Halo Wireless defends access charge avoidance methodology

When the FCC declared just a few weeks ago that per-minute access charges must be paid on long-distance calls that begin or end on the PSTN (CP: FCC adopts Universal Service and inter-carrier compensation reform order), many industry stakeholders—especially small rural carriers—were hopeful that the issue had at last been settled.

But resolving it may not be as easy as some may have hoped—as Connected Planet learned from a recent interview with Russell Wiseman, president and chief operations officer for Halo Wireless, a broadband wireless network operator targeting rural areas.

“Halo is building out broadband in unserved markets exactly as the FCC wants to do,” said Wiseman. “We don’t need government capital because we have a second line of business.”

That second line of business is termination services. On that side of the business, Halo has what Wiseman called one “high-volume” customer, for which Halo terminates calls to the PSTN in a way that avoids access charges. Some would argue that the calls involved are VoIP, as they clearly are voice calls and the calls originate in IP format. But Wiseman said access charges don’t apply to those calls, even under the FCC’s new ruling, because a) the calls are not long-distance and b) they are not VoIP. Let’s look at each of those arguments.

The local call argument
As some readers know, wireless providers’ local calling areas, known as MTAs, generally are considerably larger than those of landline voice service providers. For these wireless providers, a local call could be any one beginning and ending in a single state—or even in a single multiple-state MTA.

Halo has base stations in 28 MTAs and the company leverages that infrastructure to enable its client to avoid long-distance access charges. Halo re-originates calls through its own towers at a location close to the called party—close enough, that is, for the call to be considered a local call according to the rules established for wireless carriers.

“We have competent telecom lawyers and the way we read the rules it enables Halo as a common carrier to originate traffic,” Wiseman said.

The enhanced service provider argument
Although Wiseman did not name Halo’s high-volume service provider termination services client, he said the company is not a VoIP provider but instead is an enhanced services provider. The distinction, he said, is that an enhanced services provider does not simply carry a call but also performs some action on it, such as integrating presence information with it or offering a one-number service. The status of Halo’s client as an enhanced services provider has been established in four different federal rulings, Wiseman said.

What happens next?
Not surprisingly, Halo’s practices have caught the attention of small rural telcos who are not receiving the access charges that Halo and its client are avoiding. It’s a big deal for those telcos because access charges are designed to help cover the cost of delivering phone service to remote areas that are more expensive to serve. As Halo’s experience reveals, however, those access charges have become increasingly problematic for companies looking to deliver innovative and potentially lower-cost voice offerings based on IP.

The FCC plans to phase out access charges over a period of at least five to eight years and to replace some of the telcos’ lost revenues through an access charge replacement mechanism. But in the meantime, rural carriers have filed 20 separate complaints against Halo with public utility commissions in 10 states—and Wiseman said defending against all those suits has been so costly that it now threatens Halo’s viability.

In August, Halo put itself into bankruptcy and Wiseman is hopeful that a federal bankruptcy court will make a determination on the access charge issue or remand the issue to a federal district court.

“We’re trying to stay the actions of the state commissions and bring this before the FCC or a federal court,” Wiseman said.