The Prepaid Press - September 15, 2008 - (Page 6)

PREPAID BUSINESS September 15 · 2008 - 6 REGULATORy RUNDOWN by Ed Maldonado Early Fall Regulatory Beat 2. MOBILE: To Roam or Not to Roam Will Smaller Wireless Carriers Have the Ability? WASHINGTON, DC (August 23, 2008) The Federal Communications Commission has apparently tabled plans to revise the regulations governing the rights of the small U.S. based wireless phone carriers, enabling them to “roam” on the networks of larger market rivals. FCC Chairman Kevin Martin has proposed a guarantee to smaller wireless carriers who have rights to unused spectrum to continue roaming for 4 years before losing those rights. The reason for tabling the plan was based in large part to a lack of consensus between the five FCC commissioners as to direction and implementation. The thrust of the initial proposal was the ability of smaller carriers to roam in areas where they own airwaves but have no built-out networks or infrastructure – much like a non-facility based provider. Unclear in the wake of this announcement is the effect of the 2007 FCC order, which affirmed the rights of small carriers to roam larger networks. Small wireless providers are advised to keep track of this issue and proposed plan in 2009 after the Presidential elections. 3. STORED VALUE CARDS: New State Laws Enable Payroll Card Payment of Wages FROM THE STATE LEGISLATURES (August 23, 2008) Payroll card programs will now have more states in which they can offer their services with less ambiguity. Three states have enacted laws, going into effect this year, that directly enable workers to receive their wages or salaries on debit card based payroll cards. These include: the state of Colorado under SB 120 which is effective on August 1, 2008; the state of Connecticut under HB 5114 which will be effective October 1, 2008; and the state of West Virginia under HB 4032 enacted in March 2008. Those working compliance for payroll cards are advised to check rules and regulations in these states as they now have changed. Those promoting payroll card services should also be aware that other requirements as to Pay Stubs and requirements under REG-E are not overridden by these new laws. While good news in these three states, the news from the state houses and senates is not all good for the Payroll Card industry. In 2008, Vermont vetoed the use of Payroll Cards. The Vermont Department of Labor and Industry, Wage and Hour Program, and 21 V.S.A Sec.343 presently prohibit wages to be paid via debit card. The statute expressly requires that wages be paid in cash or check, as defined in the Vermont Uniform Commercial Code, which does not recognize payroll debit cards. Those in the payroll card industry would be wise to stay out of Vermont, at least for now. 4. TELECOM: FCC Announces September 25, 2008 Deadline for Regulatory Fee Payment WASHINGTON, DC (September 1, 2008) The Federal Communications Commission has given preemptive Notice to all interstate providers that fees mandated under Section 9 of the Communication Act of 1934, as amended, related to enforcement, policy, rulemaking, user information and international activities, will be due no later than September 25, 2008 at 11:59pm. Filing and payment must be done under Form 159 with the assessed fee payment amount rated at $0.00314 per dollar of subject revenue. Service providers included for this filing and fee include: 1. All Distance: Provides fixed local exchange services and interstate long distance services to end users for a flat rate which may also include intrastate toll. 2. Interconnected VoIP Providers: Providers of “interconnected VoIP service” as defined under 47 CFR §9.3. 3. Inter-Exchange Carriers (IXC): Providers of long distance telecommunications services substantially through switches, or alternatively, circuits that it owns or leases. 4. Prepaid Card Providers: Providers of prepaid calling services that sell prepaid calling cards, or PINs, to the public or retailers. Such providers may resell the toll service of other carriers, but, if they determine the price of the service by setting the price of the card and control the number of minutes that can be used by the card they qualify as prepaid calling card providers. 5. Toll Resellers: Providers of long distance telecommunications services primarily by reselling the long distance telecommunications services of other carriers. 6. Other Local and Other Toll Service Providers: Other providers of local exchange or toll services, including private service providers (which offer telecommunications services to others and includes companies that offer excess capacity on a private system that is used primarily for internal purposes) and VoIP Toll providers, which use IP technology to facilitate calls that originate and terminate on the public switched network and which undergo no net protocol conversion. 1. VOIP: Interconnected VoIP Resellers Must Comply with E-911 End-User Obligation 2. MOBILE: To Roam or Not to Roam - Will Smaller Wireless Carriers Have the Ability? 3. STORED VALUE CARDS: New State Laws Enable Payroll Card Payment of Wages 4. TELECOM: FCC Announces September 25, 2008 Deadline for Regulatory Fee Payment 5. TELECOM: FCC Enforcement Bureau Pushes Hard for CPNI Compliance 1. VOIP: Interconnected VoIP Resellers Must Comply with E-911 End-User Obligation WASHINGTON, DC (August 15, 2008) The Federal Communications Commission (FCC) Enforcement Bureau has issued a Notice of Apparent Liability for Forfeiture and Order (“NAL”) against an interconnected VoIP reseller for failing to provide fully compliant E911 service to its end-users. Under Case EB-07-SE-310, the FCC found Cardinal Broadband, LLC, and wholly owned subsidiary, Sovereign Telecommunications, liable for a forfeiture in the amount of $25,000 resulting from a July 13, 2007 consumer complaint in a condominium complex called Millstone in Golden, Colorado. The complaint cited that Cardinal Communication was an interconnected Voice over Internet Protocol (“VoIP”) service provider of the complex but did not provide E911 service to enable the consumer to reach the local police department in the case on an emergency. Apparently local law enforcement was aware of this, as the local police department had visited the complex and had provided residents a flyer advising them that they did not have 911 service and that they should call the police department’s regular number in case of emergency. The Enforcement Bureau issued a letter of inquiry (“LOI”) to Cardinal on September 10, 2007 directing it to provide certain information concerning its provision of interconnected VoIP service. Cardinal responded by admitting that it merely “resells” telephone service but claimed that it does not provide an “interconnected VoIP service.” Their argument being the service Cardinal resells did not require ‘broadband connection from the user’s location’ or ‘internet protocol-compatible customer premises equipment [“CPE”]. This placed Cardinal outside of two of the four criteria for interconnected VoIP service. Based upon this, Cardinal did not respond to the remainder of the LOI. The FCC Enforcement Bureau further investigated Cardinal’s website and found claims that the company provided both regular phone lines and the Internet by which its digital telephone adapter could connect for use. The FCC issued a follow-up LOI to Cardinal with this information and thereafter Cardinal acknowledged that the use of an adapter to have telephone service would definitely qualify as Interconnected VoIP, however, Cardinal asserted that it was only a reseller of other companies’ interconnected VoIP services, and not a direct interconnected VoIP service provider itself within the meaning of the Commission’s rules. In finding liability, the FCC Enforcement Bureau reviewed Section 9.5(b)(1) of the Rules that mandate that “[i]interconnected VoIP service providers must, as a condition of providing service to a consumer, provide that consumer with E911 service as described in this section.” The Bureau found that the FCC has previously found that the definition of “Provider,” under Section 9.5 of the Act, is based upon the treatment of telecommunication resellers (as switchless providers) who do not own or operate the transmission facilities. The Bureau thus found that interconnected VoIP providers are ‘providing’ telecommunications regardless of whether they own or operate their own transmission facilities or they obtain transmission from third parties. This being in contrast to services that merely use the PSTN to supply a finished product to end users, interconnected VoIP supplies PSTN transmission itself to end users. This interpretation being consistent with the U.S. Court of Appeals D.C. Circuit upholding of the Commission’s interpretation of the statutory term “provide” in Vonage Holdings Corp. v. FCC, 489 F.3d 1232 (D.C. Cir. 2007). The net effect for interconnected Voice over Internet Protocol (“VoIP”) services, whether they offer services direct, or merely resell, is that consumers must be provided with E-911 access and service to not violate the Telecom Act. If they or their underlying provider does not, the reseller may be fined just as any facility based Interconnected VoIP provider. While this NAL makes the requirements of non-facility based resellers of Interconnected VoIP services under Section 9.5(b) (1) clear, questions remain as to other implications such as the regulatory status of these providers outside core E-911 requirements. Must these resellers now contribute to USF and file the Form 499? Non-facilities based telecommunication providers that sell services directly to consumers currently do – so Interconnected VoIP resellers are now obligated. The definition of Interconnected VoIP that presently requires Interconnected VoIP providers to file and contribute to USF is the FCC’s E-911 Order and Section 9.5. Providers and resellers of Interconnected VoIP services, be they prepaid or post-paid, would be wise to follow

