The Next Logical Step in
Intercarrier Comp Reform

Posted by: AT&T Blog Team on October 3, 2016 at 10:42 am

By Matt Nodine, AT&T Assistant Vice President of Federal Regulatory

Turning around an aircraft carrier, if done correctly, takes lead time, requires great care and precision, and depends on a large crew with a variety of skills, all working together in harmony for a common cause.

Intercarrier compensation reform (ICC) is one such ship. Wisely, the FCC began this turn in 2011 with terminating access reform, working with a broad cross-section of industry, consumer groups and policymakers to decisively steer industry away from the arbitrage and schemes of unscrupulous actors, and toward what it termed “market discipline.” With the FCC’s course set, industry charted its path toward greater competition.

Now that we are several years into the FCC’s reforms, it is time to review the state of the marketplace, assess prior reforms, identify weaknesses and address next steps. With our petition for forbearance, which we filed Friday, the FCC can begin the next phase of reform we believe will benefit consumers, increase broadband investment and improve competition.

First, some background. In the 2011 USF/ICC Transformation Order, the FCC did its work well by adopting a regulatory regime that determined that a “uniform national bill-and-keep framework” would be the “ultimate end state” for all telecommunications traffic between carriers. The FCC’s action addressed some of the worst aspects of access arbitrage on the terminating access side, including what the Commission described as “access stimulation.” These so-called “traffic pumpers,” who consistently game the system to grossly inflate providers’ costs – and consumers’ bills – by hundreds of millions of dollars annually, were finally constrained. For many carriers, terminating end office switching rates complete the bill-and-keep transition on July 1, 2017.

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Critical of CAF in the 10th Circuit

Posted by: Hank Hultquist on November 20, 2013 at 11:42 am

Yesterday, more than two years after the FCC adopted transformational reforms of universal service and intercarrier compensation, critics of that order (which include AT&T on a single, discrete intercarrier compensation issue) finally had their day in court. And by all reports it was a long and exhausting day with more than two dozen lawyers arguing a host of issues.

It should not be surprising to anyone in telecom that this order has drawn appeals on so many different issues. This order represents perhaps the most significant step taken to date by the FCC to reform an outdated system of explicit and implicit subsidies to promote universal voice service, and replace it with a system of limited explicit subsidies to promote universal broadband service.

Of all the arguments being made in Denver, the one that is most threatening to the ability of the FCC to do its job leading the historic transition to broadband, IP networks (i.e., the job laid out by Chairman Wheeler yesterday), is the claim by some parties (most prominently C-Spire and US Cellular) that the FCC has no authority to use universal service to promote broadband. This argument, if accepted by the court, threatens the entire project of updating universal service for the broadband era. These parties, in effect, are trying to derail a process that was first outlined in the National Broadband Plan and then set in motion by this order. Early reports indicate that the judges were skeptical of this argument, though one can never put too much weight on what’s said in oral argument.

I don’t think, in the long run, these agents of stasis can succeed. The consensus in the telecom world that universal service should be used to bring broadband to high-cost areas is almost overwhelming. I believe that even if the court were to accept the argument of the agents of stasis, there would be bipartisan support to reverse such a decision through legislation. I hope such legislation does not become necessary.

In case you were interested, these are the parties arguing that the statute flatly prohibits the use of universal service support for broadband.

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So, Why is there No Rural Email Completion Problem?

Posted by: Hank Hultquist on November 18, 2013 at 11:37 am

Just over a week ago, the FCC released an order intended to try and improve the rate at which long distance calls to rural areas are completed. That led to a somewhat cryptic tweet on which I now expand. (In today’s blog “email” is playing the role of Internet traffic in general.)

Have you heard the one about the five policy wonks who couldn’t agree on why there’s no rural email completion problem? The wireless guy challenged the premise of the question by arguing that it would only be an interesting question if the rural call completion problem actually existed. The ILEC guy said that of course there’s a rural email completion problem (that problem being that the ILEC is not getting paid to complete them). The Internet guy said that as long as there’s net neutrality, the end-to-end principle ensures that there can be no rural email completion problem. The right-wing think tank guy said that the free market prevents the emergence of a rural email completion problem. And the public interest guy said that even if there is no rural email completion problem, which he did not concede, the FCC should adopt rules to prohibit it. Ba dump bump!

