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[House Report 114-805]
[From the U.S. Government Publishing Office]


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114th Congress  }                                          {    Report
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                          {   114-805

======================================================================

 
        IMPROVING RURAL CALL QUALITY AND RELIABILITY ACT OF 2016

                                _______
                                

 November 14, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2566]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 2566) to amend the Communications Act of 1934 to 
ensure the integrity of voice communications and to prevent 
unjust or unreasonable discrimination among areas of the United 
States in the delivery of such communications, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Duplication of Federal Programs..................................     7
Disclosure of Directed Rule Makings..............................     8
Advisory Committee Statement.....................................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     8
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Improving Rural Call Quality and 
Reliability Act of 2016''.

SEC. 2. ENSURING THE INTEGRITY OF VOICE COMMUNICATIONS.

  Part II of title II of the Communications Act of 1934 (47 U.S.C. 251 
et seq.) is amended by adding at the end the following:

``SEC. 262. ENSURING THE INTEGRITY OF VOICE COMMUNICATIONS.

  ``(a) Registration and Compliance by Intermediate Providers.--An 
intermediate provider that offers or holds itself out as offering the 
capability to transmit covered voice communications from one 
destination to another and that charges any rate to any other entity 
(including an affiliated entity) for the transmission shall--
          ``(1) register with the Commission; and
          ``(2) comply with the service quality standards for such 
        transmission to be established by the Commission under 
        subsection (c)(1)(B).
  ``(b) Required Use of Registered Intermediate Providers.--A covered 
provider may not use an intermediate provider to transmit covered voice 
communications unless such intermediate provider is registered under 
subsection (a)(1).
  ``(c) Commission Rules.--
          ``(1) In general.--
                  ``(A) Registry.--Not later than 180 days after the 
                date of enactment of this section, the Commission shall 
                promulgate rules to establish a registry to record 
                registrations under subsection (a)(1).
                  ``(B) Service quality standards.--Not later than 1 
                year after the date of enactment of this section, the 
                Commission shall promulgate rules to establish service 
                quality standards for the transmission of covered voice 
                communications by intermediate providers.
          ``(2) Requirements.--In promulgating the rules required by 
        paragraph (1), the Commission shall--
                  ``(A) ensure the integrity of the transmission of 
                covered voice communications to all customers in the 
                United States; and
                  ``(B) prevent unjust or unreasonable discrimination 
                among areas of the United States in the delivery of 
                covered voice communications.
  ``(d) Public Availability of Registry.--The Commission shall make the 
registry established under subsection (c)(1)(A) publicly available on 
the website of the Commission.
  ``(e) Scope of Application.--The requirements of this section shall 
apply regardless of the format by which any communication or service is 
provided, the protocol or format by which the transmission of such 
communication or service is achieved, or the regulatory classification 
of such communication or service.
  ``(f) Rule of Construction.--Nothing in this section shall be 
construed to affect the regulatory classification of any communication 
or service.
  ``(g) Effect on Other Laws.--Nothing in this section shall be 
construed to preempt or expand the authority of a State public utility 
commission or other relevant State agency to collect data, or 
investigate and enforce State law and regulations, regarding the 
completion of intrastate voice communications, regardless of the format 
by which any communication or service is provided, the protocol or 
format by which the transmission of such communication or service is 
achieved, or the regulatory classification of such communication or 
service.
  ``(h) Exception.--The requirement under subsection (a)(2) to comply 
with the service quality standards established under subsection 
(c)(1)(B) shall not apply to a covered provider that--
          ``(1) on or before the date that is 1 year after the date of 
        enactment of this section, has certified as a Safe Harbor 
        provider under section 64.2107(a) of title 47, Code of Federal 
        Regulations, or any successor regulation; and
          ``(2) continues to meet the requirements under such section 
        64.2107(a).
  ``(i) Definitions.--In this section:
          ``(1) Covered provider.--The term `covered provider' has the 
        meaning given the term in section 64.2101 of title 47, Code of 
        Federal Regulations, or any successor thereto.
          ``(2) Covered voice communication.--The term `covered voice 
        communication' means a voice communication (including any 
        related signaling information) that is generated--
                  ``(A) from the placement of a call from a connection 
                using a North American Numbering Plan resource or a 
                call placed to a connection using such a numbering 
                resource; and
                  ``(B) through any service provided by a covered 
                provider.
          ``(3) Intermediate provider.--The term `intermediate 
        provider' means any entity that--
                  ``(A) enters into a business arrangement with a 
                covered provider or other intermediate provider for the 
                specific purpose of carrying, routing, or transmitting 
                voice traffic that is generated from the placement of a 
                call placed--
                          ``(i) from an end user connection using a 
                        North American Numbering Plan resource; or
                          ``(ii) to an end user connection using such a 
                        numbering resource; and
                  ``(B) does not itself, either directly or in 
                conjunction with an affiliate, serve as a covered 
                provider in the context of originating or terminating a 
                given call.''.

