MetroPCS Communications Inc. urged the Federal Communications Commission to address alleged efforts to run up local termination fees levied by incumbent and competitive wireline carriers within the scope of an upcoming rulemaking on a related practice regarded as access-charge traffic pumping.
“Potential traffic-pumping abuses are not limited solely to the incumbent local exchange carrier and competitive local exchange carrier access-charges market, but also can occur with respect to local termination charges,” MetroPCS told the FCC. “Terminating carriers may set local termination compensation charges at high levels and then take deliberate steps to inflate the traffic volume artificially and thereby generate excessive local terminating compensation payments. For example, if an ILEC or CLEC offers or provides service to free chat lines, many calls that are generated can turn out to be local calls that are subject to local terminating compensation rates rather than interexchange calls that are subject to access rates.”
MetroPCS said termination rates charged by competitive telecom carriers can be largely unregulated, creating “a powerful incentive for CLECs to set terminating compensation rates at artificially high levels, and to pursue business plans purposefully designed to generate significant directional traffic.”
MetroPCS, T-Mobile USA Inc., Verizon Wireless, and other telecom carriers are tied up in federal litigation by North County Communications Corp., a CLEC trying to recover disputed termination charges.
Traffic termination between wireless and wireline carriers is generally governed by reciprocal termination arrangements between the parties. When there is a gross imbalance of communications between carriers, parties can rely on a traffic termination formula crafted by the FCC.
“Defendants have refused to pay the charges billed” and “refused to contact plaintiff to enter into a separate arrangement to pay for the provisioning of service and corresponding payment obligations between the parties,” stated North County in its third amended complaint.
Finger pointing
AT&T Inc., parent company of the No. 1 mobile phone carrier, and Qwest Communications International Inc. are pushing the FCC to promptly launch a broad rulemaking on access-charge traffic pumping. But a group of incumbent and competitive rural wireline carriers claim AT&T is a big part of the problem.
“AT&T and other large [long-distance carriers] have been engaging in unlawful self-help by refusing to pay validly tariffed access charges since last year,” the rural carriers stated. “The commission has repeatedly found this practice to be unlawful-including multiple such rulings specifically against AT&T. AT&T’s repeated resort to unlawful self-help constitutes regulatory arbitrage that circumvents the commission’s access-charge regulatory regime, and inflicts massive harm on rural carriers.”
In late June, the FCC suspended tariffs of 39 rural carriers and launched an investigation of alleged traffic-pumping activities after complaints from wireless and long-distance carriers. At the same time, the FCC said telecom carriers could not block calls from other carriers in retaliation for what they consider inflated termination charges.
Idol pumping
Rural carriers challenge the notion that traffic pumping is nefarious, arguing that creating new methods to increase traffic-something they’ve been forced to do because of declining rural populations and competition from cellular carriers-is standard fare for telecom carriers, including AT&T.
“When AT&T Mobility entered into an arrangement with American Idol to provide the service that allows viewers to vote for their favorite vocalist by text message or cellphone call, the teaming was described in the media as: ‘This high-volume application will be the first major wireless interactive TV tie-in ever seen in the U.S.’ Does this constitute an ‘illegal traffic-pumping scheme,'” asked the rural wireline carriers. “Or is AT&T exploiting a new serve application designed to increase both its service and access revenues?”
FreeConference.com struck a similar note, saying AT&T is missing the point. “Increased traffic from greater participation in conference calls . increases revenues to the [long-distance carrier] serving that customer, either through increased per-minute fees or the likelihood that users will ‘break the bucket’ of [long-distance carriers] and wireless calling plans and/or chose higher buckets, generating yet more revenue for the [long distance carriers] and wireless carriers,” stated Global Conference Partners, the company behind FreeConference.com.
