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Prepaid Deadlines Clearer
Deadlines From FCC's Recent Prepaid Card Regulation Order Start to Emerge
By Thomas K. Crowe, ESQ. (Originally published in InteleCard News, November 2006)
The FCC's recent Declaratory Ruling and Report and Order ("Order") clarifies that all prepaid calling card providers offering telecommunications capability are subject to existing federal regulation as telecommunications services providers, including Universal Service Fund ("USF") reporting and contributions. In its Order, the FCC also establishes new requirements that prepaid card providers a) report Percentage of Interstate Usage ("PIU") and call volume data to underlying providers ("PIU report") and b) file quarterly certifications with the FCC. The deadlines for the PIU report and FCC certification requirements, along with the closely related deadlines for filing FCC Forms 499-A registration and 499-Q, have become clearer due to the publication of interim rules in the Federal Register.
499-A Registration/499-Q
Prepaid card providers, including those offering menu-based prepaid services and those using underlying IP-transport to carry calls, generally must be in compliance with the FCC's USF filing and contribution requirements as well as access charge requirements, as of October 31, 2006. The FCC's Order makes clear that prepaid card providers not in compliance by this date face potential enforcement action. Therefore, prepaid card providers must consider the ramifications of the Order for collection and remittance of USF contributions before October 31, 2006. Providers should consider submitting an August 1, 2006 FCC Form 499-Q along with the November 1, 2006 FCC Form 499-Q because the August 1st form projects revenues for the fourth quarter of 2006 (October 1, 2006 to December 31, 2006), a quarter in which prepaid card providers are subject to USF contribution requirements. Most prepaid card providers will want to begin collecting USF assessments from customers as of October 1, 2006 and file an FCC Form 499-A registration before that date.
In the beginning of 2007, prepaid card providers also will be required to submit the February 1, 2007 FCC Form 499-Q and April 1, 2006 FCC Form 499-A. As noted below, prepaid card providers should closely coordinate revenue information submitted on all these forms (and all subsequent quarterly FCC Forms 499-Q and annual FCC Forms 499-A) with the FCC certifications to be filed beginning in 2007.
PIU Report/FCC Certification
The Office of Management and Budget ("OMB") must approve the PIU report and FCC certification requirements before they can become effective because they involve information collection. Assuming OMB approves the reporting and certification requirements during the fourth quarter of 2006, the first deadline for prepaid card providers to report PIU and call volume data to underlying transport providers will be February 14, 2007, and the first deadline for prepaid card providers to submit certifications to the FCC stating compliance with the reporting requirement will be March 31, 2007.
Both the PIU reporting and FCC certification requirements are quarterly requirements, with the PIU report due the 45th day of each calendar quarter and the FCC certification due by the end of each calendar quarter. Therefore, assuming again that OMB approves the requirements in the fourth quarter of 2006, the PIU reporting schedule for 2007 will be as follows: February 14, 2007, May 15, 2007, August 14, 2007, and November 14, 2007.
Similarly, assuming OMB approval in the fourth quarter of 2006, the FCC certification schedule for 2007 will be as follows: March 31, 2007, June 30, 2007, September 30, 2007, and December 31, 2007.
As discussed in our previous article on the new FCC requirements (ICN Sept.06 pg. 52 or see www.intelecard.com), the FCC decision requires all prepaid card providers to report PIU data to those carriers from which they purchase underlying transport services. This requirement is intended to address situations where Calling Party Number ("CPN") information is not available (i.e., SS7 technology is not used). Specifically, a prepaid card provider must report prepaid calling card PIU factors, and call volumes on which these factors were calculated, based on not less than a one-day representative sample. The data must be computed separately for originating and terminating traffic on a state-specific basis. If the prepaid card provider fails to provide the appropriate PIU information to the transport provider in a timely manner, the transport provider may treat the prepaid card provider's traffic as subject to a 50% default PIU. In addition, the transport provider may audit the PIU reports it receives from a prepaid card provider "if it has a reasonable basis to believe that such reports contain inaccurate or misleading data."
The FCC's decision also requires prepaid card providers to file quarterly certifications with the FCC, signed by an officer of the company under penalty of perjury, stating that the provider is in compliance with the reporting requirements described above. The certification should also include the percentage of interstate, intrastate, and international calling card minutes for that reporting period. To facilitate USF contributions, and in addition to required FCC Form 499-A and Form 499-Q submissions, prepaid card providers must also certify the percentages of total prepaid calling card service revenues that are interstate and international and therefore subject to federal USF assessments for the reporting period. Lastly, the certification must include a statement that the company is making the required contributions based on the reported information. The percentages of interstate, intrastate and international calling card minutes for each reporting period reported to the FCC must not materially diverge from the revenues reported and projected on the FCC Forms 499-A and 499-Q submitted to the Universal Service Administrative Company.
The FCC's new prepaid card provider regulations stand as a challenge not only because of the number of regular filings but also because of the strategic need to closely coordinate the filings with a provider's USF contribution and collection strategy.