                          Purpose and Summary

    H.R. 2566 requires intermediate providers of covered voice 
communications to register with the Federal Communications 
Commission (FCC) and comply with service quality standards set 
by the Commission. In addition, the Act requires that covered 
providers may not use any intermediate provider that does not 
register and meet the service standards.

                  Background and Need for Legislation

    The process of directing a call from its origin to its 
destination is called ``routing.'' When routing a call to a 
destination outside of an originating provider's network, the 
provider uses third party intermediate carriers to route the 
call from the calling party to the called party. As part of 
this process, long-distance providers must pay a local carrier 
to access its exchange--known as ``access charges''--a cost 
that can be high, particularly in rural and hard to reach 
endpoints.
    In part because of the routing process, rural consumers 
experience call quality and call failure issues at a much 
higher rate than their urban counterparts. The problems seem to 
occur most commonly in areas of the country where long distance 
and wireless providers use ``least cost routers,'' or 
inexpensive third party intermediate providers, to complete 
calls while minimizing the cost of call termination charges. 
During the process of routing calls through these intermediate 
providers, calls are dropped, lost, or the quality is degraded, 
depriving rural consumers of reliable telephone service. 
Callers may experience silence or ``dead air,'' prolonged 
ringing with no answer, or prerecorded messages that a call 
cannot be completed. Callers and recipients may also experience 
poor quality, including bad sound, breaks in connection, and 
delays. Call failure can create problems for public safety, 
small businesses, school districts, and many other essential 
services seeking to place calls to rural consumers.
    At the urging of rural telecommunications providers\1\ and 
Congress,\2\ the FCC has taken steps to mitigate call 
completion and quality issues for rural consumers. First, the 
Commission took steps to clarify its existing rules. In 2012, 
the Commission issued a declaratory ruling making it clear that 
carrier practices that result in call failure could be a 
violation of the Communications Act's prohibition on unjust and 
unreasonable practices.\3\ Beyond rulemakings, the agency has 
also taken steps to promote industry-led solutions to the 
problem of rural call completion by hosting workshops to bring 
together stakeholders to discuss the problem and potential 
solutions.\4\
---------------------------------------------------------------------------
    \1\In the Matter of Rural Call Completion, Report and Order and 
Further Notice of Proposed Rulemaking, WC No. 13-39, October 28, 2013, 
see e.g. footnote 2, https://transition.fcc.gov/Daily_Releases/
Daily_Business/2013/db1108/FCC-13-135A1.pdf. (``Rural Call Completion 
R&O'')
    \2\H. Res. 234, Expressing the Sense of the House of 
Representatives that telephone service must be improved in rural areas 
of the United States and that no entity may unreasonably discriminate 
against telephone users in those areas, http://lis.gov/cgi-lis/query/
z?c114:H.RES.234:.
    \3\In the Matter of Developing a Unified Intercarrier Compensation 
Regime et al, Declaratory Ruling, CC No. 01-92, WC No. 07-135, February 
6, 2012, https://apps.fcc.gov/edocs_public/attachmatch/DA-12-154A1.pdf.
    \4\Rural Call Completion Workshop, October 18, 2011, video 
available at: https://www.fcc.gov/news-events/events/2011/10/rural-
call-completion-workshop.
---------------------------------------------------------------------------
    Finally, the FCC has taken steps to address rural call 
completion through new rules. In 2013, the agency adopted rules 
