FCC Gets Range of Views on NPRM Proposals to Combat Intercarrier Compensation Arbitrage
The FCC got an array of advice on ways to curb intercarrier compensation arbitrage schemes that stimulate access charges. Industry parties supported, opposed and offered nuanced views on the commission's main proposal to undercut arbitrage financial incentives by giving "access-stimulating LECs" two options: to assume financial responsibility for traffic or allow direct connections. Some offered modified versions and others said the best solution is to finish the move to bill-and-keep arrangements under which carriers generally don't pay each other for exchanging traffic. Comments were posted Friday and Monday in docket 18-155 on an NPRM approved in June (see 1806060010).
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Verizon backed the proposed rule, saying shifting further to bill-and-keep "would eradicate" arbitrage by removing "hidden, inefficient charges" in the system. "Develop a plan to complete the transition to bill-and-keep" for all telecom traffic, Verizon urged. Sprint "vigorously" endorsed moving to "full bill-and-keep" expeditiously. The NPRM's proposed "partial transition" -- "only terminating tandem switching, common transport, and tandem-switched transport would be moved to bill-and-keep and only for traffic destined to an access stimulating LEC" -- would be an improvement, but "leaves the door open for on-going abuses, particularly involving the manipulation of rate elements such as terminating dedicated transport or originating access rates," said Sprint." T-Mobile sought FCC focus "on arbitrage schemes that have caused demonstrable harm to the public, such as a proliferation of robocalling, spoofing, ghost traffic and other types of fraudulent calls," and resisted calls for imposing broad direct connect requirements.
AT&T supported the first option the FCC gave access-stimulating LECs: to be financially responsible for calls delivered to their networks so they, rather than interexchange carriers (IXCs), pay for the delivery of calls to their end offices or the functional equivalent. But AT&T doubted the effectiveness of a second proposed option -- to allow access-stimulating LECs to accept direct connections from IXCs or their chosen intermediate carriers so the IXCs can bypass intermediate carriers chosen by the LEC -- unless the FCC places "financial responsibility for those direct connects on access stimulating LECs that inefficiently require transport to remote locations." NCTA said if the FCC adopts the second option, it must ensure it "does not allow for gaming and continuing arbitrage opportunities."
NTCA noted it and others offered a modified version of the first option. "Carriers engaged in access stimulation would be required to bear financial responsibility for all terminating switched transport costs (including both flat-rated and usage-sensitive charges) between their end office (or remote or functional equivalent) and the tandem switch to which the terminating carrier requires inbound calls to be routed," said NTCA, citing an April letter in which it was joined by AT&T, Verizon, NCTA, Frontier Communications, CenturyLink WTA and USTelecom. "This means ... carriers engaged in access stimulation would not render bills to interexchange carriers for terminating tandem switched transport with respect to stimulated traffic, and would be required to pay the terminating tandem switched transport charges in lieu of IXCs for these calls to other access providers of such transport." ITTA backed the proposal.
CenturyLink also backed the proposal of NTCA and others and urged adoption of its own proposal to "address the arbitrage issues caused by forced indirect connection." The telco said its modified two-pronged approach would be similar to the FCC's "but outside of the access stimulating context." Peerless Networks, a CLEC, endorsed CenturyLink's "Direct Connect Rule"; the Iowa Communications Alliance opposed it, calling it "little more than an attempt to dismantle" existing centralized equal access services. Aureon Network Services (Iowa Network Services) also opposed the CenturyLink proposal, saying the FCC should simply "decide arbitrage is an unjust and unreasonable practice" that isn't allowed. Aureon said the FCC's previous indirect approaches hadn't stopped access stimulation, and the NPRM proposals wouldn't, either: "It is time for the Commission to take direct action, and adopt a rule that outlaws access stimulation once and for all."
HD Tandem said the road to bill-and-keep is paved with an IP-enabled network, and needs FCC carrots, not sticks. "It will stall the move toward the next-generation network and its consumer benefits if it credits this regulatory whining of forbearance petitioners." It asked the FCC to define "access stimulation" to "include all the relevant parties ... to address the issue in a complete and non-discriminatory manner." Inteliquent, Teliax and others also commented.