HWG LLP Advisory (PDF)
By: Kristine L. Devine and Alex Tate
On September 13, the California Public Utilities Commission (“CPUC”) issued a proposed decision that would implement a broad-ranging set of new registration and authorization requirements on interconnected VoIP providers. The CPUC still has to vote on and approve the proposed decision before it takes effect. A vote could happen as early as October 17.
If this proposed decision is approved, it will create three new categories of interconnected VoIP provider:
- Digital Voice Nomadic provider – These providers will again be required to submit a simplified registration form through a new Nomadic Registration process.1 This process will be similar to the registration process required of wireless providers and the former registration process for Digital Voice Service providers under Section 285, which the CPUC eliminated in 2021.2 This category is limited to providers that provide only nomadic service. (Providers of nomadic service are those that cannot distinguish between intrastate and interstate calls.3) Note that providers of fixed interconnected VoIP service that offer a nomadic option will fall into one of the two Digital Voice Fixed categories.4
- Digital Voice Fixed provider (non-facilities based) – These providers will continue to be required to submit the streamlined Certificate of Public Convenience and Necessity (“CPCN”) application form through the Section 1013 registration process to obtain operating authority.5
- Digital Voice Fixed provider (facilities-based) – These providers will be required to obtain a CPCN.6
All three categories will be subject to existing requirements to pay state universal service surcharges, comply with applicable backup power requirements, and report property taxes and pricing data of certain services.7 The proposed order also will require VoIP providers to post performance bonds, pay CPUC User Fees (a regulatory fee to finance the CPUC’s budget), and file annual affiliate transaction reports.8 All three categories of providers will also be subject to the CPUC’s consumer protection and enforcement division,9 which is quite active and (like the Federal Communications Commission) leverages its enforcement power to enter into consent decrees with providers that want to avoid a contested proceeding at the CPUC.
Importantly, the order also proposes to require all three categories of VoIP providers to take certain steps to either notify the CPUC or seek prior approval of transfers of control.10 A formal application for approval is required by Digital Voice Fixed providers under certain circumstances, but even if a formal application is not required, Digital Voice Fixed providers will be required to notify the CPUC of the transfers through the CPUC’s advice letter process.11 Digital Voice Nomadic providers will be required to make an information-only filing updating their registration information.12 Notably, however, the CPUC retains the right to require a formal application for approval if it determines that it is warranted by the circumstances of the transaction.13
The CPUC will automatically migrate existing VoIP provider registrations to the Digital Voice Fixed category.14 This means that providers that qualify for the Digital Voice Nomadic category must affirmatively opt-out of automatic migration within 45 days of the issuance of the final decision by submitting a written attestation to the CPUC.15 Once the CPUC reviews the attestation, the provider will be migrated to the Digital Voice Nomadic category.16
VoIP providers that are not currently registered with the CPUC but are providing service in California will be required to file the appropriate registration within 180 days of the issuance of the final decision.17 Those providers that began offering VoIP service in California before the effective date of the final decision will be required to pay state universal service surcharges owed from the date they began service until the date they registered, plus 10% in annual interest.18 This requirement will apply to providers who qualify for the Digital Voice Nomadic category but did not previously register due to the elimination of the former Section 285 registration process in 2021.
This decision is not yet final. Interested parties can file comments (and reply comments) under CPUC Rule 14.3. Comments must be filed by 5 p.m. on Thursday, October 3. Reply comments must be filed by 5 p.m. on Tuesday, October 8.
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HWG LLP’s cross-disciplinary telecommunications practice advises clients on federal and state legislative and regulatory proceedings, company compliance, and related litigation matters. Please contact Kristine Devine or Alex Tate for more information.
This advisory is not intended to convey legal advice. It is circulated publicly as a convenience and does not reflect or create an attorney-client relationship.
1 Decision Establishing Regulatory Framework for Telephone Corporations Providing Interconnected Voice over Internet Protocol Service, Cal. Pub. Util. Comm’n, R.22-08-008, at 2, 31–33 (Sept. 13, 2024).
2 Id. at 2, 8.
3 See id. at 31 (requiring Digital Voice Nomadic providers to attest “that they do not have the capability to track intrastate and interstate calls”).
4 Id. at 21–22.
5 Id. at 2, 30.
6 Id.
7 Id. at 58–68.
8 Id. at 68–75. Digital Voice Fixed providers will also have to file annual operating and financial reports. Id. at 75–76.
9 Id. at 67–68, 82–83.
10 Id. at 80.
11 Id. at 80, App. G at 2.
12 Id. at 80.
13 Id. at 80, App. G at 1–2.
14 Id. at 51–58.
15 Id. at 53, 57–58.
16 Id. at 54.
17 Id. at 33.
18 Id. at 61–62.