that required more detailed data collection regarding rural 
telephone companies' ability to complete long distance 
calls.\5\ In addition, it adopted rules that gave carriers 
incentives to reduce reliance on least-cost routers and 
prohibited ``phantom ringing.''\6\ In addition, as part of 
reforms to the intercarrier compensation regime, the FCC has 
made changes to its rules that eventually eliminate terminating 
access charges,\7\ which will remove economic incentives for 
bad call routing.
---------------------------------------------------------------------------
    \5\Rural Call Completion R&O
    \6\Id.
    \7\In the Matter of Connect America Fund et al, Report and Order 
and Further Notice of Proposed Rulemaking, WC No. 10-90, October 27, 
2011, para. 34, https://apps.fcc.gov/edocs_public/attachmatch/FCC-11-
161A1.pdf.
---------------------------------------------------------------------------
    Despite these efforts by both legislators and regulators, 
the problem persists. A recent survey indicated that a majority 
of the telephone providers that responded had received consumer 
complaints in the past 12 months.\8\
---------------------------------------------------------------------------
    \8\In the Matter of Rural Call Completion, Ex Parte by NTCA--The 
Rural Broadband Association, June 2, 2016, http://www.ntca.org/images/
stories/Documents/Advocacy/ExParteLetters/05.31.16%20fcc%20ex%20parte-
ntca%20meeting%20with%20fcc%20staff%20re%20rural%20call% 
20completion,%20wc%2013-39.pdf.
---------------------------------------------------------------------------
    As part of the Subcommittee on Communications and 
Technology's ongoing efforts to address the rural call 
completion issue, it examined H.R. 2566, the Improving Rural 
Call Quality and Reliability Act of 2015. H.R. 2566, introduced 
by Rep. David Young (R-IA), Rep. Peter Welch (D-VT), and Rep. 
David Loebsack (D-IA), amends the Communications Act of 1934 by 
adding a new section to require intermediate providers who 
offer the capability of transmitting covered voice 
communications to register with the FCC. The bill also requires 
the Commission to establish service quality standards for 
intermediate providers to ensure the integrity of voice 
communication and prevent unjust or unreasonable discrimination 
among areas of the United States. Considering that the 
investigation into the rural call completion problem has not 
yet revealed a clear cause, the Commission should avoid placing 
unnecessary burdens on carriers that are not the source of the 
problem. The Commission should craft service quality rules that 
are minimally burdensome on registered providers that route 
traffic consistent with industry best practices.
    The bill also prohibits the use of any intermediate 
provider that is not registered with the Commission. H.R. 2566 
provides some transparency in the provision of intermediate 
routing by requiring the Commission to establish a database of 
registered intermediate providers and to make it available on 
the Commission's website. In addition, the bill exempts 
carriers from these requirements who have certified under the 
Commission's existing Safe Harbor rules. To minimize the 
regulatory burdens on carriers that are not causing the rural 
call completion problem, the Commission should make efforts to 
ensure that carriers providing service in good faith in the 
marketplace be allowed to avail themselves of the Safe Harbor 
exemption, including by expanding the scope of the Safe Harbor 
if appropriate.

                                Hearings

    On September 8, 2016, the Subcommittee on Communications 
and Technology held a hearing on H.R. 2566 and received 
testimony from:
     Eric LeBeau, General Manager, Dakin Farms; and
     Lance Miller, President, McClure Telephone 
Company.

