WASHINGTON-A federal appeals court’s interest in how the Federal Communications Commission solves carrier compensation issues could pre-empt a telecom industry group’s efforts to solve the problem.
William Maher, chief of the FCC’s Wireline Competition Bureau, said he hasn’t given the industry group a deadline yet, “but the U.S. Court of Appeals for the District of Columbia Circuit keeps asking our attorneys about it.”
The intercarrier compensation forum has been meeting for months to try to come up with a plan that it can present to the commission to solve a problem that has gotten a lot more tricky with the advent of new technologies, including wireless.
Under the current system, adopted in the wake of the Telecommunications Act of 1996, carriers pay each other to carry traffic using a scheme known as reciprocal compensation. Incumbent local exchange carriers, particularly the regional Bell operating companies, have complained that with the Internet, some competitive carriers are gaming the system since more traffic goes out than comes in, forcing the Bells to pay more. Bell companies began arguing for a new scheme called bill-and-keep, where carriers decide the best method to transport calls, they buy this transport and then bill customers what they think the market will bear. Wireless carriers have made the same argument since more calls go out from wireless services than come in so wireless carriers end up paying others to carry traffic.
A panel at the National Association of Regulatory Utility Commissioners convention last week extolled the pros and cons of the bill-and-keep method. Competitors and small rural exchange carriers do not like it.
Some groups complained they are not involved in the intercarrier compensation forum because they would not agree to a bill-and-keep program. “We have not been a party to the discussions. The criteria to participate is that you endorse bill-and-keep as the end product,” said John Windhausen, president of the Association of Local Telecommunications Service. “Bill-and-keep has some fundamental problems.”
The National Telecommunications Cooperative Association is also against using a bill-and-keep solution. “Simply put, the study results show that central office bill-and-keep is not a financially feasible concept for rural ILECs. Without a sound financial base, these companies will no longer be able to continue to provide outstanding services and public benefits; neither will they be able to invest in the infrastructure necessary to offer advanced services as mandated by the telecom act,” said Michael Brunner, NTCA’s chief executive, referring to a study released by NTCA at NARUC.
The NTCA study showed that rural ILECs would lose more than $2 billion in annual access charges if the intercarrier compensation regime was changed to bill-and-keep.
The Cellular Telecommunications & Internet Association is not participating in the forum because it was told industry trade associations were not welcome, said Michael Altschul, but several carriers are participating either on their own or because they have Baby Bell affiliates.
The discussion surrounding intercarrier compensation comes amid renewed debate regarding how much competitors should pay to lease facilities. FCC Chairman Michael Powell called for state regulators to join him in crafting new rules rather than appealing a court decision that said the FCC cannot delegate price-setting authority to the states.
“The D.C. Circuit made clear that where the FCC has been entrusted and directed by Congress to make critical decisions it may properly enlist the aid of state commissions in developing the factual record,” said Powell. While Powell did not say how he would change the rules for wireless carriers, the D.C. Circuit said the mobile-phone industry does not need access to landline facilities at below market rates.
