CTIA Calls for Intercarrier Compensation Reform
CTIA Tues. laid out 6 principles for intercarrier compensation reform and contended most proposals unveiled so far would be good for the companies proposing them but bad for consumers. CTIA Pres. Steve Largent elaborated on the principles in a 4-page letter to FCC members. A few CTIA members previously had filed positions on intercarrier compensation, but this is the wireless carrier industry position.
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“We believe that fundamental reform of the intercarrier compensation system is essential if consumers are to enjoy the benefits of an economically efficient telecommunications regime,” Largent wrote: “To date, many of the proposals filed with the Commission appear simply designed to enrich certain carriers and industry segments without regard to the long-term impact of those proposals on consumers’ interests.” Largent said systems should be changed “to focus incentives on enhancing economic efficiency, rather than maximizing subsidies.”
CTIA said the rules must be “technology neutral,” not offering an advantage to wireline over wireless carriers, as well as “revenue neutral.” The association argued that the current regime discriminates against wireless carriers. CTIA said each carrier must be “responsible for recovering its network costs from its own end-user customers” and that support levels should be “no higher than necessary to ensure affordable end-user rates.” Rules also must be “as simple as possible” to administer and should encourage “economic efficiency and promote competition.” On the latter point, CTIA argued that the current system encourages LECs to increase their costs to receive higher intercarrier compensation and universal service support. CTIA observed that many of the proposals that have surfaced make the system more rather than less complex.
One carrier source said CTIA was seeking to stay on top of a critical issue. “They realized that intercarrier compensation was going to be a hot issue in the near future,” the source said. “They wanted to rally the troops and develop a consensus position… With other groups it was clear what their position was. What was missing was a wireless position.”
Wireless carriers have followed the issue with interest. Sprint, which is also a long distance company, has been active in intercarrier compensation reform and was a member of the Intercarrier Compensation Forum (ICF), which developed a set of principles (CD Aug 20 p1). T-Mobile and Western Wireless were members of that group but dropped out.
In Nov., Western Wireless, which is making presentations to the FCC on intercarrier compensation reform, laid out principles similar to the CTIA proposal. Western Wireless said the FCC should “promote intra- and inter-modal competition by eliminating uneconomic arbitrage and establishing unified rules regarding intercarrier compensation and universal service, unlike the current divergent array of rules that unfairly discriminate among various classes of service providers.” Western Wireless said compensation also must not vary based on jurisdictional or distance-based classifications or the category of carrier. Western Wireless, T-Mobile and Dobson filed a set of principles at the FCC on Nov. 17. The companies argued: “Equitable IC reform cannot be accomplished simply by shifting ILEC support from one inefficient compensation mechanism to another. The Commission also must use this opportunity to eliminate inefficiencies that continue to burden consumers and suppress competition.”