorial privileges" on the item). Only the Press Release was made available yesterday. So far, here is what we know:

• Providers will be required to file outage reports as provided in Section 4 of the Commission's rules already. Generally, this requires an Electronic Notification, an Initial Outage Report and a Final Outage Report for each incident above the threshold levels.
• The rules will apply to interconnected VoIP providers, broadband Internet service providers and to broadband backbone providers.
• Both facilities-based and resale providers will be obligated to make reports of outages.
• The threshold level of outage that triggers a report has not been determined. This will be the primary area of comment on the rules.

In addition, because the classification of both interconnected VoIP and broadband-based services is in doubt, the FCC's authority to apply the rules also is an issue. The NPRM proposes to use the FCC's ancillary authority under Title I. Commissioner Copps agreed with this approach, but reiterated his view that the services are Title II telecommunications services, and said that proceeding under Title II would be his preference. Commissioner McDowell, on the other hand, refused to join this portion of the NPRM, saying only that he welcomed a discussion of the Commission's authority in response to the rulemaking proposal. Welcome to "Comcast Junior."

Meanwhile, interconnected VoIP and broadband service providers should take note of these rules. In the past, the FCC has set significant fines for failing to file the required outage reports. It has proposed a base forfeiture of $40,000 for failing to file the Electronic Notification, $20,000 for failing to file the subsequent Outage Reports and $25,000 for filing incomplete or inaccurate reports. (All of this was determined with a base forfeiture of $3,000 for failing to file a required report, an inconsistency we've commented upon before.)

As the chart shows, the FCC has imposed many telecom obligations on interconnected VoIP on an individual basis. In each instance, the FCC relied upon its ancillary authority to impose the obligation, even if it were ultimately to classify interconnected VoIP an information service. In a few instances, the FCC has not -- yet at least -- imposed a telecom obligation on interconnected VoIP. VoIP services that do not meet the FCC's definition of "interconnected VoIP" are not subject to any of the telecom service requirements today.

DISCLAIMER: This chart is for informational purposes only and is not intended to serve as legal advice or a comprehensive review of regulatory obligations. With that in mind, you may view the chart here.

One carrier agreed to a "voluntary contribution" of $40,000. The other carrier agreed to a contribution of $50,000, must implement a compliance training program and must file three compliance reports with the FCC. Clearly, the Commission felt that this carrier's degree of non-compliance was greater. A little prevention can make all the difference in these investigations.