                        Committee Consideration

    On September 12 and 13, 2016, the Subcommittee on 
Communications and Technology met in open markup session and 
forwarded H.R. 2566, as amended, to the full Committee by a 
voice vote.
    On September 20 and 21, 2016, the full Committee on Energy 
and Commerce met in open markup session and ordered H.R. 2566, 
as amended, reported to the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no recorded votes taken in connection with ordering 
H.R. 2566 reported.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal and objective of H.R. 2566 is to improve the 
reliability and quality of calls, particularly those made rural 
endpoints.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
2566 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 2566 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 12, 2016.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2566, the 
Improving Rural Call Quality and Reliability Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2566--Improving Rural Call Quality and Reliability Act of 2016

    The Federal Communications Commission (FCC) is an 
independent agency that regulates various aspects of wireline 
(telephone, for example), wireless, cable, and satellite 
communications. H.R. 2566 would require certain providers of 
voice communication services to register with the FCC. It also 
would require the FCC to issue rules establishing service 
quality standards for those providers.
    Based on an analysis of information from the FCC about the 
effort needed to create those service standards, CBO estimates 
that implementing H.R. 2566 would cost $3 million over the 
2017-2021 period. However, under current law the FCC is 
authorized to collect fees sufficient to offset the cost of its 
regulatory activities each year. Therefore, CBO estimates that 
the net cost to implement H.R. 2566 would be negligible, 
assuming annual appropriation actions consistent with the 
agency's authorities.
    Enacting H.R. 2566 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 2566 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 2566 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    The bill contains private-sector mandates as defined in 
UMRA. Specifically, the bill would require all intermediate 
providers of voice communications services to register with the 
FCC and to comply with service quality standards established by 
the agency. (Intermediate providers contract with other 
telecommunication providers to transmit voice calls from one 
destination to another.) The bill also would require 
telecommunications providers that contract with intermediate 
providers to use only those providers that are registered with 
the FCC. Lastly, if the FCC increases annual fee collections to 
offset the costs of implementing its additional regulatory 
activities, the bill would increase the cost of an existing 
mandate on commercial entities required to pay those fees. On 
the basis of information about current industry and regulatory 
practices, CBO estimates that incremental cost to comply with 
the requirements of the bill would not be substantial. Further, 
any increase in fees would amount to no more than $3 million 
over the 2017-2021 period. Therefore, CBO estimates that the 
aggregate cost of the mandates in the bill would probably fall 
below the annual threshold established in UMRA for private-
sector mandates ($154 million in 2016, adjusted annually for 
inflation).
    On September 16, 2016 CBO transmitted a cost estimate for 
S. 827, the Improving Rural Call Quality and Reliability Act of 
2016, as ordered reported by the Senate Committee on Commerce, 
Science, and Transportation on June 29, 2016. The two bills are 
similar and CBO's estimate of their budgetary effects is the 
same.
    The CBO staff contacts for this estimate are Stephen Rabent 
(for federal costs) and Logan Smith (for private-sector 
mandates). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 2566 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    H.R. 2566 directs one rule making within the meaning of 5 
U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    This section provides that the Act may be cited as the 
``Improving Rural Call Quality and Reliability Act of 2016''.

Section 2. Ensuring the integrity of voice communications

    This section amends the Communications Act to require that 
all intermediate providers of covered voice communications 
register with the FCC and comply with the service standards set 
by the Commission. This section also prohibits covered 
providers from using any intermediate provider who is not in 
compliance with this Act. This section requires the FCC to 
promulgate rules to establish a registry within 180 days, and 
rules establishing minimum service standards within one year of 
enactment.
    This section clarifies that this Act does not preempt, 
expand, or change the authority of State agencies or 
commissions. In addition, it clarifies that this Act does not 
affect the regulatory classification of any service.
    This section creates an exception for providers who have 
been certified as Safe Harbor providers under the agency's 
rules and continue to meet the requirements of the Safe Harbor 
exemption. This section also defines several terms used in this 
Act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *

TITLE II--COMMON CARRIERS

           *       *       *       *       *       *       *

PART II--DEVELOPMENT OF COMPETITIVE MARKETS

           *       *       *       *       *       *       *

SEC. 262. ENSURING THE INTEGRITY OF VOICE COMMUNICATIONS.

