@@ -203,9 +203,11 @@ func takeCounterSnapshot(ctx context.Context, c *Client) (*counterSnapshot, erro
 //   - /api/v1/telemetry/payload: pinned to builtin_tool_calls only — pure
 //     in-process counters that move with call_tool_*/retrieve_tools traffic
 //     regardless of whether heartbeat SENDING is enabled. Network-dependent
-//     fields are deliberately excluded. If the telemetry service itself is
-//     unavailable (503) at both snapshots, that sub-check is recorded as
-//     skipped with a reason (FR-004) rather than asserted.
+//     fields are deliberately excluded. If the telemetry service is unavailable
+//     (503) at the boot baseline, that sub-check is recorded as skipped with a
+//     reason (FR-004 environment skip). If it is healthy at the baseline but
+//     disappears under matrix traffic, that is a regression and the sub-check
+//     FAILS rather than being masked as a skip.
 func checkCountersMoved(ctx context.Context, c *Client, before *counterSnapshot, timeout time.Duration) ([]gatereport.Step, *counterSnapshot, error) {
 	if before == nil {
 		return nil, nil, fmt.Errorf("no baseline counter snapshot recorded by the matrix run")
@@ -218,9 +220,15 @@ func checkCountersMoved(ctx context.Context, c *Client, before *counterSnapshot,
 		if err != nil {
 			return nil, nil, err
 		}
+		// The telemetry sub-check only skips when telemetry was unavailable at
+		// the baseline (no reference point). If it was available at baseline we
+		// must wait for it to actually move — a mid-run disappearance is a
+		// regression, not a reason to stop polling early.
+		telemetryMoved := !before.TelemetryAvailable ||
+			(after.TelemetryAvailable && after.TelemetryBuiltin > before.TelemetryBuiltin)
 		moved := after.TokensToolListSize > before.TokensToolListSize &&
 			after.UsageCalls > before.UsageCalls &&
-			(!before.TelemetryAvailable || !after.TelemetryAvailable || after.TelemetryBuiltin > before.TelemetryBuiltin)
+			telemetryMoved
 		if moved || time.Now().After(deadline) {
 			break
 		}
@@ -250,16 +258,25 @@ func checkCountersMoved(ctx context.Context, c *Client, before *counterSnapshot,
 		fmt.Sprintf("usage call total %d -> %d", before.UsageCalls, after.UsageCalls))
 
 	switch {
-	case before.TelemetryAvailable && after.TelemetryAvailable:
-		addStep("telemetry-builtin-tool-calls-increase",
-			after.TelemetryBuiltin > before.TelemetryBuiltin,
-			fmt.Sprintf("builtin_tool_calls total %d -> %d", before.TelemetryBuiltin, after.TelemetryBuiltin))
-	default:
+	case !before.TelemetryAvailable:
+		// Telemetry was already unavailable at the boot baseline: this
+		// environment has telemetry disabled, so there is nothing to assert
+		// (FR-004 environment skip).
 		steps = append(steps, gatereport.Step{
 			Name:   "telemetry-builtin-tool-calls-increase",
 			Status: gatereport.StatusSkipped,
-			Reason: "telemetry payload unavailable (503) — telemetry service disabled in this environment; counter not asserted",
+			Reason: "telemetry payload unavailable (503) at baseline — telemetry service disabled in this environment; counter not asserted",
 		})
+	case after.TelemetryAvailable:
+		addStep("telemetry-builtin-tool-calls-increase",
+			after.TelemetryBuiltin > before.TelemetryBuiltin,
+			fmt.Sprintf("builtin_tool_calls total %d -> %d", before.TelemetryBuiltin, after.TelemetryBuiltin))
+	default:
+		// Telemetry was healthy at the baseline but the endpoint went
+		// unavailable (503) under matrix traffic — a real regression, not an
+		// environment skip. Fail rather than mask it.
+		addStep("telemetry-builtin-tool-calls-increase", false,
+			fmt.Sprintf("telemetry payload became unavailable after a healthy baseline (builtin_tool_calls baseline %d) — endpoint regressed under matrix traffic", before.TelemetryBuiltin))
 	}
 
 	if len(failures) > 0 {
 
@@ -246,6 +246,44 @@ func TestCheckCountersMoved_TelemetryUnavailable_SkippedNotFailed(t *testing.T)
 	}
 }
 
