Cisco Webex recently filed a Request for Review of a USAC audit that reclassified a portion of revenue from Cisco’s Webex online collaboration service as telecommunications. Specifically, USAC concluded that the audio features of Webex are “separable” from other features because participants can use third-party audio services and can use the audio services without using the other features.
In its filing, Cisco describes Webex as an online collaboration service that allows users to share information and collaborate on work product through the integration of audio, video, and computing capabilities. Webex offers a wide range of capabilities, including desktop sharing, document sharing, whiteboards, video integration, remote keyboard and mouse control, host controls, chat features, presence information, and audio integration. Webex also offers integration with software, such as Microsoft Outlook and Lotus Notes, and instant messaging programs, including AOL Instant Messenger, Windows Messenger, Google Talk and Yahoo Messenger. Finally, Webex enables users to participate in collaboration sessions using a traditional telephone and a computer, a computer and VoIP telephony, or a mobile device.
USAC determined that the desktop and document sharing services, as well as Webex’s active talker and active speaker features, are information services. However, USAC determined that Webex offers a separable telecommunications component because customers can use the audio features with or without accessing the services other features. Therefore, USAC concluded that Webex more closely resembles a bundle of telecommunications and non-telecommunications and not an integrated information service. As a result, USAC directed Cisco to revise its Form 499 to report all audio feature revenue as USF-assessable telecommunications.
Cisco argues in its Request for Review that USAC improperly focused on how customers could use the Webex service and not the capabilities the service offers.
Our firm has been advising clients of this possible outcome for several years, as we have observed an increasing trend since the FCC’s reconsideration of its InterCall order for USAC to identify a voice component that can be unbundled from an integrated information service offering. In its 2004 pulver.com FWD Order, the FCC classified pulver.com’s FWD service as an information service because it relayed VoIP calls between computer users. The FCC concluded that, “the fact that the information service Pulver is offering happens to facilitate a direct disintermediated voice communication, among other types of communications, in a peer-to-peer exchange cannot and does not remove it from the statutory definition of information service and place it within, for example, the definition of telecommunications service.” However, since Pulver, to our knowledge, the FCC has not found any revenue-generating service with a telecommunications component to be sufficiently “sufficiently integrated” to meet the statutory definition of an “information” service that would be exempted from USF assessment.
While USAC’s determination directly addresses only Cisco’s USF contribution obligations related to Webex, the potential consequences of a “telecommunications” classification of the services are much more far-reaching and include the following:
- Full Title II regulatory obligations, including other fund contributions (TRS, LNP, NANP, FCC regulatory fee), CPNI, CALEA, CVAA;
- State licensing, tariffing and other requirements;
- State USF and other regulatory charges; and
- State communications and transaction taxes.
Because of the broad-reaching implications of USAC’s determination for any communications offering that includes an audio or voice component, including unified communications, CaaS, and online collaboration services, we urge clients to review their current offers in consultation with counsel to determine what steps they should take going forward. If you have questions or would like to discuss what this decision means for your company, please contact your assigned attorney or you may contact Jonathan S. Marashlian at jsm@commlawgroup.com.
