YEAR-LONG INTERCARRIER COMPENSATION DISCUSSIONS COLLAPSE

Several other major players dropped out Wed. as the ICF held a key “go-no go” vote. They included Verizon; T-Mobile, one of only a few wireless carriers that had participated; and Montana Independent Telecom Systems, one of only 2 rural carriers at the table. Sources said the departure left the talks in doubt. The FCC has said it would go ahead with intercarrier compensation action if industry couldn’t reach an agreement but it would prefer industry consensus. The FCC has held off on intercarrier compensation action, initiated 3 years ago, while the industry attempted to reach a consensus.

BellSouth dropped out because of “unanswered questions” regarding how universal service funds should be collected and from whom, as well as circumstances under which service providers would pay intercarrier compensation during the transition to bill & keep. But the company left the door open to reinitiating discussions later.

BellSouth believed parts of the agreement on USF were ill-defined and in need of further work, a source said. Substantial amounts of money were in question since the 9% USF surcharge applies both to interstate long distance calls and 2/3 of charges for DSL. The company had similar questions about access charges during the transition.

“BellSouth supports the need for a uniform industry approach to Intercarrier Compensation,” BellSouth Vp Bob Blau said in a statement. “We continue to believe that the process established by the ICF represents a proper and appropriate forum for resolving complex and controversial policy issues like intercarrier compensation and universal service reform in a reasonable and timely manner.”

Verizon issued a statement late Wed., saying that in general the company questions “the political viability of the current proposal.” Verizon also said the proposal doesn’t adequately address VoIP calls. “Third, if legislation is required in conjunction with this proposal, it may preclude more comprehensive solutions to the challenges facing our increasingly evolving industry,” Verizon said. But Verizon said the company also “remains committed to working with regulators, legislators, our industry colleagues and consumers to craft an effective, forward-looking, market- based policy framework for 21st century communications.”

T-Mobile found still other reasons to oppose the proposal. “We conclude on balance that a number of provisions are significantly disadvantageous to wireless carriers and subscribers and prevent our support of the plan,” wrote Vp Tom Sugrue. “I will not articulate here all of our considerations in making this decision, but I note that we were particularly concerned about the operations of the new support mechanisms, including their size, uncapped potential for growth, contribution methodology, and underlying purpose (revenue preservation rather than universal service).”

The Montana group followed Great Plains Communications, which had dropped out in March. The departure had been long expected, with rural incumbent local exchange carriers viewed as having little to gain from the talks.

The discussions were largely modeled on the CALLS (Coalition for Affordable Local and Long Distance Service) talks of the late 1990s, which led to an agreement overhauling the interstate access charge regime. One source noted that time has been a problem. The FCC has been turning up the heat on the group to structure an agreement, but the source noted that negotiators had less time to work out an agreement than during CALLS, and the issues this time were more complicated. Gary Epstein, chief of the FCC Common Carrier Bureau from 1981 to 1983, who has served as moderator, had no comment Wed.