+func TestCheckCountersMoved_TelemetryRegressesAfterHealthyBaseline_Fails(t *testing.T) {
+	// Telemetry is healthy at the boot baseline but goes 503 under matrix
+	// traffic. That is a regression, not an environment skip — the sub-check
+	// must FAIL rather than be masked as skipped.
+	fake := &countersFake{toolList: 0, calls: 0, builtin: 3, telemetry: 0}
+	c := fake.client(t)
+	before, err := takeCounterSnapshot(context.Background(), c)
+	if err != nil {
+		t.Fatal(err)
+	}
+	if !before.TelemetryAvailable {
+		t.Fatal("fake telemetry should be available at baseline")
+	}
+	fake.mu.Lock()
+	fake.toolList, fake.calls = 100, 5
+	fake.telemetry = http.StatusServiceUnavailable
+	fake.mu.Unlock()
+
+	steps, _, err := checkCountersMoved(context.Background(), c, before, 0)
+	if err == nil || !strings.Contains(err.Error(), "flat counters") {
+		t.Fatalf("expected failure when telemetry disappears after a healthy baseline, got %v", err)
+	}
+	var telemetryFailed bool
+	for _, s := range steps {
+		if s.Name == "telemetry-builtin-tool-calls-increase" {
+			if s.Status == gatereport.StatusSkipped {
+				t.Errorf("telemetry regression must not be skipped: %+v", s)
+			}
+			if s.Status == gatereport.StatusFail {
+				telemetryFailed = true
+			}
+		}
+	}
+	if !telemetryFailed {
+		t.Errorf("telemetry sub-check must be recorded as failed, steps=%+v", steps)
+	}
+}
+
 // ============================================================================
 // FR-013 negative: a pre-approved (never-quarantined) server fails the
 // quarantine invariant.
 
@@ -786,19 +786,39 @@ else
         "jq -e '.success == true and .data.registries != null and .data.total > 0' < '$TEST_RESULTS_FILE' >/dev/null"
 fi
 
+# Tests 26/27 proxy to the LIVE public "official" MCP registry. When that
+# third-party service is slow/down we log_skip instead of log_fail — a
+# release-blocking gate must not depend on a third party's uptime. But a
+# success:false is ONLY treated as an outage when there is transport-level
+# evidence: curl itself failed/timed out (rc != 0 or empty body), or the proxy's
+# error envelope names an upstream fetch/transport failure. A success:false whose
+# .error is anything else is a real proxy-side regression (same writeError path
+# the handler uses for its own bugs) and must hard-fail — otherwise the gate
+# would silently skip an API regression it exists to catch.
+registry_is_outage() {
+    # $1 = curl rc, $2 = response body
+    local rc="$1" body="$2"
+    if [ "$rc" -ne 0 ] || [ -z "$body" ]; then
+        return 0
+    fi
+    if echo "$body" | jq -e '.success == false' >/dev/null 2>&1; then
+        local err
+        err=$(echo "$body" | jq -r '.error // ""' 2>/dev/null)
+        if echo "$err" | grep -qiE 'timeout|timed out|deadline exceeded|connection refused|no such host|no route to host|network is unreachable|i/o timeout|tls handshake|EOF|temporarily|unreachable|dial tcp|refused|reset by peer|502|503|504|bad gateway|gateway timeout|upstream|server misbehaving'; then
+            return 0
+        fi
+    fi
+    return 1
+}
+
 # Test 26: Search registry servers (Phase 7)
-# NOTE: this proxies to the LIVE public "official" MCP registry. When that
-# third-party service is slow/down (curl times out → empty body, or mcpproxy
-# returns success:false because the upstream fetch failed) we log_skip instead of
-# log_fail — a release-blocking gate must not depend on a third party's uptime. A
-# reachable registry returning a malformed body still hard-fails below.
 log_test "GET /api/v1/registries/{id}/servers"
 RESPONSE=$(curl -s --max-time 10 $CURL_CA_OPTS -H "X-API-Key: $API_KEY" "${API_BASE}/registries/official/servers?limit=5")
 CURL_RC=$?
 echo "$RESPONSE" > "$TEST_RESULTS_FILE"
 if echo "$RESPONSE" | jq -e '.success == true and .data.servers != null and .data.registry_id == "official"' >/dev/null 2>&1; then
     log_pass "GET /api/v1/registries/{id}/servers - Response has servers array and registry_id"
-elif [ $CURL_RC -ne 0 ] || [ -z "$RESPONSE" ] || echo "$RESPONSE" | jq -e '.success == false' >/dev/null 2>&1; then
+elif registry_is_outage "$CURL_RC" "$RESPONSE"; then
     log_skip "GET /api/v1/registries/{id}/servers - external 'official' registry unreachable (curl rc=$CURL_RC); not a proxy regression"
 else
     log_fail "GET /api/v1/registries/{id}/servers - Expected server search results" \
@@ -812,7 +832,7 @@ CURL_RC=$?
 echo "$RESPONSE" > "$TEST_RESULTS_FILE"
 if echo "$RESPONSE" | jq -e '.success == true and .data.servers != null and .data.query == "github"' >/dev/null 2>&1; then
     log_pass "GET /api/v1/registries/{id}/servers?q=github - Response has query field"
-elif [ $CURL_RC -ne 0 ] || [ -z "$RESPONSE" ] || echo "$RESPONSE" | jq -e '.success == false' >/dev/null 2>&1; then
+elif registry_is_outage "$CURL_RC" "$RESPONSE"; then
     log_skip "GET /api/v1/registries/{id}/servers?q=github - external 'official' registry unreachable (curl rc=$CURL_RC); not a proxy regression"
 else
     log_fail "GET /api/v1/registries/{id}/servers?q=github - Expected query parameter in response" \