Commission Sides with SIP Trunk and VOIP Users on 911 Fees

In a victory for enterprise users that rely on SIP trunking and other VOIP services, on October 30, 2019, the FCC released a Declaratory Ruling stating that states and municipalities “cannot charge the same class of subscribers total 911 fees that are higher for VoIP services than for traditional telecommunications services with the same 911 calling capability.”  More concretely, the Commission declared that examples of prohibited 911 fee differentials include: “(1) imposing caps or limits on the 911 fees or charges that can be collected from telecommunications subscribers regardless of outbound calling capacity, with no similar caps or limits placed on VoIP subscribers, and (2) imposing or collecting higher total 911 fees or charges on VoIP subscribers than on traditional telecommunications subscribers for the same amount of calling capacity by applying the same rate to different units of measurement.” For example, a municipality cannot assess 911 fees on a per number basis on VOIP services while assessing 911 fees on a per circuit (voice pathway) basis on TDM services.

In issuing its Declaratory Ruling, the Commission was interpreting the NET 911 Act of 2008, 47 U.S.C. § 615a-1(f)(1), stating that a 911 fee or charge on VoIP service subscribers “may not exceed the amount of any such fee or charge applicable to the same class of subscribers to telecommunications services.”  The policy rationale underlying the ruling was that allowing states or localities to charge higher 911 fees for VoIP services would discourage the deployment of advanced, IP-based services in the United States.

The back story leading up to this Declaratory Ruling is also interesting in that a tax and fee consulting group called Phone Recovery Services LLC and/or its principal had either filed qui tam suits initiating the fee recovery efforts by many of the municipalities against various carriers (including AT&T, BellSouth, and Teleport) or served as a consultant to the municipalities seeking recovery. The litigation from which the Petition for Declaratory Ruling arose came from such fee recovery actions brought by municipalities in Alabama, Florida, Pennsylvania, and South Carolina.

How do you know if this is an issue for your enterprise?  We suggest that you look at your largest SIP/VOIP invoice by accessing your detailed invoices on the supplier’s portal.  Read through the beginning notices section of the invoice, which are typically in the first few pages—this section highlights changes in taxes and regulatory fees in words.  After that, you can review the numbers.  Look at the taxes and surcharge summary as that outlines the specific taxes and regulatory fees by type that are assessed on each of your invoices.  You can then compare your SIP/VOIP taxes and surcharges to any TDM voice invoices that you have (if you still have that service) to see the relative differential in the taxes and surcharges between TDM voice and SIP/VOIP.  This analysis will help you identify if you have any issues worthy of deeper analysis and a possible refund claim.

If you would like any additional information regarding 911 fees or other telecom tax and fee issues, please contact either Steve Rosen or Theresa Knutson.