WASHINGTON-Even as two wireless carriers left the forum trying to resolve carrier compensation issues, FCC Commissioner Jonathan Adelstein said that wireless participation in intercarrier compensation reform is essential, and it is likely government will have to resolve the issue.
“We are going to have to do something to reform the system. It is clearly out of date,” Adelstein told reporters last Thursday at a regularly scheduled press breakfast.
How carriers are compensated for traffic sent between their networks has always been a contentious issue. But last week, two wireless carriers, T-Mobile USA Inc. and Nextel Communications Inc., confirmed they have dropped out of the Intercarrier Compensation Forum, the group trying to resolve the issue.
The ICF has been meeting for months to try to come up with a consensus plan that it can present to the FCC 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. The incumbent local exchange carriers, particularly the regional Bell operating companies, have complained that with the Internet, some competitive carriers are gaming the system because more traffic goes out than comes in so the Bells have to pay. The Bells began arguing for a new scheme of bill-and-keep, where carriers decide the best method to transport calls, buy the transport and then bill their customers what they think the market will bear. Wireless carriers have made the same argument because more calls go out from wireless than come in so wireless carriers end up paying others to carry traffic.
Research firm Legg Mason Thursday said it believes the breakup of the ICF will mean the FCC will have a much more difficult time reforming the system, but it could take incremental steps.
“A telecom industry group seeking to reform intercarrier compensation appeared largely to fall apart yesterday, as we understand most of its members-including two Bells, all rural LECs and wireless companies, and most competitive LECs-said they could not support the current proposal, and our sense is it’s going to be very difficult, though not impossible, to put Humpty-Dumpty back together again,” said Legg Mason. “Longer term, we continue to believe the system will have to undergo an overhaul because technology, bundling and past policy decisions are driving industry changes that appear to be incompatible with the current framework.”
The work of the ICF will apparently still continue, said Sprint, which did not exit the group.
“Sprint has been an active participant in industry efforts to develop a workable solution to problems with the intercarrier compensation system that are crippling the telecommunications industry’s ability to fully develop the next generation of technologies and products. … However, Sprint remains committed to continue to work with other companies in a good faith effort in whatever forum is most appropriate to accomplish this goal. It is a complex problem presenting a significant challenge, but we believe that if industry representatives-along with regulatory, political and consumer stakeholders-work diligently in a real spirit of compromise, we can fix this problem to the benefit of every consumer in America,” said Sprint spokesman James Fisher.
During his press conference, Adelstein initially forgot to mention wireless companies as being necessary to any final plan but once pressed, said this was an oversight. He then stressed that some of the issues appearing in the implementation of local number portability show that reform is necessary. Intermodal porting in rural areas is supposed to be effective today, but many RLECs received waivers until it is determined how and who will pay for a call to a number ported to a carrier that does not have an interconnection agreement with a RLEC. The wireline and wireless networks are configured differently so it is possible for a wireless carrier to cover an area served by a rural LEC without interconnecting with that RLEC.
A recent study by the National Telecommunications Cooperative Association showed that RLECs would lose more than $2 billion in annual access charges if the intercarrier compensation regime was changed to bill-and-keep.
