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 Channel Futures

Regulation & Compliance


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Government Regulation

Runaway FCC Regulations: Abating the Ban on Agents

  • Written by Technology Channel Sales Professionals
  • March 30, 2022
Agent group seeks FCC change to allow rural health care customers to pay agents earned commissions.

… many hundreds of small- and medium-sized businesses scattered around the U.S. that utilize the sales commission model as the primary mechanism for generating revenue. It also didn’t take into account the tens of thousands of businesses that benefit from the force-add, zero-cost labor our industry provides to IT departments across the country. The federal regulators weren’t aware of the hundreds of thousands of orders our industry places each year to make moves, adds, changes and disconnects on behalf of our customers outside of the RHC Program parameters. The FCC commissioners didn’t know of us, save what they inaccurately associated to all of us from a single example of duplicitous behavior. While not all of us have deep penetration into the health care vertical, what else could a misinformed impression of our industry by a key federal regulatory agency do to other areas of our industry in the future? Back to the question of standing on railroad tracks.

In the case of health care, a Report and Order was adopted in August 2019 that bans all third-party consultants with a sales commission arrangement from working with health care participants of the RHC Program. New requirements on both health care provider and participating cable/telco provider to certify to that effect were added to the RHC Program fund request and reimbursement forms. When the restriction on agents became effective on July 1, 2020, the majority of agents were unaware they would lose some segments of the health care book of business until well into the second quarter of the same year.

It’s Complicated

As information about the agent ban trickled out through a few agent programs, the situation was further complicated by a lack of shared understanding amongst cable and telco providers regarding the scope and impact of the new rules. Adding to the challenge, the extent of the restriction and base loss also varied as a result of an eligibility expansion and the way in which health care providers are instructed to apply for the federal subsidy.

It’s important to note that the FCC recently began allowing urban hospitals to receive subsidies through the Rural Health Care Program. When filed through a consortium, slightly less than half of an application can be comprised of urban locations. The problem is that consortium filings typically use a naming convention that does not match the customer-of-record billing name for the cable or telco account. At this point in time, the Universal Service Administrative Company (USAC) hasn’t made available a search tool that could identify the billing telephone number or billing account number for a service on an application. What that means is that any location, urban or rural, could be tied into a consortium filing name that doesn’t match the location’s billing account name.

Cable and telco providers receive notification of a location’s participation in the RHC program at the end of the application process. That means a cable or telco provider could have paid an agent commission for the prior year without knowledge of the service’s inclusion into an RHC program filing. In that case, the cable or telco would need to claw back a year’s worth of earned commissions from the agent or refuse to release (reject) the RHC Program subsidy. Further, a billing account number representing a hundred locations could have a single location filing for RHC program funds, and the entire account would be banned from agents. What’s worse, because of differences between the billing account name (where the subsidy is applied) and consortium name (where the funds are sourced), many cable and telco providers have unknowingly continued to pay agent commissions in violation.

We also have examples of service providers that still believe in …

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Tags: Agents Regulation & Compliance Strategy Vertical Markets

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One comment

  1. Avatar [email protected] March 30, 2022 @ 7:46 am
    Reply

    First, the TCA – the Technology Channel Association – was the first non-profit trade association founded in 2008. Second, this sounds like a SCTC move. “Every consultant member commits annually to a strict Code of Ethics, ensuring they work for the client benefit only and do not receive financial compensation from vendors and service providers.” They can only be paid by the client. So the health care org would need to pay the consultant.

    The problem with the FCC is that it is always on a 4 year cycle. Every President changes the chair and that changes the results. Frankly, the FCC has had some awful chairmen who have screwed up many things.

    It didn’t help that AT&T made this claim: “We thus agree with AT&T that the current rules “encourage[] the use of consultants or service providers which have made it easy for unscrupulous parties to create artificially low urban rates . . . , which feeds skyrocketing growth in the Program.” AT&T Public Notice Comments at 1-4

    You might need to get AT&T back on your side which will be a challenge considering someone is getting commissioned on these sales and they don’t want it to be the agent partner.

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