FCC Proposes to Extend Outage Reporting Rules to Internet-based Services [Updated: 6/9/11]

Update [6/9/11]:  The FCC’s Notice of Proposed Rulemaking extending outage reporting requirements to interconnected VoIP and broadband-based services was published in today’s Federal Register.  Comments are due by AUGUST 8, 2011 and reply comments are due by OCTOBER 7, 2011.  As we previously noted, the proposed rules raise a number of the same jurisdictional issues as the FCC’s net neutrality order and other Commission initiatives extending various regulatory requirements to IP-based services, and will likely be hotly contested. 

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The FCC believes Internet-related outages are a growing problem for which providers lack sufficient accountability and consumers lack appropriate notice. To address these issues, yesterday the FCC adopted a Notice of Proposed Rulemaking which would require interconnected VoIP, broadband Internet, and broadband backbone providers to report service outages lasting longer than 30 minutes. The proposal would impose reporting obligations similar to those currently borne by wireline and wireless carriers, cable operators, and certain satellite providers, and represents the latest example of FCC efforts to layer traditional carrier regulations on VoIP and broadband providers. The Commissioners voted 4-0 in favor of the proposed rules (Commissioner Meredith Baker recused herself following her announced upcoming departure from the FCC to join NBC/Universal). Citing the recent natural disasters affecting Japan and the Midwest and Southern states of the United States, Chairman Julius Genachowski stated the reporting obligations would provide the FCC with the data necessary to rapidly respond to emergency situations.

Leading Internet service and VoIP providers immediately criticized the proposed new rules, arguing that regulations designed for traditional circuit switched phone service are ill-suited for Internet-based technologies. By contrast, public service commissions of states like California and New York hailed the proposal as an effective means of improving local emergency communications.

A threshold issue is whether the FCC possesses the authority to apply the new rules to interconnected VoIP and broadband-based services. In his partial concurrence to the proposed rules, Commissioner Robert McDowell stated that while he believed the reporting requirements exceeded the FCC’s authority, he “look[ed] forward to learning more” as the rulemaking progressed. Commissioner Michael Copps also voiced his displeasure with the agency’s attempt to utilize its ancillary authority under Title I of the Communications Act to support the new rules and reiterated his preference to reclassify VoIP as a Title II telecommunications service. While recognizing the authority issue, Chairman Genachowski indicated he has little doubt the FCC possesses the authority required to enact the proposed reporting obligations. In many respects, the proposed new rules raise the same jurisdictional issues as the Commission’s adoption of new Net Neutrality rules, and would be expected to face court challenge, if adopted.

Under the proposed rules, providers of the affected services would face substantial fines for violations, with the FCC proposing a base forfeiture penalty of $40,000 for notification failures. As a result, beyond the jurisdictional questions, affected providers will likely focus their comments on the FCC’s proposed definition of outage reporting, the scope of what information must be reported, and whether the FCC will permit providers to submit outage reports confidentially. The deadline for comments and replies will be set after publication of the NPRM in the Federal Register.