Table of Contents Feed for the Digital Edition of The Prepaid Press - September 15, 2008

The Prepaid Press - September 15, 2008 ISOs Hold Key to Growth in Prepaid Industry Contents From the Publisher: The Show Goes On Regulatory Rundown: Early Fall Regulatory Beat 5 Minutes With Brian Rudolph, Co-owner, Krush Communications TPPEXPO’08 Spotlight Dateline Expo: Prepaid Wireless Update 2008 Wireless in Brief MetroPCS Available at Best Buy Western Capital Resources Inc. to Acquire PQH, Inc. TracFone Launches SafeLink Wireless Prepaid Wireless Roundup CIT Secures Financing for Prepaid Wireless Company MetroPCS Premiers Loopt Social-Mapping Services Virgin Mobile USA Reports Financial Results Dateline Expo: Prepaid Calling Card Update 2008 Inc. 5000 Recognizes Viscom International USAC’s “Carrier’s Carrier” Rule Comes Under Attack NetIQ Extends VoIP Management to Microsoft Office Transverse Launches OSS/BSS Open Source Platform Calling Cards in Brief Dateline Expo: Prepaid and Alternative Payments Update 2008 NETELLER and TransSend to Offer Cards Payments in Brief U.S. Treasury Introducing Direct Express Debit Card Visa Launches New Mobile Payment Services SCX Global Acquired by Rev Worldwide Metavante Selected by Corporate Network eCom ACE and NetSpend Launch March of Dimes Card AccuPOS Announces AccuCount Software Springbok Offers Private Label Prepaid Cards Prepaid 101: ATMs and Prepaid NACS Releases State of the Industry Report PaySpot to Distribute Futura Cards Hypercom Lands Element Payment Services Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - September 15, 2008

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