I’ve long thought that I could write a book about various absurdities associated with intercarrier compensation. But, as my wife has pointed out to me (repeatedly), there are no more than a couple of dozen people who would be interested in reading such a book. Since they’re probably the same couple of dozen people who read this blog, I figure I can skip writing the book and inflict my intercarrier musings on you via the blog. The topic for today is traffic pumping. Or, as it is known in more polite company, access stimulation.
I know the 24 of you will be busy this week reading Congressional responses from up to 24 companies that are due today to Energy & Commerce Committee Chairman Henry Waxman and Subcommittee Chairman Rick Boucher and Rep. Bart Stupak.
Traffic pumping arises from the confluence of several peculiar features of intercarrier compensation. At the heart of these is the authority possessed by local exchange carriers (LECs) to file a document called a “tariff” with the FCC and, once it “takes effect,” start sending bills to any entity that terminates traffic to the particular LEC. Experience shows that this authority to file tariffs, which is granted by FCC rules, may be the closest thing yet to an actual license to print money. And therein lies the problem. It turns out that if you had such a license, you might be tempted to print as much as you possibly could, irrespective of the consequences for everyone else.
The goal of traffic pumping is to maximize the amount of traffic terminated to a particular LEC while deploying the minimum amount of infrastructure. The traffic pumping LEC accomplishes this by giving away something of value to the customers of other service providers. The classic traffic pumping scheme gives away free chat line use or conference calling. Needless to say, these services can tend toward a more unsavory bent, as shown in a recent story on Ars Technica. But there are also services directed to other kinds of niche audiences, such as international radio programming. And we’re now seeing the extension of multi-level marketing arrangements to traffic pumping via services that pay a user directly for stimulating calling.
Traffic pumping has been around for a long time, but the current controversy goes back to 2007 when the FCC made clear that it did not view call-blocking as an acceptable response to traffic pumping, while tentatively concluding that traffic pumping violated its rules.
Since then, policy makers have proven more “patient” with both traffic pumping and call-blocking by some entities than we and others would like. But, recent signs indicate that such patience may be wearing thin. Both the Iowa Utilities Board and the FCC recently adopted excellent decisions on traffic pumping. And, as noted above, the House Commerce Committee recently asked some of the more prominent traffic pumpers to answer some fairly pointed questions. Finally, it is being reported that the FCC’s National Broadband Plan may recommend that interim solutions to arbitrage problems like traffic pumping be adopted in the relatively near term. And, according to press reports, the FCC is looking to phase out over time the entire intercarrier compensation system — that great enabler of traffic pumping — in its National Broadband Plan. Sounds like a pretty good plan to me.