    (a) Registration and Compliance by Intermediate 
Providers.--An intermediate provider that offers or holds 
itself out as offering the capability to transmit covered voice 
communications from one destination to another and that charges 
any rate to any other entity (including an affiliated entity) 
for the transmission shall--
          (1) register with the Commission; and
          (2) comply with the service quality standards for 
        such transmission to be established by the Commission 
        under subsection (c)(1)(B).
    (b) Required Use of Registered Intermediate Providers.--A 
covered provider may not use an intermediate provider to 
transmit covered voice communications unless such intermediate 
provider is registered under subsection (a)(1).
    (c) Commission Rules.--
          (1) In general.--
                  (A) Registry.--Not later than 180 days after 
                the date of enactment of this section, the 
                Commission shall promulgate rules to establish 
                a registry to record registrations under 
                subsection (a)(1).
                  (B) Service quality standards.--Not later 
                than 1 year after the date of enactment of this 
                section, the Commission shall promulgate rules 
                to establish service quality standards for the 
                transmission of covered voice communications by 
                intermediate providers.
          (2) Requirements.--In promulgating the rules required 
        by paragraph (1), the Commission shall--
                  (A) ensure the integrity of the transmission 
                of covered voice communications to all 
                customers in the United States; and
                  (B) prevent unjust or unreasonable 
                discrimination among areas of the United States 
                in the delivery of covered voice 
                communications.
    (d) Public Availability of Registry.--The Commission shall 
make the registry established under subsection (c)(1)(A) 
publicly available on the website of the Commission.
    (e) Scope of Application.--The requirements of this section 
shall apply regardless of the format by which any communication 
or service is provided, the protocol or format by which the 
transmission of such communication or service is achieved, or 
the regulatory classification of such communication or service.
    (f) Rule of Construction.--Nothing in this section shall be 
construed to affect the regulatory classification of any 
communication or service.
    (g) Effect on Other Laws.--Nothing in this section shall be 
construed to preempt or expand the authority of a State public 
utility commission or other relevant State agency to collect 
data, or investigate and enforce State law and regulations, 
regarding the completion of intrastate voice communications, 
regardless of the format by which any communication or service 
is provided, the protocol or format by which the transmission 
of such communication or service is achieved, or the regulatory 
classification of such communication or service.
    (h) Exception.--The requirement under subsection (a)(2) to 
comply with the service quality standards established under 
subsection (c)(1)(B) shall not apply to a covered provider 
that--
          (1) on or before the date that is 1 year after the 
        date of enactment of this section, has certified as a 
        Safe Harbor provider under section 64.2107(a) of title 
        47, Code of Federal Regulations, or any successor 
        regulation; and
          (2) continues to meet the requirements under such 
        section 64.2107(a).
    (i) Definitions.--In this section:
          (1) Covered provider.--The term ``covered provider'' 
        has the meaning given the term in section 64.2101 of 
        title 47, Code of Federal Regulations, or any successor 
        thereto.
          (2) Covered voice communication.--The term ``covered 
        voice communication'' means a voice communication 
        (including any related signaling information) that is 
        generated--
                  (A) from the placement of a call from a 
                connection using a North American Numbering 
                Plan resource or a call placed to a connection 
                using such a numbering resource; and
                  (B) through any service provided by a covered 
                provider.
          (3) Intermediate provider.--The term ``intermediate 
        provider'' means any entity that--
                  (A) enters into a business arrangement with a 
                covered provider or other intermediate provider 
                for the specific purpose of carrying, routing, 
                or transmitting voice traffic that is generated 
                from the placement of a call placed--
                          (i) from an end user connection using 
                        a North American Numbering Plan 
                        resource; or
                          (ii) to an end user connection using 
                        such a numbering resource; and
                  (B) does not itself, either directly or in 
                conjunction with an affiliate, serve as a 
                covered provider in the context of originating 
                or terminating a given call.

           *       *       *       *       *       *       *

                                  [all]
```