FCC schedules vote on updated access arbitrage rules

After a long, complicated deliberation, the FCC is set to vote on new rules to prevent access arbitrage. Here’s what’s happening.

The FCC adopted an Access Stimulation Order on September 26, 2019. The order required access stimulating LECs to bear the financial responsibility for the access and transport costs from the Intermediate Access Provider to their end office or equivalent.

It didn’t take long for someone to find a loophole: insert an IPES (Internet Protocol Enabled Services) provider into the call path.

The IPES Provider Loophole

Figure 1. Access Arbitrage with a LEC and IPES Provider

Under the rules, an IPES provider is not a LEC and therefore is not subject to the access stimulation rules.

On July 15, 2022, the FCC proposed new rules to close this loophole: make the IPES provider subject to the same access stimulation rules.

Second Report and Order

Although the problem and proposed remedy are easy to describe, putting the remedy into the existing law is complicated. The Second Report and Order on access arbitrage (WC Docket No. 18-155) has over 50 pages that discuss and explain the rule changes. The final rule listed in Appendix A is over five pages long. Here’s a summary of the final rule changes:

1. Existing access stimulation rules were updated for LECs that engage in access stimulation.
2. Two paragraphs were added with access stimulation rules for IPES providers that engage in access stimulation.
3. The access stimulation definitions were modified to include IPES providers.

The gist of the access stimulation remedy remains the same:

• If a LEC or IPES provider engages in access stimulation per the ratios in the definition, then the LEC or possibly the IPES provider is responsible for the access charges from the Intermediate Access Provider to the end office or equivalent (the rules were written this way to handle cases where access-stimulating traffic went through the IPES provider but not the LEC), and
• The access stimulating LEC or IPES provider shall designate the Intermediate Access Provider, if any, that will provide transport and access service to the terminating end office equivalent, and
• The Intermediate Access provider shall not charge the Interexchange Carrier (IXC) for transport or access charges.

The Commission has scheduled a vote on this order during their open meeting scheduled for Thursday, April 20, 2023.

If approved, most of the new rules would take effect 30 days after publication in the Federal Register and compliance would be required 45 days after the effective date. Rules on notifying the Commission and other providers of access stimulation must first be reviewed by the Office of Management and Budget (OMB) to comply with the Paperwork Reduction Act. The Wireline Competition Bureau will announce the effective date for the notification rules after the OMB review is complete.

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