But seriously folks, why is there no rural email completion problem? You’re probably expecting me to say that it’s because peering is unregulated, or because there’s no intercarrier compensation for email, or because email providers lack market power. And while all of those are true and important, I’d like to focus on a more fundamental distinction between the public switched telephone network (PSTN) and the Internet – the fact that there’s no such thing as “local Internet service.”

For a very long time (and to some extent even to this day), the voice world distinguished between “local exchange service” and “long distance service,” largely because they were regulatorily-driven constructs. The domain of the local service provider was required to end at some specific geographic point. It might be the exchange boundary, or maybe the LATA, or maybe even at a tandem switch. In any case, at that point responsibility for the transmission of a call, in either direction, passed from the local exchange carrier to the long distance carrier, or interexchange carrier (IXC). As a consequence of this distinction, long distance carriers became financially responsible for the transport path between rural exchanges and the rest of the PSTN.

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AT&T on FCC’s USF/ICC Order

Posted by: AT&T Blog Team on October 27, 2011 at 2:13 pm

Washington, DC –The Federal Communications Commission (FCC) today adopted an Order to reform the Universal Service Fund (USF) and the Inter-Carrier Compensation (ICC) rules for the broadband era. You may attribute the following statement to AT&T’s Senior Vice President-Federal Regulatory & Chief Privacy Officer Bob Quinn:  

“The FCC today took an important step in transforming the concept of universal service.  By redefining the 21st century basic service, which all Americans should have access to, as broadband instead of traditional voice, the FCC has recognized the fundamental technological transformation that has occurred across the globe over the past fifteen years.  Many Commissions have attempted to solve this seemingly insoluble problem without success.  Managing all of the moving industry pieces has been compared to trying to change a tire on a car racing down the highway.  This historic achievement could not have occurred without the leadership of Chairman Genachowski, and the commitment of Commissioners Clyburn, McDowell and Copps to work together and to find a path forward. 

“While no one can say that it is thrilled with all aspects of what the FCC did today, we are cognizant that we shouldn’t lose sight of the forest – the significance of what this decision means to all Americans – through the trees.  In the future, the basic level of service that United States policy will encourage and fund will be broadband and not simply voice service.  This is a significant achievement worthy of congratulations and its impact on all Americans should not be minimized.  With that said, we look forward to carefully reviewing the details of the FCC’s order before we can fully understand all of its implications.”

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Comcast and the Throes of Addiction

Posted by: Hank Hultquist on October 21, 2011 at 4:00 pm

It’s time to chalk up another victim to the addictive qualities of access charges.  

For more than a decade, cable companies have fought vigorously to avoid entanglement of their broadband IP networks with common carrier regulation.  Now, for less than a penny a minute, Comcast seems ready to say “the heck with all that.”  

In recent weeks, Comcast has proposed certain changes to the FCC’s rules that govern competitive local exchange carrier (CLEC) access charges.  In particular, Comcast has asked the FCC to eliminate a rule that prohibits CLECs from charging for functions that they don’t actually perform.  No, that’s not a typo.  Comcast wants the FCC to allow CLECs (and this includes Comcast’s own CLEC affiliates) to charge for access services whether they provide them or not. This request is surpassingly ironic in that VoIP providers have spent much of the last 10 years insisting that they should never have to pay access charges.  Today, we filed a letter with the Commission explaining why Comcast’s proposal is not only unlawful but also unwise.

In a nutshell, Comcast wants the FCC to make a rule saying that as long as a CLEC provides the telephone number listed in the number portability database, that CLEC should be able to charge the same amount as an incumbent local exchange carrier (ILEC) that terminates a call to an end user over its plain old telephone service (POTS) network. The implication of this proposal is that as long as a CLEC provides the telephone number, it’s safe to conclude that the CLEC provides a service equivalent to all of the other functions – and the associated costs – included in access charges. Nothing could be further from the truth.  And, here’s why.

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